Australia’s Senate has passed the government’s AUD $2/kg ($1.26/kg) green hydrogen tax credits, paving the way for the incentive to be offered to producers.
As part of the Future Made in Australia (FMIA) Bill, the 10-year tax credit will be available for green hydrogen producers between 2027/28 and 2039/40, aimed at bridging the cost with fossil fuels.
Passage through the Senate will allow the Australian Government to implement the act and create the hydrogen production incentives.
Under the proposed legislation, projects looking to secure the credits will need to take final investment decision (FID) before July 2030 – with no funds being released until the projects begin producing hydrogen.
In addition to the specific hydrogen incentives, similar measures are available for critical minerals.
“This is all about seizing the vast economic and industrial opportunities from the global Net Zero transformation and strengthening our economic resilience,” the Government’s Resources Minister, Treasurer and Energy Minister said in a joint statement.
The AUD $13.7bn ($8.6bn) package was met by praise from key players across the hydrogen industry; however, high-level backtracks and scrapped projects have prompted growing questions about the Government’s plans, as Australia stands on the verge of election.
Since the package’s unveiling, Fortescue has scaled back its green hydrogen ambitions, while Origin Energy has exited the sector entirely.
Most recently, Stanwell’s 2.2GW Central Queensland Hydrogen Project (CQ-H2) has appeared on unsteady ground as the state government denied it AUD $1bn ($628m) of funding.
Read more:Queensland Govt. pulls support for 2.2GW green hydrogen project
The South Australian Government also warned AUD $600m ($377m) in funding for a 250MW plant may not be issued if steelmaker GFG Alliance did not ink an offtake deal.
These troubles have ignited political rhetoric, with opposition parties criticising the green hydrogen support.
“The fact that major players like Origin and Fortescue are stepping away from green hydrogen only confirms what we’ve been saying all along: Labour is picking losers and it’s Australian taxpayers who are left to pick up the tab,” Liberal Shadow Minister for Climate Change and Energy, Ted O’Brien, previously said.
Australia’s federal election must be held on or before May 17 this year. While there will be more to sway voters than just hydrogen, if the Liberals return to power, hydrogen could be in the firing line.
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