Copenhagen Infrastructure Partners’ (CIP) 1.5GW Murchison green hydrogen project has become the first selected under the Australian Government’s Hydrogen Headstart programme to be awarded funding.
Energy Minister Chris Bowen today (March 20) gave the Western Australian project the green light by awarding it up to AUD $814m ($514m) in production incentives.
The 10-year production credit, under the first AUD $2bn ($1.26bn) Hydrogen Headstart package, will be paid at “production milestones” to support the project’s development.
While the Department of Climate Change, Energy, the Environment and Water (DCCEEW) has not confirmed the subsidy’s per-kilogramme rate, the project plans to produce 900,000 tonnes of green ammonia per year in its first stage.
CIP intends to expand the plant to produce around two million tonnes of green hydrogen-based ammonia per year for export to overseas markets.
In 2024, the Danish developer signed a Memorandum of Understanding (MOU) with South Korea’s Lotte Chemical to explore the supply, purchase and sale of clean ammonia from its US and Australian projects.
Final investment decision (FID) on phase one is expected at the end of 2026 – with full production planned for 2031.
The funding approval comes at a critical moment for Australian hydrogen, where setbacks in government and state-funded projects have fuelled political rhetoric ahead of its general election later this year.
On Wednesday (March 19), it was reported that Iwatani Corporation had backed out of Stanwell’s Central Queensland Hydrogen Project (CQ-H2), which had also been selected for Headstart funding.
It came after the Queensland Government rejected Stanwell’s request for AUD $1bn ($632m) in funding from the Australian Renewable Energy Agency (ARENA).
These setbacks have raised questions about investor confidence in the Australian hydrogen market – in turn fuelling political criticism of the Labour Government’s support for the energy carrier, including its recently passed AUD $2/kg ($1.26/kg)tax credit under the Future Made in Australia Act (FMIA).
Despite these setbacks, Bowen remains confident that the funding will prove successful.
“This support is about unlocking that private capital to help realise our potential,” he said.
Australian Hydrogen Council CEO, Dr. Fiona Simon, added that combined with the recently passed FMIA tax credits, “this project can now proceed to its next phase with private investors, partners, community and the government.”
Analysis: Billions pledged, projects paused – what’s next for Australia’s hydrogen industry?
Australia’s hydrogen sector has encountered significant challenges over the past year, highlighted by the South Australian Government’s recent decision to reallocate funding from the Whyalla hydrogen project to support local steelworks.
It came as the fourth project, with federal or state support, to be in the spotlight for apparent failures, opening the Labor government to stark, anti-hydrogen political opposition – just months away from a federal election.
bp’s 105MW Kwinana project, Origin Energy’s Hunter Valley Hydrogen Hub and Stanwell Corporation’s Central Queensland Hydrogen Project (CQ-H2) were all selected for a share of AUD $2bn Hydrogen Headstart Program.
The funding scheme planned to provide the prospective hydrogen producers with a 10-year production credit, aimed at closing the gap between high production costs and sale prices.
But all four projects have faced setbacks, often entangled in political rhetoric. This has only been catalysed with backtracks on green hydrogen targets from the likes of Fortescue.
Despite this, the government doubled down on hydrogen support. In May 2024, it announced a second Hydrogen Headstart round alongside its AUD $2/kg ($1.26/kg) green hydrogen tax credits as part of its Future Made in Australia (FMIA) bill.
Feeling the political pressure, the government appears to be recalibrating. When withdrawing funding from the 200MW Whyalla project, South Australian Premier Peter Malinauskas stated, “There’s no point in producing hydrogen if there’s not a customer for it…
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