The South Australian Government has decided to reallocate the AUD $600m ($374m) originally set aside for a green hydrogen project in Whyalla to support the struggling steelworks instead, as part of an agreement with the Federal Government.
The announcement follows GFG Alliance’s decision to delay its offtake commitment, which involved using green hydrogen from the planned adjacent plant to decarbonise its steel operations.
Read more:Whyalla hydrogen project future uncertain as GFG Alliance delays offtake commitment
The South Australian Premier, Peter Malinauskas, stated there’s “no point in producing hydrogen if there’s not a customer for it,” referencing the steelworks.
Malinauskas added, “The first step is to realise what’s meant to happen with GFG. [This means] investing in the steelworks and transitioning to electric arc furnace with direct reduced iron (DRI), and that must happen concurrently with a potential new owner of the steelworks.
“That’s what this package will provide for,” he clarified.
GFG Alliance is currently facing significant financial challenges, including debts of over $587m to Greensill’s Capital, legal disputes over unpaid obligations, and operational issues at the Whyalla steelworks.
Additionally, the Australian Minister for Industry and Science, Ed Husic, announced a new AUD $1bn ($637m) Green Iron Investment Fund, with half allocated to the steelworks’ new owner and the remaining half available to applicants with existing green iron facilities or new projects.
“We need to make more sustainable steel,” Husic claimed. “It will be a huge opportunity for Australia – satisfying what we need and other countries that want low-emission steel.”
Whilst the South Australian Government remains committed to green hydrogen projects in the long-term, “keeping the plant is the priority,” according to Malinauskas.
However, Peter Dutton, Leader of the Opposition of Australia, has previously slammed the nation’s commitment to clean energy policies.
“The renewables-only policy has been a disaster,” he said, “and there’s no greater example of this than South Australia right now.”
Australia’s hydrogen sector has faced significant setbacks over the past year. Earlier this month (February), the Queensland Government pulled support for a AUD $12.5bn ($7.68bn) green hydrogen project located at the Port of Gladstone.
Read more:Queensland Govt. pulls support for 2.2GW green hydrogen project: reports
Local sources claimed over 140 people have been laid off from the Central Queensland Hydrogen Project (CQ-H2), which was expected to reach a final investment decision (FID) this year.
Old habits die hard: Why the global approach to hydrogen needs a rethink
Late last year, I met with several natural gas customers, technology companies and ammonia producers to discuss how we might work together to bring more green hydrogen into the world’s energy mix.
It is fair to say that despite enthusiasm for clean energy, a lot of the business and energy leaders I spoke with were hesitant about green hydrogen, and to be fair to them, it is not hard to see why.
The suspension of several green hydrogen projects in Australia and globally in the past year, US President Trump’s determination to roll back renewable energy investments, and global inflationary pressures have given plenty of reason for many to stand back to see how this plays out.
But despite the understandable hesitancy by some, there is a compelling need to decarbonise the world, and green hydrogen has a big role to play, particularly in the hard-to-abate sectors. It’s not because I think renewable hydrogen or its derivatives are a silver bullet, but for other reasons entirely.
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