Two of Australia’s biggest investors in the renewable energy transition – Fortescue Future Industries and Quinbrook Infrastructure Partners – have warned that Australia’s high hopes in green hydrogen could be lost if the  government fails to match the new incentives rolled out in the United States.
One of the key parts of president Joe Biden’s Inflation Reduction Act – the clever naming of his climate and energy bill that reflects the cheaper cost of renewables – is the massive support for green hydrogen that makes it quickly competitive with fossil fuel alternatives.
That is going to give the US a massive leg up when competing in the new green hydrogen industry, and the scale of that advantage is being recognised by some of the Australian companies looking to compete in the same space.
It also poses a major challenge for Australia’s dream of becoming a renewable hydrogen export super-power, a dream that has already dimmed significantly as analysts assess the transport costs for Australian projects and competition overseas.
One of the those big dreamers in billionaire Andrew Forrest and his newly established Fortescue Future Industries. Its new CEO Mark Hutchinson says Australia and Europe risk being left behind if they don’t match the efforts to the US.
“The recent passage in the United States that the inflation Reduction Act has seen the US position itself as probably the world’s green hydrogen superpower,” Hutchinson told the Fortescue Metals annual general meeting on Tuesday.
IRA is a game-changer for green hydrogen
“We’ve worked hard with the US government, with the White House, with (Democrat) Senator Joe Manchin to get this bill passed and as a game changer, because the hydrogen market globally will benefit from the passage of that bill .
“America is actually very well placed to be the place of investment for the world and they’re poised to take advantage of this.
“Australia and Europe now must now look closely at what the Americans have done. And to make sure that they supercharged green energy and not left behind.”
FFI has big plans for green hydrogen, both in Australia and overseas, where it has struck a series of MoUs about potential gigawatt scale renewable energy projects closer to the end market.
In Australia, it is nearing completion of a 2GW hydrogen electrolyser factory to help meet that demand, although most of its gigawatt scale wind and solar projects in Australia – such as the Pilbara and in central Queensland – appear destined for domestic customers.
Australia at risk of being left behind
Quinbrook, one of Australia’s biggest and most successful investors in renewable and storage projects, much of it in the US, also warns that Biden’s Inflation Reduction Act … will have big impacts in Australia and the world.
“It has very far-reaching implications, not only for the United States, but also for the alliance between Australia and the United States in particular,” says Quinbrook co-founder David Scaysbrook.Â
“For example, the amount of US support for their corporates goes far beyond anything Australia could even contemplate. We don’t incentivize industry in the way that they do in the United States.”
Scaysbrook says there are still big opportunities for Australia in supplying rare earths, critical minerals, and raw material, but less so for green hydrogen opportunities and Australia’s dream of becoming a green hydrogen export superpower.
“The IRA has some bad news for Australia in that context and that is the degree to which the hydrogen supply chain will be subsidised in the United States, which will make it very, very difficult for Australia to compete.Â
“For example, green hydrogen in America is being supported at every step of the supply chain from renewable power through to the onshore manufacturer of electrolysers through to the manufacturing of the actual hydrogen.”
