The Department of the Treasury has conducted a consultation on its Hydrogen Production Tax Incentive, which forms part of the Australian Governments Future Made in Australia package.
Developing renewable hydrogen markets and capabilities is a foundational element required to to achieve Australia’s emissions reduction targets and unlock the benefits of the global shift to a net zero economy.
This is especially urgent as the window to limit global warming to 1.5 degrees is still open, but narrowing.
Renewable hydrogen is an important part of Australia’s ambition to become a renewable energy superpower.
Modelled scenario analysis undertaken by Climateworks Centre and CSIRO for the Australian Industry Energy Transitions Initiative found that low-cost, renewable hydrogen could play an important role in decarbonising Australian industry, both as a fuel and chemical feedstock.
Renewable hydrogen will be especially important in instances where electrification is not technically possible or is cost prohibitive.
Renewable hydrogen also has important potential in long-haul and heavy vehicle freight transport.
Climateworks recognises the value of the Hydrogen Production Tax Incentive as one of several mechanisms to attract investment in renewable hydrogen.
The recommendations in this submission will enhance the scheme’s design and delivery and support the objective of establishing Australia as a renewable energy superpower.
Recommendations:
- Prioritise ‘net zero industrial precincts’ for the Hydrogen Production Tax Incentive to enhance economic efficiency and enable further industrial development.
- Include a review process for the Hydrogen Production Tax Incentive to assess ongoing necessity of support and help avoid perverse outcomes.
- Require ‘credible transition plans’ from recipients as a way to ensure the Net Zero Transformation Stream supports Australia’s emissions reduction targets.
More details on these recommendations can be found in the submission.