Australia’s Green Hydrogen Outlook Seen Souring Before Elections

(Bloomberg) -- Australia’s ambitions to become a major producer of green hydrogen may follow a similar trajectory to the US’s move away from renewable energy if the government loses elections due by mid-May, according to project ratings agency HySights Pte Ltd.

The ratings of six projects selected under an initial A$2 billion ($1.3 billion) program to encourage the nascent sector have dropped an average of two bands since the third quarter, according to HySights. None of them are now considered “bankable” — or able to meet criteria including minimum costs — after sponsors left or they were paused, the Singapore-based company said.

“Australia’s likely change in ruling party will have a major impact on projects in the country,” HySights co-founder Ciaran Roe said. Considering the “export-oriented nature of four of the projects, these changes have wide-ranging impacts on government incentive schemes for low-emission fuels in Japan, South Korea, and Singapore,” he said. 

Anthony Albanese’s Labor government had pushed for Australia to tap its abundant wind and solar resources to develop a clean hydrogen sector, putting in place more than $5 billion of incentives over the next decade to support the nascent industry. The opposition coalition, which has edged ahead in polls, has been less enthusiastic, recently denying A$1 billion of funding for a major project.

Renewable hydrogen remains reliant on government support to be economically competitive, while implementation and fund allocations need to happen faster for the local hydrogen industry to take off, BloombergNEF Analyst Caroline Chua said in a note. Queensland’s earlier withdrawal from financial investment also raises concerns about the federal administration’s ability to deliver on its hydrogen and clean energy supply chain ambitions, she said.

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