5 September 2023
The NSW Powerfuels including Hydrogen Network has submitted recommendations to the review of the National Hydrogen Strategy, with a view towards building the future P2X economy. The Strategy offers a timely opportunity to rethink, reposition and rewrite the national blueprint for clean fuel and chemicals in a world that looks quite different to how it did 4 years ago.
The Network and its Expert Panel has collated 34 responses and recommendations to the National Hydrogen Strategy Review, reflecting a balanced view from NSW stakeholders for a national context. These recommendations resulted in 7 high-level considerations:
- Supporting the Development of Emerging and Disruptive Technology. Emerging technology players should be identified for targeted support to promote domestic R&D and advanced manufacturing in the powerfuels sector. The current scheme lacks the agility and flexibility to support cutting-edge technologies from innovation communities that have the potential to reshape global P2X and hydrogen value chains.
- Revenue Support and Demand-Side Pull Measures. Current prices and a limited willingness to pay premiums above conventional fuel prices are hindering the feasibility of large-scale investments. To drive down production costs in the medium term, it’s important to encourage demand and investment through policies that bridge the price and revenue gap until powerfuel price premiums normalise.
- Delivering Cohesive Government Assistance. Improving the mechanisms for delivering government assistance would expedite project implementation and assist potential investors and developers seeking entry into the Australian markets. Particularly, simplifying project approval pathways to align with competitors for streamlined process and accelerated timeline, and simplifying interactions with investors.
- Expanding Regional Powerfuel Supply Locations and Overcoming Competition for Renewable Resources. Given the diverse applications of powerfuels, it is likely that multiple supply locations near end-use sites will be needed across Australia. The supply of clean powerfuel and chemicals from inland production centres should be considered in meeting domestic demand. The increasing competition between domestic and export as well as for renewable energy resources should be addressed through policy mechanisms.
- Overcoming Project Development and Market Challenges. Global supply chain and labour market challenges are constraining project delivery, with uncertainty over standards delaying projects once equipment is received from international suppliers. Prolonged wait times for electrolysers and equipment are emerging as an issue, with projects up to 55 MW lacking vendor interest. Access to a skilled labour workforce is evolving, as a significant challenge without an established workforce education and development framework.
- Australia within the Global Policy Landscape. Australia can leverage its competitive advantages over other nations to establish a foothold in the global P2X economy. International support mechanisms (e.g. the US Inflation Reduction Act) are perceived as both a threat and opportunity for Australian industry growth, shifting powerfuel production and procurement to locations with stronger incentives but also serving as an opportunity to grow Australian emerging technology suppliers.
- Achieving and Maintaining Social License. Securing community support and maintaining a social license to operate are essential for powerfuel projects. This entails considering the sustainability of inputs like carbon dioxide, water and other feedstocks adopting a holistic system approach to minimise adverse community impacts. The local community’s concerns regarding water impacts need careful consideration, and clarifying the acceptability of various other feedstock sources is essential to provide greater certainty for investors and project planners.