Australia has set its sights on becoming a global hydrogen leader, but is it on track to achieve its ambitious goals? We have continued to track the evolving hydrogen landscape in the country, revealing insights into significant recent project cancellations and delays.
The A$2 billion Hydrogen Headstart Programme was designed to accelerate the country’s commercial-scale hydrogen production, yet early indicators suggest significant roadblocks ahead. Our data shows that 40% of projects have been canceled or stalled due to high costs and economic challenges - join us as we delve into this further.
The first big winner: Murchison Green Hydrogen
The programme’s first recipient, Copenhagen Infrastructure Partners’ 1.5GW Murchison Green Hydrogen project, has secured A$814 million (US$511.8 million) in subsidies. This large project is expected to produce 1.8 million tonnes of green ammonia per year, equating to 320,000 tonnes of hydrogen.
But this particular project’s early success is not indicative of the country as a whole. Here’s why:
Half of the shortlisted Hydrogen Headstart Programme projects have been stalled or cancelled
Some of the most notable cancellations include:
- Origin Energy – Scrapped the Hunter Valley Hydrogen Hub (55MW) amid a shift away from green hydrogen because of continuing uncertainty about the pace and timing of hydrogen market development.
- BP – Shelved its H2Kwinana (Phase 1 – 100MW) project effectively halting its plans to convert the former oil refinery into a biofuels plant. This decision stems from escalating costs and uncertainties in local demand for renewable fuels, particularly due to the absence of supportive government mandates. The primary offtake for the Kwinana project was intended to be sustainable aviation fuel (SAF). However, the lack of federal mandates on the use of biofuels, especially SAF, has contributed to BP's decision to pause the project. This move has also raised concerns among industry stakeholders about the future of renewable fuel initiatives in Australia.
- Stanwell – Stanwell’s 750MW Phase 1 Central Queensland Hydrogen Project faced investor withdrawals due to high development risks and policy uncertainty. The rejection of a $1 billion funding request led to 140 job losses, highlighting the fragile nature of Australia’s hydrogen investment landscape.
Our data shows that Australia had 79GW of planned hydrogen capacity by 2030. However, 11.12GW (37 projects) have been cancelled or delayed, representing 14% of the total pipeline capacity.
High costs and economic challenges are causing the majority of the hydrogen project hurdles
Several key factors are contributing to the slowdown in hydrogen project development:
- High Costs & Economic Challenges – 40% of stalled capacity
- Changes in Strategic Direction – 29% of stalled capacity
- Failure to Obtain Funding/Subsidies – 24% of stalled capacity
- Lack of Demand – 7% of stalled capacity
Can Australia still lead the global hydrogen race?
The Australian government has set a target of producing 0.5-1.5 million tonnes (2.25- 6.75GW) of low-emission hydrogen per year by 2030, with an export-driven strategy.Currently, our assessment of Australia’s planned hydrogen capacity stands at 79GW by 2030—over 10 times the government’s official target. However, most projects remain in early stages: 30.5GW in Early Planning, 19.4GW in Pre-FEED, and 15.43GW in FEED. Only 172MW has passed FID, with even less currently operational.
There are a few factors we should be aware of:
- The rising trend of project cancellations, particularly at the FEED stage, poses a significant risk to meeting Australia’s hydrogen targets
- Notably, three shortlisted projects under the A$2 billion Hydrogen Headstart Programme were cancelled despite their initial selection, highlighting the fragility of early-stage hydrogen development in Australia.
The Road Ahead: Can Australia still deliver?
Despite recent setbacks in the promising hydrogen project development pipeline, Australia remains a strong hydrogen contender, thanks to:
- Some of the world’s lowest hydrogen production costs
- A well-developed hydrogen export pipeline with international partnerships with Japan, South Korea and Germany
- Strong developer and investor interest
- Queensland Renewable Energy Zones (REZs), which are designed to harness its abundant renewable resources—such as solar and wind energy—to drive the development of large-scale renewable energy projects, including green hydrogen production
However, without cost reductions and policy certainty, Australia risks falling behind Chile, and Saudi Arabia in the hydrogen export market.
To stay ahead, Australia must lower production costs, streamline regulatory processes, and attract further investment with secure long-term hydrogen offtake agreements with global buyers.
Global demand for hydrogen is increasing, particularly in Europe and Asia, providing a significant export opportunity if Australia can maintain momentum.
The global hydrogen economy is rapidly evolving, with demand increasing in Europe and Asia. Will Australia achieve its hydrogen targets by 2030, or will it be overtaken by more agile competitors?
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