Proponents of renewable energy raised concerns that using hydrogen to store fossil fuel-generated energy could support the coal sector and prolong the operation of the nation’s ageing fleet of coal-fired power stations.
ACT Energy Minister Shane Rattenbury argued before the meeting that Australia faced a “fork in the road” that could set the direction of hydrogen as either a forward-looking renewables industry or a mechanism to “prop up” coal.
“It’s disappointing that other jurisdictions did not support the ACT’s proposal to amend the national hydrogen strategy to focus on green, renewable hydrogen,” Mr Rattenbury said.
“Green hydrogen produced from renewable electricity, like wind and solar, is the way of the future. Green hydrogen will be in demand as countries seek zero-emissions energy solutions and I will continue to advocate for green hydrogen and an end to fossil-fuel extraction and use in Australia.”
Funding will be injected into hydrogen development through the Clean Energy Finance Corp (CEFC), a Commonwealth funding body that invests with private companies to develop emissions-reducing technology.
The CEFC will commit $300 million and the Australian Renewable Energy Agency (ARENA) will invest $70 million to bankroll “electrolyser” projects, which can convert electricity to hydrogen and allow energy to be stored and transported. Hydrogen produces water as a waste product when converted to electricity.
The ability to store renewable energy and use when conditions for renewables are unfavourable, such as when it is not windy or sunny, has long been considered the missing link in the global energy transition away from carbon-intensive fossil fuels.
But unlike batteries, hydrogen energy storage could also provide the opportunity to set up a new export market for Australia that could replace fossil fuel exports and help other nations decarbonise.
ARENA chief executive Darren Millner said Australia was in a prime position to become a “major exporter” of hydrogen. He said the funding would help “kickstart” a domestic hydrogen industry by driving down the cost of producing renewable hydrogen at scale.
The CSIRO has said the development of a hydrogen export industry could be a “game changer”.
The CEFC may require rule changes to allow it to invest in carbon capture and storage projects if it selects coal-fired projects for development.
Significantly, the COAG energy council agreed to meet again in March. Ministers typically meet four times a year but Mr Taylor had deferred Friday’s meeting since December last year amid tensions between state and federal governments.
The Australian Energy Market Operator, which assess risks to the electricity network, told the council it was confident there were sufficient measures in place to minimise the risks to the grid over what is forecast to be a hot and fire-prone summer.
Ministers agreed to rework by March energy market rules that govern the amount of back-up power required to prevent blackouts, which are a particular risk during summer when the electricity grid is under the most pressure.
Mike is the climate and energy correspondent for The Age and The Sydney Morning Herald.
Business reporter for The Age and Sydney Morning Herald.