Green hydrogen powers back up with major fundingPoppy JohnstonAAPFri, 4 July 2025 2:59PM
A major green hydrogen project has secured federal backing days after one of the biggest proposals to produce the clean fuel fell over.
The Commonwealth financial support for the Hunter Valley facility will allow it to make the switch from hydrogen made with gas, a fossil fuel, to renewable energy.
Funding of $432 million for the Orica facility was allocated under the federal government’s Hydrogen Headstart program, which provides credits for the manufacture of the clean fuel.
The $2 billion grant program, delivered by the Australian Renewable Energy Agency, aims to build scale across green hydrogen production and so drive down costs over time.
Australia wants to become a global leader in green hydrogen to power heavy industry and long-haul trucks, and to produce green metals such as iron – all key to meeting global decarbonisation targets and tackling climate change.
But the fledgling sector has struggled to find its feet.
One of the biggest proposals in the nation, Gladstone’s $14 billion Central Queensland Hydrogen Project (CQ-H2), was officially scrapped this week after the state government withdrew its support.
Federal Energy Minister Chris Bowen acknowledged the headwinds faced by the renewable hydrogen industry but said his government was rising to the challenge.
“It’s in the hard basket, not the too hard basket,” he told reporters on Friday.
The failed Gladstone project was a disappointment, Mr Bowen said, pointing a finger at the Queensland government rather than private sector investors.
Queensland Treasurer David Janetzki has described the Gladstone project as “speculative in nature” and said he “didn’t want to see the precious taxpayer dollar tipped into it”.
The federal incentives for the Hunter Valley project will go towards a 50 MW electrolyser powered by renewable energy on the Kooragang Island site, capable of producing about 4700 tonnes of green hydrogen each year to support regional jobs in low-carbon industries.
Hydrogen is used to make ammonia, important in fertiliser production, so the shift to a clean fuel will allow Orica to cut emissions from its ammonia facilities.
It will also open the region to opportunities to export clean hydrogen and ammonia.
Clean Energy Council general manager of advocacy and investment Anna Freeman applauded the government’s commitment to getting “complex and challenging” renewable hydrogen projects off the ground.
“We urgently need to drive down the cost of this renewable fuel to support Australia’s decarbonisation plans,” Ms Freeman said.
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