Australia's hydrogen policy landscape

State and federal governments have released iterations of hydrogen policies and due to increasing policy certainty, there has been strong interest, investment and government funding for hydrogen related projects in Australia.

Significant federal initiatives include:

• Low Emissions Technology Statement, which sets a price goal for hydrogen of under A$2 per kilogramme;
• Federal government’s National Hydrogen Strategy, that sets a goal of commercially viable renewable hydrogen exports by 2030;
• Hydrogen Headstart Programme, which commits to invest A$2 billion to provide support for large-scale renewable hydrogen projects, as well as introducing legislative support mechanisms, over a ten-year period beginning 2026-27;
• Clean Energy Finance Corporation commitments which committed A$300 million to support the hydrogen industry in the CEFC Advancing Hydrogen Fund; and
• Australian Renewable Energy Agency investment that granted A$236m in funding to 43 hydrogen projects.

The states and territories have released strategies setting out their paths for developing the hydrogen industry in their respective jurisdictions:

With various jurisdictions having established hydrogen hubs under their respective hydrogen strategies, more hydrogen projects are expected to be announced in Australia. Failure to navigate properly through relevant approvals, licenses and regulations can have serious consequences for the project and environment, and substantially delay project delivery.

A common source of delays on developing hydrogen projects is a failure to obtain the right advice early on in respect of planning and environmental approvals at the outset. We are seeing the crippling effects that such delays are having on early-stage hydrogen projects so there are some valuable lessons to be learnt from these pioneers.

While current state planning frameworks in their current capacities have been able to accommodate hydrogen developments under the usual planning pathways, hydrogen-specific planning pathways provide a clearer approach and would assist in preventing approval delays for hydrogen projects.

Commonwealth consultations on two hydrogen strategies

The federal government’s national hydrogen strategy is set for a review (5.48MB / 40-page PDF) following an agreement by state and federal energy ministers. The review aims to ensure the strategy is fit for purpose and positions Australia on a path to be a global hydrogen leader. It will consider the impact of global hydrogen industry policy since the initial strategy was published three years ago, highlighting the impact of the US Inflation Reduction Act in particular.

In the 2023-24 Federal Budget, the Australian government announced the establishment of Hydrogen Headstart, a A$2bn revenue support programme to support large scale renewable hydrogen and released a consultation paper (748KB / 17-page PDF) to assist with its design. The consultation paper covers proposed objectives, eligibility criteria and funding mechanism, as well as other features of the programme.

The consultation papers for these two have closed and the findings are expected to be released in coming months.

Planning and environmental considerations

Specialised hydrogen infrastructure such as production plants, pipelines, roads and storage facilities requires local, state and federal level planning and environmental approvals. In most instances, approvals will also be required for the development of green power assets, such as wind, solar or other renewable energy sources, given the limited availability of green energy presently around Australia. 

Due to the potential hazards associated with hydrogen projects, appropriate project siting is a key consideration. Most projects will trigger requirements to obtain environmental licenses and major hazard facility registration and licences from regulators, and there are some potential zoning limitations on the ability to co-locate hydrogen projects with solar or wind farm assets.

Australian hydrogen energy projects have clear indicative approval requirements at state/territory and federal levels. At state/territory level, there are four relevant approval stages:

• planning approval will be required for most, if not all hydrogen projects to authorise use of land and construction activities;
• major hazard facility approval will be required for most, if not all hydrogen projects to authorise storage under health and safety laws;
• secondary planning and water use approvals will be required for most, if not all hydrogen projects to authorise taking of water and for other matters;
• environment approval will be required for most, if not all hydrogen projects to authorise environmental impacts.

At commonwealth level, approval will be required under the Environment Protection and Biodiversity Conservation (EPBC) Act for projects with a significant impact on matters of national environmental significance.

Legislation implementation

To meet the targets that are set out in the respective state hydrogen policies, state governments are recognising the need to streamline their approval processes to improve development prospects, and are implementing legislation and policy to assist with this.

Western Australia has started operating its green energy approvals group to help to streamline the approval process of environmental assessments for renewable energy and hydrogen projects.

South Australia has proposed the Hydrogen and Renewable Energy Bill 2023 (SA), which could facilitate development of hydrogen and broad scale renewable energy projects across freehold and non-freehold land and state waters through the implementation of a licensing framework.

Queensland has developed the Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Bill 2023 (QLD). The Bill amends the Gas Supply Act 2003 (QLD) and Petroleum and Gas (Petroleum and Safety) Act 2004 (QLD) to provide clear approval pathways for hydrogen and liquid hydrogen carrier pipelines and will extend the National Gas Law to hydrogen, biomethane and other renewable gases.

New South Wales (NSW) released a guideline (727KB / 27-page PDF) in March which provides guidance on the application of the NSW planning framework for hydrogen developments and flags some of the key assessment issues which may arise in hydrogen development. However, NSW has not provided any hydrogen specific approval pathways and the guideline makes it clear there is a strong preference for hydrogen projects to be located in designated prospective hydrogen hubs to be located at Port Kembla, the Port of Newcastle and in special activation precincts.

In a more general context, the following states are also introducing legislation to modernise their planning systems in the major project space:

• the Australian Capital Territory recently enacted the Planning Act 2023 (ACT); and
• Tasmania recently enacted the Land Use Planning and Approvals (Amendment) Bill 2022 (TAS) which amended the Land Use Planning and Approvals Act 1993 (TAS).

Co-written by George Varma and Niren Menon of Pinsent Masons.