NSW unveils new green hydrogen strategy with A$3bn in incentives available

Out-Law News | 15 Oct 2021 | 3:20 am | 1 min. read

The New South Wales (NSW) state government has announced a new hydrogen strategy, setting targets for the development of a renewable or 'green' hydrogen industry in the state, providing A$3 billion (US$2.2bn) in incentives.

The plan aims to support the development and commercialisation of hydrogen supply chains and hydrogen infrastructure projects with the goal of increasing hydrogen production in NSW to 110,000 tonnes per annum and sharply reducing the cost of green hydrogen by A$5.80 per kilogramme (kg) to A$2.80 per kg by 2030.

Renewable energy expert George Varma of Pinsent Masons, the law firm behind Out-Law, said: "Hydrogen is seen as critical to the decarbonisation of hard-to-abate sectors such as mining, heavy industry and heavy transport. Given the penetration of these sectors in NSW, the introduction of an ambitious hydrogen strategy offers stakeholders the opportunity for the rapid growth of the hydrogen sector in NSW.”

“With progressive hydrogen strategies already in place at the Commonwealth level and in other states, Australia is well on its way to being a world leader in the hydrogen market,” he said.

Leanne Olden of Pinsent Masons, the law firm behind Out-Law, said: “As the race for the nation to become a leader in the global hydrogen market intensifies, each state within Australia is putting its best foot forward to establish a dominant position in the market. With the recent hydrogen strategies and road maps released by Western Australia and Queensland, it is important for New South Wales to ensure it is positioning itself in a fledging market. Having a well thought out hydrogen strategy will be essential to the growth of the hydrogen market in the region.”

Key features of the new plan include a A$70 million fund which will be used to establish green hydrogen hubs, similar to the existing renewable energy zones, beginning in the Hunter and Illawara regions. A$78m will also be invested to support Australia’s first green hydrogen and gas power plant at the Tallawara B power station.

The remainder of the estimated A$3bn allocated to the plan will be used to establish a hydrogen refuelling network to support the increased use of hydrogen vehicles, waive government charges on green hydrogen production, provide a 90% exemption of network charges for electrolysers that connect to the network and to provide other financial incentives for green hydrogen production.

The new strategy will set the state up as a global hydrogen leader and is forecast to increase the size of the NSW economy by more than A$600m by 2030, said treasurer and energy minister Matt Kean. It also aligns with the NSW government’s commitment to achieve net zero emissions by 2050.