BNEF: 'Expect delays to Australia's green hydrogen projects — investors don’t yet have confidence in H2 import demand'
A lack of concrete offtake agreements and specific government incentives could derail the timeline of some of Australia’s announced schemes
Hydrogen: hype, hope and the hard truths around its role in the energy transition
The reason for this uncertainty in the market is primarily due to a lack of concrete offtake agreements for Australian-produced green hydrogen, as well as a lack of adequate government support, according to David Hostert, the lead author of BNEF’s New Energy Outlook series.
BNEF’s analysis is borne out by the glacial progress towards final investment decision (FID) by Australia’s biggest green hydrogen champion, billionaire iron magnate Andrew Forrest’s Fortescue Future Industries (FFI), which has this year pledged to take FID on five projects, including the Gibson Island green ammonia scheme in its home country.
“The amount and speed of capital deployment required [to realise Australia’s green hydrogen export potential] is unlikely to happen unless investors have confidence that the demand and value of hydrogen products will support their investments,” a spokesperson for BNEF added separately.
In this scenario, not only can Australia produce enough renewable energy to meet its own decarbonised power needs, but it will also have enough to meet its own domestic hydrogen demand and supply 25 million tonnes to the global marketplace.
Hostert believes that some green hydrogen exports from Australia will begin in 2025.
But BNEF’s analysts believe that the lack of progress on offtake agreements and an uncertain regulatory framework is affecting all hydrogen projects, not just those in Australia.
Moreover, global hydrogen demand is insufficient to stimulate enough production to meet the analysts’ Net Zero Scenario, in which the world achieves net zero emissions by 2050.
“Around the world, demand for low carbon hydrogen is rapidly emerging, spurred on by new government policies and ambitious corporate decarbonisation targets,” BNEF’s spokesperson added.
“But even at current levels, identified hydrogen demand still lags behind what analysis in our Net Zero Scenario finds it would need to be to keep the world on a net-zero pathway.”
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