ENERGY SECURITYIt’ll Take Effort, Not Hype, to Finally Achieve the Hydrogen Future

By Henry Campbell

The Australian government envisions Australia as a renewable energy superpower, with the Future Made in Australia policy committing billions to building a domestic hydrogen industry. For decades, optimists have called hydrogen the fuel of the future, while cynics have said it’s 20 years away—and always will be. Hydrogen offers Australia, particularly northern Australia, great economic opportunity. But more policy work is needed to achieve this opportunity.

The history of hydrogen fuel and industry reveals ambitious promises and disappointing results. Is Australia poised to lead in this energy revolution, or are we caught in a hype cycle?

Hydrogen could help decarbonize sectors including long-haul transportation, ammonia manufacturing, steel making and other industrial processes, commonly by replacing metallurgical coal and natural gas. But transitioning to hydrogen is not easy.

In 2003, then-US president George W Bush pledged US$1.7 billion to hydrogen fuel initiatives and programs to develop more environmentally friendly transportation technologies. Bush dreamed that when children born in 2003 bought their first cars, those cars would be hydrogen powered. 21 years later, their first cars likely still had regular combustion engines.

Despite various initiatives, estimated global hydrogen fuel cell passenger car stock is only 93,000 cars. Instead, electric vehicles are leading in decarbonizing road transport: more than 10 million electric vehicles were sold in 2022, about 14 percent of all new car sales. S&P Global projected 13.3 million electric-vehicle sales in 2024 (an estimated 16 percent of total new car sales).

Some analysis attributes the long-running ups and downs of hydrogen hype cycles to both internal factors (such as technological innovation) and external factors (such as domestic politics and national security). The risk is that Australia may now be investing in hydrogen due to these external factors, rather than technological progress and at the cost of investing in other, more successful clean technologies.

The Future Made in Australia initiative commits $8.0 billion to hydrogen over the next 10 years. This includes $6.7 billion through the hydrogen production tax incentive and a further $1.3 billion to the Hydrogen Headstart program, which funds large-scale hydrogen projects.

Northern Australia can especially benefit from the clean energy transition generally, potentially including hydrogen. Its energy expertise, abundant opportunities for building solar farms, and port infrastructure make it uniquely suited to hydrogen production. Government support is also needed—and each jurisdiction in northern Australia has developed a hydrogen strategy and has committed resources to supporting projects.