What's happening in North Shore?

Speech to CEDA (Committee for Economic Development Australia) Developing Hydrogen in NSW

Published on 30 June 2022

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I begin by acknowledging the Gadigal people of the Eora Nation, the traditional owners of this land, and pay my respects to their Elders, past, present and emerging.

For more than 60 years, CEDA has delivered leading thinking, informed discussion and rigorous research to influence good public policy for Australia's economic and social development.

Nowhere is informed discussion and rigorous research more important than in relation to developing the New South Wales hydrogen industry.

Because Hydrogen is moving rapidly from an economic opportunity to a market where major energy producers and users are writing the rules of the road and settling the contracts that will govern this trade.

In fact, Australia has partnerships on foot with Germany, Singapore, Japan, the United Kingdom, the Republic of Korea and India to help drive the hydrogen economy.

All of this is happening in the shadow of a global energy shock caused by Russia’s aggression in Ukraine.

The war in Ukraine is raising the premium on hydrogen, because it is clean, flexible, storable and safe, and can be sourced from strategically stable countries like Australia.

In the face of this global premium - and recognising the reality that this will be a global market, with global interests, right from the start, it’s absolutely vital that New South Wales takes a strategic and focused approach on developing the hydrogen industry in our state.

What distinguishes the New South Wales approach is that our hydrogen strategy is integrated with New South Wales Electricity Infrastructure Roadmap.

The Roadmap is our 20 year plan to deliver the generation, storage, firming and transmission infrastructure we need as we navigate the fastest change to our electricity system in over thirty years.

It is driving private investment to meet our goal of creating at least 12 gigawatts of renewable energy generation and two gigawatts of long duration storage by 2030.

It will help replace the generation capacity produced by the State’s existing fleet of coal fired generation plants, of which four out of five are forecast to close in the next 10 to 15 years.

Renewable energy zones are central to the creation of the contemporary energy grid our climate deserves and our economy needs.

And they are central to the effective, efficient and affordable generation of hydrogen.

Hydrogen will be a driver of deep decarbonisation for our state and an export opportunity.

The New South Wales Hydrogen Strategy aims to more than halve the cost of production of green hydrogen in our state.

Our Strategy is unique compared to other state jurisdictions and aims to lead the nation. For instance, our renewable fuel scheme has legislated a minimum requirement of at least 67,000 tonnes by 2030. We are the first and only state to provide such incentives, making New South Wales the most competitive state for industry to invest in hydrogen production.

This Strategy will provide up to $3 billion in support for the hydrogen industry by waiving government charges on green hydrogen production, providing a 90% exemption to network charges for electrolysers that connect to parts of the electricity network with spare capacity, investing up to $150 million in hydrogen hubs in the Illawarra and Hunter, incentivising demand for green hydrogen and rolling out hydrogen refuelling stations.

Hydrogen hubs are a critical element of the strategy, and the core of our competitive advantage.

They will combine demand from both existing and emerging hydrogen users, and use the existing energy infrastructure and inherent advantages we have in the Hunter and Illawarra.

Both the Hunter-Central Coast and Illawarra have had strong investor interest in developing renewable energy and storage projects.

In February this year, the Government received registrations of interest from 87 renewable generation and storage projects representing over $100 billion of potential investment in the Hunter-Central Coast Renewable Energy Zone.

This includes 24 solar energy projects, 13 onshore and 7 offshore wind energy projects, 35 large-scale batteries and eight pumped hydro projects.

And we are seeing early signs of similarly strong investor interest in the Illawarra Renewable Energy Zone, whose registration of interest project will close on 22 July 2022.

When you put a renewable energy zone and a hydrogen hub together you are creating an unbeatable competitive proposition by providing a cheap, reliable supply of clean, green energy.

We recently sought expressions of interest for participation in the hubs.

Ten projects have been shortlisted from the expression of interest round, with projects proposed in the Hunter, Illawarra and regional NSW.

Among the shortlist are industry leaders that have proposed a wide range of end uses for green hydrogen.

The NSW Government has expanded the grant funding available from $70 million to up to $150 million from the New Low Carbon Infrastructure Foundation Fund.

This additional funding is in response to the huge commercial interest, signalled by industry, to rapidly decarbonise hard to abate sectors and strengthen NSW’s position to become a hydrogen superpower.

It is a clear trend.

Every time we go to market, the response is positive.

New South Wales is now the go-to state for energy investment.

On top of this, the Hunter and Illawarra regions already have the skilled workforces that the hydrogen industry will need.

And the value of this competitive advantage is enhanced by the skill shortages we see around the economy.

Most importantly, both these regions already produce and use hydrogen at large scale.

And they have heavy manufacturing bases, access to electricity networks, gas infrastructure and existing export facilities.

Scaling up green hydrogen will also help to make the economic case for green steel and green ammonia from the Hunter and Illawarra to a range of global markets.

Making hydrogen and exporting it is one thing, but we also have to put it to productive use here.

Heavy transport is one of the toughest nuts to crack in terms of decarbonisation.

Transport is also the fastest growing sector for emissions so it’s critical for the climate that we change its emissions pathway.

Establishing a hydrogen refuelling network for heavy transport on Australia’s busiest road freight routes is the key to decarbonising heavy transport.

That is why I describe the signing of the Memorandum of Understanding for refuelling corridors between New South Wales, Victoria and Queensland as truly national reform.

New South Wales played a key role in the negotiation of this agreement, which will start with the Hume Highway, the Pacific Highway and the Newell.

Victoria and New South Wales will each provide $10 million dollars to build at least four renewable hydrogen refuelling stations between Sydney and Melbourne. 

The funding will also provide grants for the country’s first long-haul hydrogen fuel cell electric freight trucks.

The NSW energy sector was one of the big winners in the 2022-2023 Budget, with more than $2.4 billion in funding.

The funding will continue the NSW Government’s plan to transform our electricity system into one that is cheap, clean and continues to be reliable.

Global demand for sustainable energy is growing, and hydrogen is one element of our plan to take advantage of our state’s abundant renewable energy resources, grow the economy and reduce power prices.

It will enable the heavy transport we depend on to move our produce, goods and services around the state, and it will enable New South Wales to continue as the manufacturing powerhouse of the Federation.

To fulfil this promise, we will continue to invest appropriately, plan strategically and work energetically with local governments, with the other states and territories and with the federal government, to make sure that this industry delivers for the climate, the economy and the people of New South Wales.