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10/13/2021 | News release | Distributed by Public on 10/12/2021 21:19

Australia’s NSW unveils hydrogen production hub plan

Australia's New South Wales (NSW) state plans to be a significant producer of hydrogen for domestic use and export, through a A$3bn ($2.2bn) state-funded investment plan for the expansion of renewable energy to produce hydrogen rather than for alternative methods of producing hydrogen from coal or gas.

The NSW state government plans to create hydrogen production hubs in traditional coal producing regions of the Hunter Valley, which is the country's largest thermal coal producing and exporting area, and the Illawarra region which produces metallurgical coal, as well as build hydrogen hubs around planned renewable energy zones (REZ) in regional NSW.

"We want to be a significant hydrogen producer, not just in Australia but around the world," NSW premier Dominic Perrottet told reporters at a news conference today.

The NSW hydrogen plan follows the announcement last month that the state will deepen its greenhouse gas (GHG) emissions reduction by 50pc by 2030 from 2005 levels compared with its previous plan of a 35pc cut.

The hydrogen plan will also signal a significant shift in energy production and use, as coal-fired plants produced almost 70pc of the state's electricity in the 12 months to 17 October according to the Open NEM website. Renewables accounted for 21pc of NSW electricity supply over the same period, electricity imported from neighbouring states made up a further 7.8pc of NSW power supply and the remainder came from gas.

"Hydrogen is going to be the fuel that powers the low carbon economy. The A$3bn investment will be focused on the Hunter and the Illawarra, which futureproofs those regions," NSW treasurer and energy minister Matt Kean said at the press conference. The treasurer hopes that the government funding will stimulate private investment of between A$80bn-270bn in hydrogen related businesses by 2050.

The focus on the coal region address once of the coal industry's concerns about the energy transition. Both regions are connected to ports as well as hosts to significant power transmission infrastructure. Australia is the world's second largest thermal coal exporter, with most of these shipments from NSW. Australia is also the world's largest metallurgical coal exporter with mines in the Bowen basin region of Queensland producing the majority of the country's hard coking coal.

"The size of the hydrogen industry here in NSW will be as big by 2050 as the coal industry is now," Kean said. The NSW government hydrogen strategy announcement was also accompanied by mining entrepreneur Andrew Forrest, chairman and the largest shareholder in Australia's third biggest iron ore exporter Fortescue Metals Group.

"There will be no bigger industry than green hydrogen, green ammonia and green electricity. It will be bigger than iron ore, it will dwarf the scale of coal in our country, and to capture it here in NSW reflects that we have plenty of solar and wind resources to produce hydrogen," Forrest told reporters.

"The fossil fuel sector has had a magnificent day. The fossil fuel sector will still play an important role in years to come," he said.

NSW already has plans to expand its renewable energy supply through at least five REZs in regional areas of the state and has only released plans for two of those REZs, which will host a combined 11,000MW of installed capacity.

NSW is the latest Australian jurisdiction to unveil hydrogen plans. Fortescue Future Industries, the sustainable energy arm of Fortescue Metals, plans to build a 2,000 MW/yr hydrogen electrolyser production plant at Gladstone in Queensland, which would be the largest plant of its kind in Australia.

The Queensland state government has established a A$2bn fund to finance renewable energy and hydrogen projects in the state.

Last week, Australia's Northern Territory government released plans for an export-oriented hydrogen production hub fuelled by solar photovoltaic (PV) and battery storage.

The Australian government has already nominated the Hunter valley region as one of six national hydrogen hubs.

The NSW hydrogen plan is also an update on the state's energy plan released in November when it targeted the construction of 12,000MW of new renewable energy capacity by 2030, with most of this from wind and solar PV sources and a further 2,000MT of power storage.

By Kevin Morrison