Australia’s renewable energy ambitions are facing a “material threat” from the US Inflation Reduction Act (IRA), according to Guy Debelle, director of Fortescue Future Industries. Debelle warned that the act’s scale could draw investment dollars away from Australia and lure away potential export markets. This comes as the Australian government looks to establish a green hydrogen sector, with the potential to build more than 100 projects that could bring between AUD 230bn ($153bn) and AUD 300bn of investment. Debelle urged the Australian government to act quickly and expressed concerns that Australia risks being left behind in the race to grab a share of the global green hydrogen market.
Fortescue Future Industries Director Guy Debelle said that the sheer scale of the IRA threatens to overwhelm Australia’s renewable energy advantages, drawing investment dollars out of the country and locking up potential export markets.
Potential of Australia’s renewable energy advantages
Australia’s renewable energy advantages and history as a reliable exporter to nations such as Japan and South Korea position it well to take advantage of growing demand for green hydrogen. However, Debelle said that the breadth of the IRA threatens to snap up these markets. He said, “There’s a real risk that with the US getting their headstart on us through the Inflation Reduction Act, they are going to lock up a fair chunk of the Japanese and Korean markets. We have great potential here in Australia and a great comparative advantage but … if you throw upwards of a trillion dollars at something, that tends to buy a comparative advantage. I think it’s a really serious risk that by the time we get our act together, that market won’t be there for us.”
Australian renewable energy ambitions
The Australian government’s ambitions for a green hydrogen industry has been backed by Energy Minister Chris Bowen who described it as “the heart” of the country’s renewable energy plans. Australia’s pipeline of major green hydrogen projects totals over 100, representing close to 40% of all global clean hydrogen project announcements.
However, Debelle stated that these bottlenecks have to be addressed quickly or Australia risks getting left behind in green hydrogen. “The Inflation Reduction Act got legislated last August, the details are going to be put in place this August,” he said. “Once that’s there, then you’re going to see projects hitting the ground in the US pretty much straight away. Those projects are starting this year, not next year, this year. We need to start soon.”
Hydrogen Headstart program
Debelle praised the government’s budget announcement of the Hydrogen Headstart program as “a good start.” The program will provide revenue support for investment in renewable hydrogen production through competitive production contracts. The funding aims to “help bridge the commercial gap for early projects” and put the country on track to develop a gigawatt of electrolyzer capacity by 2030 via two to three “flagship projects.” These supported projects are expected to become operational by 2026-27.
Debelle urged that the Headstart program must be rolled out quickly and must be accompanied by a clear strategy, warning that Australia needs to act soon to avoid being left too far behind in the global energy race. “We can’t match the IRA across the board but I think a more targeted response to it… is achievable particularly if we think about it as an investment in the future,” Debelle said. “It’s not just money out the door, it’s investment.”
Original Story at www.pv-magazine.com – 2023-06-08 07:00:30
