How can Australia compete in the global hydrogen market (before it’s too late)?
Joshua Ngu A * and Flor De La Cruz AA
Joshua Ngu serves as Vice Chairman of Asia–Pacific at Wood Mackenzie, advising clients across upstream, gas, LNG, downstream, petrochemicals and energy transition sectors since 2012. His cross-sectoral experience enables a holistic approach to energy transition, including CCUS, hydrogen and carbon offsets. Joshua regularly engages with C-suite executives and government representatives to discuss market trends and industry challenges. He is a frequent speaker at regional conferences and part of Wood Mackenzie’s thought leadership executive, leveraging extensive data and insights to explore complex energy topics. Previously, Joshua worked in corporate finance at a global bank, advising on M&A and capital raising in the natural resources sector. He holds a Master of Engineering Management from the University of Applied Sciences Mannheim and a Bachelor of Mechatronic Engineering from the University of Applied Sciences Aalen. |
Flor De La Cruz is the lead APAC hydrogen consultant for Wood Mackenzie. She works on modelling hydrogen markets, tracking deployments, policy, investments, technology trends and analysing the adoption of hydrogen in industrial processes, including ammonia, methanol, heating, blending, midstream logistics and the power sector. Before joining Wood Mackenzie, Flor led the innovation team at IDOM, working on developing low-carbon and circular economy projects for green/blue hydrogen, advanced biofuels, hydrotreated vegetable oils, plastic recycling and carbon capture. Flor holds a Bachelor’s degree in Chemical Engineering from the Massachusetts Institute of Technology (MIT). While at MIT, she worked as a researcher at the Metabolic Engineering Laboratory on a project for Novogy Inc (now Total) to investigate yeast’s ability to convert low-cost feedstocks into lipids to produce inexpensive biodiesel. |
Abstract
Australia led the charge in low-carbon hydrogen (H2) developments, announcing several giga-scale projects between 2020 and 2021, leveraging its world-class renewable resources and land availability. However, recent years have seen significant setbacks, with several high-profile projects cancelled, raising concerns about the future of the industry. Today, Australia’s progress appears to have stalled, with 80% of projects still in early development. The cancellation of the H2Tas 200 ktpa project in Tasmania, alongside Woodside’s acquisition of OCI’s clean ammonia project in Texas, highlights the competitiveness challenges faced by Australian projects. International projects, including those in the US, India and Egypt, have gained traction, supported by low-cost renewable energy and significant government subsidies. The US, for instance, offers a production tax credit of up to US$3/kg H2, making it one of the most competitive suppliers globally. Recently, the Australian Hydrogen Production Tax Incentive (HPTI), which provides a AU$2/kg H2 tax credit, was introduced. Wood Mackenzie estimates that the tax incentive will reduce Australia’s levelised cost of hydrogen, but is it sufficient? What else does Australia need to consider for its projects to be competitive? This paper discusses the state of hydrogen developments globally, comparing it against the progress made in Australia so far. We study the cost competitiveness of Australian projects compared to international projects and consider policy changes that could make Australian projects more bankable. Key focus areas include incentivising domestic demand for hydrogen, enhancing production incentives, advocating for blue hydrogen, aligning with global standards and strengthening collaboration with global partners.
Keywords: Australia, blue hydrogen, global hydrogen developments, green hydrogen, hydrogen competitiveness, hydrogen export, hydrogen market, Hydrogen Production Tax Incentive (HPTI), hydrogen standards, levelised cost of hydrogen (LCOH), low-carbon hydrogen, policy changes.
Joshua Ngu serves as Vice Chairman of Asia–Pacific at Wood Mackenzie, advising clients across upstream, gas, LNG, downstream, petrochemicals and energy transition sectors since 2012. His cross-sectoral experience enables a holistic approach to energy transition, including CCUS, hydrogen and carbon offsets. Joshua regularly engages with C-suite executives and government representatives to discuss market trends and industry challenges. He is a frequent speaker at regional conferences and part of Wood Mackenzie’s thought leadership executive, leveraging extensive data and insights to explore complex energy topics. Previously, Joshua worked in corporate finance at a global bank, advising on M&A and capital raising in the natural resources sector. He holds a Master of Engineering Management from the University of Applied Sciences Mannheim and a Bachelor of Mechatronic Engineering from the University of Applied Sciences Aalen. |
Flor De La Cruz is the lead APAC hydrogen consultant for Wood Mackenzie. She works on modelling hydrogen markets, tracking deployments, policy, investments, technology trends and analysing the adoption of hydrogen in industrial processes, including ammonia, methanol, heating, blending, midstream logistics and the power sector. Before joining Wood Mackenzie, Flor led the innovation team at IDOM, working on developing low-carbon and circular economy projects for green/blue hydrogen, advanced biofuels, hydrotreated vegetable oils, plastic recycling and carbon capture. Flor holds a Bachelor’s degree in Chemical Engineering from the Massachusetts Institute of Technology (MIT). While at MIT, she worked as a researcher at the Metabolic Engineering Laboratory on a project for Novogy Inc (now Total) to investigate yeast’s ability to convert low-cost feedstocks into lipids to produce inexpensive biodiesel. |
