In May we published a Legal Update on the recent Australian federal election (here) and what a new Labor government may mean for the renewables industry in Australia. The note highlighted that no specific legislation was planned for hydrogen.
Australia’s states have been more active in trying to jump on the hydrogen bandwagon. This Legal Update provides a brief overview of the existing and planned legislation for hydrogen in Australia’s six states and two territories.
Australia does not have any federal laws in place that deal directly with hydrogen. There are existing funding mechanisms in place, as well as new announcements from the Labor government aimed at encouraging renewables development. The federal government has also taken the lead in trying to achieve harmonization across the states in the regulation of hydrogen. For example, Australia’s energy ministers (at federal and state level) recently agreed to amend the national gas regulatory framework to address biomethane and hydrogen and reconsider the definition of “natural gas” under the National Gas Law.
The federal government has also commenced trialling a Guarantee of Origin scheme that may eventually allow the certification of hydrogen exports as “green hydrogen”. This will be of particular importance to Japanese and Korean importers, where hydrogen is seen as part of their plans to be carbon neutral by 2030 and 2050, respectively.
New South Wales
The government released the NSW Hydrogen Strategy in October 2021. The government has pledged up to A$3 billion in support of green hydrogen. The government aims to create hydrogen hubs where there are geographical requirements for green hydrogen and, importantly, in coal-producing areas (such as the Hunter Valley and Illawarra) where “going green” is often seen as an attack on jobs and the local economy .
The government has also introduced the Energy Legislation Amendment Bill 2021, with a plan of allowing blending of up to 10 percent hydrogen and biomethane into natural gas pipelines by 2030. The law also amends the Electricity Supply Act 1995 and the Energy and Utilities Administration Act 1987 to allow specific exemptions for electricity used in the production of green hydrogen. Electricity used for green hydrogen production will also be exempt from the Climate Change Fund.
Western Australia’s economy is heavily tied to the energy and resources industry. It has a highly skilled workforce and solid export infrastructure, providing significant potential for the development of a green hydrogen market
In 2019, the government released its Renewable Hydrogen Strategy. As with other states, the paper was more aspirational than it was detailed. Key areas of consideration were replacing diesel with hydrogen in remotely located communities and industries, blending hydrogen into existing natural gas networks, mobility and leveraging existing infrastructure and skills to promote hydrogen export. The strategy has recently been updated (translations in Japanese (here) and Korean (here).
Western Australia is one of the few states implementing laws to encourage hydrogen development. The government recently announced the Land and Public Works Legislation Amendment Bill 2022which will amend the Land Administration Act 1997. This will allow for the introduction of “diversification leases”. While this is not as attention-grabbing as the announcement of a multi-million dollar fund, the actual impact of this bill could be significant. The introduction of a diversified lease could allow the development of renewables and hydrogen projects on crown land or pastoral leases. Presently, pastoral leases only allow the land to be used for pastoral purposes. The changes could free up significant areas of land for hydrogen and renewables development.
The government has also announced plans to introduce up to 10 percent renewable hydrogen into the gas network by 2030. The government had previously set a timetable of 2040 to achieve this.
South Australia is a leading state in terms of spending money on, and taking action to facilitate, hydrogen development. In February 2021, the government amended the Petroleum and Geothermal Regulations 2013 to make hydrogen, and its compounds and by-products, “regulated substances” under the Petroleum and Geothermal Energy Act 2000. This amendment allowed for the exploration and development of natural hydrogen under the state’s petroleum licensing regime.
The government has also announced an intention to introduce legislation that will expedite hydrogen development. The legislation will cover the licensing of green and blue hydrogen, with the intention that the law can be the focal point for hydrogen reduction. No details of the law have been provided. It is not clear when an exposure draft will be released for public comment.
As with other states, South Australia is promoting a number of active projects. Notably, the government has committed A$593 million over four years to create a hydrogen hub in Whyalla (an industrial port city, approximately 400km from South Australia’s capital, Adelaide).
Tasmania already produces approximately 90 percent of its electricity from hydropower. Tasmania exports electricity to the mainland during peak demand via the Basslink electricity interconnector. Tasmania has established the Tasmanian Renewable Hydrogen Industry Development Fund which will promote the trial of hydrogen fuel cell vehicles and provide loans to support hydrogen projects. There are no specific hydrogen laws in place.
The government has published the Victorian Renewable Hydrogen Industry Development Plan. Like other state governments, the Victorian government emphasizes the importance of hydrogen and renewables development. No specific legislation has been announced.
Queensland has been the focus of significant attention in the renewables and hydrogen space. Queensland’s existing gas and LNG infrastructure, strong resources industry, favorable solar climate, and proximity to Asian markets have made it a popular place for development, particularly with Korean and Japanese investors.
The government has not introduced any hydrogen specific legislation. The Hydrogen and Renewable Energy Jobs Fund has been formed to promote job-creation in the renewables and hydrogen industries. There is also focus on creating “hydrogen hubs”. The mining industry is a large employer in Queensland, so government policy may need to be more nuanced than in other states.
The Northern Territory released its Renewable Hydrogen Master Plan in October 2021. While the paper talks about the “extracting value”, “opportunities for downstream value-add” and plans to “drive economic growth” and “leverage the Territory’s unique value propositions”, no relevant legislation has been tabled for consideration. However, the Northern Territory’s close proximity to export markets, along with its renewables potential, makes it a jurisdiction to watch.
Australian Capital Territory (ACT)
Given its small geographical area, it is not surprising that there is no legislation in place for large-scale hydrogen development in the ACT. While most of the energy produced in the ACT comes from renewable sources (mainly solar), the ACT imports most of its electricity through the national electricity grid, via New South Wales. The ACT does have some incentives in place for renewables, including subsidies for electric vehicles.