The global hydrogen market is primed to grow significantly over the coming decade, as part of the transition to net-zero emissions. Both the Commonwealth and State governments have recognised the potential for Australia to capitalise on emerging opportunities in this new industry, particularly in the context of a green recovery from the economic challenges associated with the COVID-19 pandemic.

Much of the current focus centres on export opportunities associated with hydrogen, either in liquid form or as ammonia. As Australia’s Chief Scientist Dr Alan Finkel AO stated, ‘the potential to export clean hydrogen is substantial, with the World Energy Council identifying Australia as a potential hydrogen production powerhouse. We can become a leader in the industry I call 'shipping sunshine' (Australia’s National Hydrogen Strategy, 2019). There are also a range of domestic opportunities, including blending hydrogen with natural gas in existing domestic gas networks, and using hydrogen as a fuel for domestic power generation.

With clean hydrogen set to play a key role in the future of Australia’s energy industry, this article outlines the key government grants and initiatives that are currently available to developers and investors to support the development of clean hydrogen infrastructure and expertise for both domestic use and international export. The grants will largely cover green hydrogen as opposed to brown hydrogen (i.e. hydrogen derived from fossil fuels) or blue hydrogen (i.e. brown hydrogen coupled with carbon capture technology).

What grants are available?

Federal level

The Commonwealth Government is offering several grants to kick-start the renewable hydrogen industry. These are administered through two key entities: the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC). The following opportunities are currently available.

  • Advancing Renewables Program – ARENA’s Advancing Renewables Program offers grants between $100,000 and $50 million to support the development of renewable energy technologies including hydrogen, with the objective of increasing the supply and competitiveness of renewable energy in Australia.
  • Future Fuels Fund – ARENA’s Future Fuels Fund promotes co-investment in charging and refuelling infrastructure projects for future fuels, including hydrogen and biofuels. Applications open in February 2021.
  • RD & D – We anticipate future grants for institutions and companies conducting research, development and demonstration in relation to renewable hydrogen. The last major round of grants was announced in September 2018 when $22.1 million was awarded across 16 research projects to support innovation in exporting hydrogen. Recipients included research teams from several Australian universities and the CSIRO.
  • Clean Energy Innovation Fund – In 2016, the CEFC launched the $1 billion Clean Energy Innovation Fund, with $100 million available each year. This initiative targets innovative clean energy projects that use technologies including renewable hydrogen, which have passed the research and development stage but are not yet commercially viable. As of June 2020, the Fund has provided over $308 million to 14 companies.
  • Grid Reliability Fund – In October 2019, the Commonwealth Government announced that it would invest $1 billion in the Grid Reliability Fund to be administered by the CEFC, with the objective of supporting electricity generation, transmission and distribution infrastructure, as well as energy storage projects including those that employ renewable hydrogen technology.
  • Advancing Hydrogen Fund – In May 2020, the CEFC launched the $300 million Advancing Hydrogen Fund, which aims to support the growth of a clean, innovative and competitive Australian hydrogen industry. It provides debt and equity financing to large-scale commercial projects that require more than $10 million.

State level

Additionally, several State governments have launched initiatives to foster hydrogen development. The following opportunities are currently available.

  • NSW: $50 million of funding over ten years as part of the newly enacted Electricity Infrastructure Investment Act 2020 to develop the green hydrogen industry in NSW. Additionally, the NSW and Commonwealth Governments entered a Memorandum of Understanding in January 2020, setting out NSW’s Energy and Emissions Initiatives, which included a Hydrogen Technology Program to support the commercialisation of hydrogen technologies.
  • VIC: $108 million of funding for renewable energy and hydrogen projects, announced in November 2020 as part of the State Budget 2020–21.
  • QLD: $15 million for the Hydrogen Industry Development Fund to support hydrogen projects, plus a further $10 million to support hydrogen industry development activities, announced in 2019 as part of the Queensland Hydrogen Industry Strategy 2019–24.
  • SA: $75 million for the Renewable Technology Fund, launched in August 2017 to support energy storage projects including hydrogen storage, and a further $17 million as part of the South Australian Hydrogen Action Plan, announced in February 2018 to support renewable hydrogen projects.
  • WA: $10 million for the Renewable Hydrogen Fund, announced in July 2019 as part of the Western Australian Renewable Hydrogen Strategy.
  • TAS: $50 million for the Tasmanian Renewable Hydrogen Industry Development Funding Program, launched in May 2020 to activate renewable hydrogen industry development.
  • ACT: $1.1 million for the Renewable Energy Innovation Fund, announced in September 2020 to support innovation in hydrogen storage.

What next domestically?

The hydrogen industry domestically is still in its development phase with several current projects being commissioned to demonstrate the potential uses of hydrogen gas in the domestic market. We have listed below several projects that highlight the potential for growth in this industry:

  • Jemena – In NSW, Jemena’s $15 million Western Sydney Green Gas Project, co-funded by Jemena and ARENA, involves constructing a 500kW electrolyser to convert solar and wind power into hydrogen gas. If the 5-year trial to power 250 homes and Hydrogen Refuelling Stations for hydrogen vehicles is successful, the Power-to-Gas technology will be adopted more broadly across the NSW gas network.
  • H2U – In South Australia, H2U received $37 million from the South Australian Government as part of the State Budget 2020–21 to upgrade the Port Bonython jetty, with a view to building the world’s largest green ammonia plant by late 2022.
  • APA – In Queensland, APA Group’s $2.26 million Renewable Methane Demonstration Project involves building a renewable methane production plant which will utilise water and solar energy to produce hydrogen, which is then converted into methane using carbon dioxide extracted from air. It demonstrates the commercial viability and technical advantages of adopting an integrated system of renewable methane production and hydrogen electrolysis.
  • FMG – In Western Australia, Fortescue Metals Group recently received $2 million in funding from the Western Australian Government to facilitate the production of green hydrogen and develop refuelling facilities for its fleet of solar-powered hydrogen coaches, which it intends to use for worker transport at Fortescue’s iron ore mine in the Pilbara.
  • AGIG – In Victoria and South Australia, the Australian Gas Infrastructure Group received $1.28 million from ARENA to establish the Australian Hydrogen Centre, which will investigate the feasibility of blending 10% hydrogen into existing natural gas networks in South Australia and Victoria, with a view to increasing the percentage of hydrogen over time and eventually leading to the wholesale replacement of natural gas.
  • Origin Energy – In Tasmania, Origin Energy recently received $1.6 million from the Tasmanian Government in November 2020 to build an export-scale 500mW green hydrogen and ammonia plant with zero emissions in Bell Bay.

What next internationally?

Beyond its domestic potential, hydrogen is a promising export commodity. Australia enjoys a unique advantage when it comes to capturing the clean hydrogen export market, for two key reasons:

  • Australia has the capacity for abundant renewable energy generation; and
  • Australia’s proximity to high-demand economies such as Japan, South Korea, Singapore and China, provides ease of access to key opportunities in regional markets.

Japan and South Korea in particular are likely to become large-scale consumers, having expressed ambitions to become hydrogen-based societies and to achieve carbon neutrality by 2050. Australia has already entered arrangements with several countries, some of which we have outlined in previous alerts.


Japan depends on foreign countries for over 90% of its primary energy supply due to its limited natural resources. In December 2017, Japan’s Ministry of Economy, Trade and Industry published the Basic Hydrogen Strategy, which expressed Japan’s vision of realising a world-leading hydrogen-based society. Key priorities include ensuring energy security and reducing greenhouse gas emissions. Importantly, the strategy outlined Japan’s plan to develop international supply chains for liquefied hydrogen, which involves establishing joint projects with Australia to develop technologies for producing CO2-free hydrogen from brown coal.

As noted in an earlier KWM alert, Australia and Japan signed the Joint Statement on Cooperation on Hydrogen and Fuel Cells in January 2020, reflecting a shared ambition to develop hydrogen as a sustainable and affordable source of energy, potentially deploying Australian hydrogen in the Japanese energy market in the future.

South Korea

Similarly, South Korea has set ambitious targets for reducing its greenhouse gas emissions. In September 2019, Australia and South Korea signed a letter of intent in relation to the expansion of hydrogen cooperation and the development of a Hydrogen Action Plan in 2020.


In September 2020, Australia and Germany announced a partnership to investigate the feasibility of a hydrogen supply chain, and opened expressions of interest to involve Australian industry. This is part of Germany’s National Hydrogen Strategy, announced in June 2020 to import substantial quantities of hydrogen from partner countries.