Australia falling behind in global hydrogen race, says WoodMac

Despite its early leadership ambitions, Australia is falling behind in the global hydrogen economy, with 80% of its low-carbon hydrogen projects still in early development and multiple high-profile cancellations, according to new analysis from data and analytics solutions provider Wood Mackenzie (WoodMac).

In a report, ‘How can Australia compete in the global hydrogen market (before it’s too late)?,’ WoodMac highlighted that “while the country boasts world-class renewable energy potential and abundant land, it is struggling to convert those advantages into competitive hydrogen production.”

Joshua Ngu, Vice Chairman for Asia Pacific at WoodMac, stated: “Australia’s strategic proximity to Asian demand centres is a clear advantage. But this is offset by a significantly higher Levelized Cost of Hydrogen (LCOH), driven by elevated engineering, procurement and construction (EPC) and power costs. This leaves Australia trailing behind global hydrogen front-runners such as the Europe and the Middle East.”

Globally, 6 million tonnes per annum (mtpa) of low-carbon hydrogen capacity is either operational or under construction, and of that, Australia contributes less than 5%, WoodMac claimed, adding that the recent project cancellations have raised concerns about the future of this industry in the country.

The data and analytics solutions provider outlined five key areas where policy and market interventions could help reposition Australia in the global hydrogen market:

• Stimulating domestic demand – As per the report, Australia could draw inspiration from countries like Germany, Japan, and South Korea, which have introduced Contracts for Difference to stimulate domestic demand.
• Enhancing hydrogen production incentives – “While the government has introduced programs such as the Hydrogen Production Tax Incentive (HPTI) and the Hydrogen Headstart Programme, these initiatives need to be scaled up to compete with international offerings,” WoodMac stressed.
• Supporting blue hydrogen as a transition pathway – Ngu emphasized: “With vast gas reserves in Western Australia, Australia is well-positioned to produce blue hydrogen domestically. This approach could also accelerate the development of CCS infrastructure, essential for long-term decarbonisation and economic benefits.”
• Alignment with global certification standards – This reportedly includes standardizing safety standards, fuel quality and purity standards, and trade standards. Ngu explained: “Harmonising standards with key trading partners would unlock export potential. Aligning with international schemes such as Japan’s Green Hydrogen Certification Scheme would enhance Australia’s ability to compete in export markets.”
• Strengthening collaboration with global partners – WoodMac’s analysis highlighted the importance of collaboration between governments, developers, and international partners for the growth of Australia’s hydrogen industry.

Ngu concluded: “Unless Australia ramps up policy support and market development now, it may find itself locked out of the next wave of industrial transformation.”

To read more about hydrogen developments in Australia, click here.