Australian Government-owned green bank, Clean Energy Finance Corporation (CEFC), has welcomed the launch of the $300 million Advancing Hydrogen Fund.
The Australian Government Clean Energy Finance Corporation Investment Mandate Direction 2020 directs the CEFC to make available up to $300 million in CEFC finance to support the growth of a clean, innovative, safe and competitive Australian hydrogen industry.
An early priority will see the CEFC seek to invest in projects included in the ARENA Renewable Hydrogen Deployment Funding Round.
The ARENA Round is a $70 million grant program aiming to demonstrate the technical and commercial viability of hydrogen production at a large-scale using electrolysis.
“Hydrogen has the potential to make a substantial contribution to our clean energy transition, reducing emissions across the economy while underpinning the development of an important domestic and export industry," said CEFC CEO, Ian Learmonth.
“Renewable hydrogen can enable the deep decarbonisation of notoriously difficult-to-abate sectors, particularly in transport and manufacturing, while accelerating the contribution of renewable energy across the economy.
“CEFC finance remains central to filling market gaps, whether driven by technology, development or commercial challenges. We are confident we can use our capital to help build investor confidence in the emerging hydrogen sector, which is an exciting extension of our investment focus," he said.
The CEFC Advancing Hydrogen Fund will draw on existing CEFC finance. In line with the CEFC Act, projects seeking CEFC finance through the Advancing Hydrogen Fund are required to be commercial, draw on renewable energy, energy efficiency and/or low emissions technologies and contribute to emissions reduction.
Through the Advancing Hydrogen Fund, the CEFC expects to provide either debt or equity finance to eligible larger-scale commercial and industrial projects, typically requiring $10 million or more of CEFC capital. CEFC investments typically include co-financiers and/or equity partners where possible.
Hydrogen is currently used mainly for ammonia production in Australia, accounting for approximately 70 per cent of total hydrogen use nationally. The current ammonia production process is a material carbon emitter, accounting for almost one per cent of total Australian greenhouse gas emissions.
“Accelerating the transition to green ammonia, produced using renewable energy, represents a sizeable abatement opportunity for Australia, with the potential to position Australia as a leading global producer and exporter of green ammonia," said Learmonth.
“Hydrogen is an extremely versatile energy carrier which is gaining significant support worldwide as the fuel of the future.
“We see green hydrogen as offering the most credible pathway to decarbonisation for high emitting sectors and those which lack scaleable electrification options. Together, these sectors are responsible for driving some 30 per cent of Australia’s greenhouse gas emissions," he said.
In considering investment proposals for the Advancing Hydrogen Fund, the Mandate directs the CEFC to prioritise projects that promote the objectives of the National Hydrogen Strategy and that focus on one or more of the following: advancing hydrogen production projects; developing export and domestic hydrogen supply chains, including hydrogen export industry infrastructure; establishing hydrogen hubs; and other projects that assist in building domestic demand for hydrogen.
CEFC finance for the hydrogen sector has the potential to deliver significant benefits:
The ARENA Renewable Hydrogen Deployment Funding Round is receiving expressions of interest for projects which: demonstrate electrolysis and associated renewable hydrogen technologies at scale; facilitate a pathway to technical and commercial viability of renewable hydrogen in Australia and provide price discovery and transparency in relation to the current and projected economics for renewable hydrogen technologies.
ARENA and the CEFC have previously worked together to accelerate clean energy developments, including through the successful large-scale solar funding program. The program delivered grant and/or debt finance to 12 developments contributing to large-scale solar becoming cost competitive with wind energy and cheaper than new build coal and gas.
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