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Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionFebruary2023每日免費獲取報告1、每日微信群內(nèi)分享7+最新重磅報告；2、每日分享當日華爾街日報、金融時報；3、每周分享經(jīng)濟學人4、行研報告均為公開版，權(quán)利歸原作者所有，起點財經(jīng)僅分發(fā)做內(nèi)部學習。掃一掃二維碼關(guān)注公號回復(fù)：研究報告加入“起點財經(jīng)”微信群。。Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage3ContentsExecutivesummary481.Hydrogen’sroleinAustralia’sfuture2.Australia’sroleintheglobalhydrogenmarket3.Australia’scompetitivenessisatrisk4.ElementsofthenecessarypolicyresponseAboutus182637474748AcknowledgementDisclaimerPage4Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage5ExecutivesummaryThetransitiontonetzeroisusheringinaneweconomicsofcomparativeadvantageandcleanmanufacturing–theenergy-industrialcomplexreignssupreme.HydrogenhasthepotentialtobeatippingpointforAustralianmanufacturingThisdecadematters–hydrogenproducersarelikelytodevelopsignificantandpersistentfirstmoveradvantagesandtheUSA,EuropeandGulfStateproducersareenteringintoabiddingwarformarketshareanddominanceAstheenergyfuelmixshifts,particularlytowardscleanelectrification,hydrogenemergesasasignificantnewcomponentofAustralia’senergyneeds.Thisisbecausehydrogenhasthepotentialtodecarbonise‘hard-to-abate’industries,suchasheavytransport,metalsrefiningandfertiliserproduction.Australia’scompetitivepositioninrenewablehydrogencouldtiptheplayingfieldbackinAustralia’sfavourasamanufacturingeconomybyloweringinputcostsandacceleratingagglomerationeffectsinindustrialclusters.FormuchofAustralia’spost-warindustrialhistory,tyrannyofdistance,thecostoflabourandoursmalldomesticmarkethaveworkedagainstourabilitytocompeteasaglobalindustrialpowerhouse.Butinthetransitiontoalowcarbonworld,accesstorenewableenergywillbecomeanincreasinglyimportantcostdriver.Marketsandfirmsthatdecarbonisetheirsupplychainsswiftlyandatlowcostwillrisetothetop.ThispromisesnewopportunitiesforAustralia,ifweactswiftlyenoughtoseizethemoment.Theeconomicraceisatransformationoftheentireproductionsystemofoureconomy–togenerateeconomicgrowthandjobsandincome,decoupledfromhighemissionsintensity.Thetransformationbeginswiththeenergywhichpowersoureconomy–namelyashifttowardsclean,renewableenergyasareliable,efficient,andeffectiveinputintoourproductionsystems.Itwilltriggerdevelopmentofanewenergy-industrialcomplex,whichwillbecomeadriverofinnovationandproductivitygrowth,adeterminantofpricelevels,andabarometerforeconomicresilience.Theaccelerationofinvestmentintorenewablepoweristhefirstenablerofthenewenergy-industrialcomplex.Theglobalhydrogenmarketisexpectedtodeliversignificantfirstmoveradvantagesandpositiveeconomicspillovereffectsdrivenbylong-termcontracts.Thisdynamicisexpectedtotriggeraracetoscaledproductionwhereinnovationdrivesproductiondownthecostcurve.Buttheeconomicandcommercialbenefitsofinnovationextendbeyondtechnologydevelopmentandmaybestickyandpersistentsupplycontractsarelikelytoaccruetotheearlymovers.Today,Australiastandsatacrossroads.WecouldbeontheedgeoftheprecipiceofavirtuouscyclewhereacceleratingdeploymentsofrenewableelectricityandrenewablehydrogenunlockcleanmanufacturingatscaleinregionalAustralia,acceleratingourtransition,distributingthebenefits,andincreasingnationaleconomiccomplexity.AdelayedstartduetolowcompetitivenesscouldleaveAustraliawithlimitedopportunitiesforthehydrogenvaluechain,asmallercleanenergymanufacturingbase,forgonelabourproductivitygains,andamountaintoclimbtobreakintoscaledhydrogenproductioninlateryears.Ourfutureisnotjustourstomake,butitisforotherstotake.Aseconomiesaroundtheworldembarkonthegreatesttransformationsincetheindustrialrevolution,ourdestinyisoneforustoforge,forthethingsthatwecando,withoneeyeonourglobalcompetitors.Inthecurrenttransformation,thecompetitivelandscapehasbeenradicallyalteredbythecomprehensivenessandaggressivenessoftheInflationReductionActof2022–onascaleandmagnitudewhichcannotbeignored.Yetcrossingthistippingpointisprovingchallengingandtheclockistickingbecauseemergingglobalcompetitorsaremovingquickly.Inturn,thiswouldslowthedecarbonisationofAustralia’sindustrialbase,inhibitmomentumforregionaleconomicdiversification,anddelaydevelopmentofanewtaxbase.Morethanthis,delayrisksforgoingopportunitiesforlowcostrenewablesandhydrogentocornerstonetherevivalofAustraliancleanmanufacturing.Page6Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage7ExecutivesummaryAggressiveindustrialpoliciesfromglobalcompetitorswillreduceAustralia’srenewablehydrogenproduction–wemustrespondWesuggestsixdesignprinciplesthatshouldshapearenewedAustralianindustrialpolicyincludingforrenewablehydrogen:SwiftpolicyactioncouldensureAustralia’sglobalcompetitivenessNewindustrialpolicysettingsmustdemonstratelong-termpublicvalueOuranalysissuggeststherearesubstantialPolicysettingsforhydrogenwillneedtostrikeaDespiteAustralia’scleanenergyambitions,therealityisourglobalcompetitivenessisdeclining.Inpartthisisdrivenbyhigherdomesticrenewableelectricitypricesthanincompetitormarkets,butitisalsodrivenbydecisivepolicyactioninthesemarketstoo.TheInflationReductionActisthemostvisibleexampleofthis,buttheEU,Canada,andanumberofGulfStateshavealsoembracedmarketintervention.1.Timebound;surgicalinterventionfocusedoncriticalelementsofthevaluechaindifferencesbetweenpolicytheleversthatAustraliabalancebetweencompetitiveness,communitycouldchoosetoincentivisehydrogenproduction.Productioncreditsemergeasmoreefficientatincentivisingadditionalhydrogenproductionthancapitalgrantsorinvestmenttaxcredits.expectations,andgeostrategicpowershifts.Wecannotdevelopahydrogenandclean2.Leveragethebenefitsofcompetitionandshapemarketsthatunambiguouslybenefitdomesticandexportobjectivesmanufacturingeconomyinthewayofpreviousresourcebooms.Thismeansacknowledgingthetrade-offsupfrontandtakinganapproachwhichbuildsoutplace-basedindustrialecosystemsandofferssupportacrossvaluechainstomaximisevalue-addedeconomicactivitywithinAustralia.Ouranalysisalsosuggeststhereisa3.Prioritiselong-termandsustainablevaluetodriveeconomicdevelopmentandprovideaneconomicandsocialdividendfrominterventionsGoldilockszoneforpolicyintervention–aroundaA$2/kghydrogenproductioncredit.ThisisaroundhalfthelevelofthemaximumcreditintheIRAforrenewablehydrogen,reflectingAustralia’sunderlyingcomparativeadvantagesandkeepinganeyeonfiscalobjectives.WeestimatethatifAustraliadoesnotrespondtotheInflationReductionAct,wecouldexport65%lesshydrogenp.a.by2050thanbeforetheIRA’sintroduction,withscaledproductiondelayeduntilafter2030.Thiscouldmeanthatrenewablehydrogenneverreachesacomparablescalewithourcurrentfossilfuelexports,withimplicationsforourbalanceoftradeandcleanmanufacturingaspirations.Thewindowtoactisclosingfast4.5.6.GovernmentinterventionneedstobesimpleandefficienttoimplementMuchlikecarbon,thereisatimevalueofindustrialpolicy.ThereisashortwindowforAustraliatoactandensureitscompetitivenessandlaythefoundationsforasignificantnewindustry.Thecompetitionwillcontinuetoincrease,butwithoutintervention,Australiarisksasmallerindustrythatdoesnotliveuptopublicpromises,failstodeliverforregionsintransition,andfailstooffsetdecliningfossilfuels.ThiswouldrequirepublicinvestmentofReinforcedynamicindustrialandserviceecosystemsA$15.5billionintoday’stermsoveradecade.Ifwegetitright,Australiawouldbeontracktoproducealmost16milliontonnesofrenewablehydrogenayearby2050,withexportsworthA$17.4billionayearintoday’sterms.Crucially,wewouldmatchthedeclineofourfossilfuelindustrieswiththegrowthofnewcleanindustries.Enableplace-basedjusttransitions.Industrypolicyischanging,andAustraliamustrespond.ThisdoesnotrequireAustraliatoblindlyfollowpolicysettingsinothercountries.Butitdoesrequirecarefulconsiderationofwhatitwouldtaketocompetewherewehaveexistingadvantages,andhowwecanachievethisatleastcosttooureconomy.Page8Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage91.Hydrogen’sroleinAustralia’sfutureTheeconomicsofcleanmanufacturingAsExhibit1shows,hydrogenwillbeakeypartofExhibit1:Australia’senergymixto20704Australia’scompetitivenessinthisneweconomicorder–makingup10-15%ofourenergymix.3FormuchofAustralia’spost-warindustrial100%ElectricityBio-energyHydrogenGashistory,ourtyrannyofdistance,labourcostsandeconomiesofscalehaveworkedagainstourabilitytocompeteasaglobalmanufacturingpowerhouse.1Inmorerecenttimes,Australianmanufacturinghasbeentiedtoenergyprices,whichhaveremainedhigherthancompetitors.2Asaconsequence,oureconomyhasgrownlesscomplex,lessresilient,andthecaseforrebuildingamanufacturingbasehasremainedanaspiration.Inthisnewworld,cleanenergyandmanufacturingvaluechainsareafundamentalofeconomicgrowth.806040200Theenergy-industrialcomplex(seeExhibit2)becomesadriverofinnovationandproductivitygrowth,adeterminantofpricelevels,andabarometerforeconomicresilience.Inthisfuture,speedandscaleofrenewableenergyandcleanmanufacturingdeploymentmatter,asfast-movingtechnologyfrontiersmakemarketssensitivetocompoundinginnovationandadvantagesarelikelytobesticky.OilandpetroleumproductsCoalThetransitiontonetzeroisalteringthestructureofnationaleconomies.Inatransitioningworld,manufacturingwillremaindrivenbyeconomiesofscale,butaccesstorenewableenergyandcleanfeedstockswillbecomeanincreasinglyimportantcostdriverandenablerofmarketaccess.20252035204020502070Exhibit2:Theenergy-industrialcomplexWithsignificantrenewableenergypotential,Australiahasclearcomparativeadvantagesinalowcarbonfuture.ThisisthelogicthatunderpinsaspirationsforAustraliatobecomearenewableenergysuperpowerbuildingourcapabilitiesingreenmetals,fertilisersandrenewableenergycomponentvaluechains.Resources?&??Critical?MineralsClean??ManufacturingRecycling,??End?of?Life,?&??RegenerationServices1McLean,Ian,(2012)‘WhyAustraliaProspered:TheShiftingSourcesofEconomicGrowth’2Deloitte(2022)‘BringingManufacturingHome:HowcompaniescansucceedontheglobalstagewithAustralianmanufacturing’</au/en/blog/consulting-blog/2022/bringing-manufacturing-home.html>Renewable??Energy?3Deloitte(2022)‘TheElectrificationofEverything’</au/en/pages/energy-and-resources/articles/energy-system-deep-dive.html>4IbidPage10Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage111.Hydrogen’sroleinAustralia’sfutureIfAustralia’senergy-industrialcomplexisRenewablehydrogenhasakeyroletoplayinAustralia’sdecarbonisationjourneyExhibit3:Usesofrenewablehydrogenaligned,acceleratingdeploymentofrenewablesandrenewablehydrogenwillputdownwardpressureoninputpricesandincreaseAustralia’smanufacturingcompetitivenessandattractiveness.Inturn,thissupportsinvestmentandjobcreationinAustralia’sindustrialregions.TimingCommentsHydrogenhasreceivedconsiderableinterestinrecentyears,asitsroleindecarbonisationhasbecomeclearer.Forecastsofhydrogen’srolevarywidely,withdifferentusecasesconsideredcommerciallyviable.Somestudiessuggesthydrogenislikelytobea500-600Mtp.a.marketSectorsRoleofCleanHydrogen2030+2040+SteelHHHHMMLReductionagentforDRIorBF-BOFandforhightemperaturesFeedstocktoproduceammoniaVoluntarydemand,butlongassetreplacementtimesEaseofassetreplacement,asH2isalreadyusedAmmoniaMethanolRefiningFeedstocktoproducemethanolFeedstockforhydro-crackingand–treatingFeedstockand/orfuelforsteamcrackingHowever,thisvirtuouscycleisnotpreordained.Complacencyandoverrelianceonourcomparativeby2050.5Othersaremorepessimistic,seeingOtherchemicalsCementDependingoneconomics(vse-cracking)BoosterfueltoincreasecalorificvalueUnfavourableshort-termeconomics(vsbiomassused)DependingoneconomicsadvantagescouldseeAustraliafailtotriggerthisvirtuouscycle.Thiscouldleavetheeconomywithhigherinputpricesthanwouldotherwisebethecaseandnarrowourpathwaytodevelopsignificantandgloballycompetitivecleanmanufacturingcapabilities.demandaroundhalftheselevelsbutmaynotreflectaParis-alignedpathway.6Ineitherscenario,hydrogenproductionwillgrowsubstantiallyfromthe95milliontonnesproducedtoday.Crucially,virtuallyallhydrogentodayisproducedfromfossilfuels.OtherindustryRoadfreightShippingMostcanbedirectlyelectrified/nicheapplicationsFuelinheavy-dutylong-haultransportHHHLVoluntarydemandandfavourableeconomicsLackoftechnologyalignmentandmaturityRegulatorypressure(EU)andnoassetchangesneededFuelininternationalshippingintheformofH2,ammoniaormethanolDirectuseorasfeedstocktoproduceSustainableAviationFuelElectrificationpossibleandmoreeconomicAviationCarsTrainsMLFueltoreplacedieselenginetrainsinlong-haultransportResidentialCommercialHeatingalternativeincaseofeconomiclimitationsofelectrification(e.g.highcosttoelectrifybuildingswithpoorinsulation)ExpectedtofirststartinareaswhereelectrificationisnoteconomicL?Thequestionishowfastwilltheexistingsupplyofhydrogenitselfdecarbonise,howquicklywillindustrialsectorsoftheeconomyturntorenewablehydrogentospeedtheiremissionsreduction;andhowquicklycannewrenewablehydrogensupplybebroughtonlineatscale?Demand,andtimingofdemandforrenewablehydrogen,willvarybyspecificenduse(Exhibit3).7RequiredwhenrenewablesreachhighshareinenergymixPowerMBalanceintermittencyfromrenewablesthroughstorage5SeeforexampleBloomberg‘NewEnergyOutlook2022’(2022)</new-energy-outlook/>.6SeeforexampleDNV‘HydrogenForecastto2050’(2022)</focus-areas/hydrogen/forecast-to-2050.html>7Deloitte“Hydrogen:MakingitHappen”(2023)</nl/nl/pages/energy-resources-industrials/articles/hydrogen-report.html>Page12Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage131.Hydrogen’sroleinAustralia’sfutureForAustralia,hydrogenwillplayanessentialroleindecarbonisinghard-to-abatesectorssuchaschemicalandfertiliserproduction,aluminarefining,steel,cementandheavytransport.Australia’shard-to-abatesectorsarethosewhereouremissionsarewhereouremissionsarehigh,andwherecarbon-linkedimportpoliciessuchasEurope’scarbonborderadjustmentmechanism(CBAM)willbegintobite,eitherdirectlyorthroughintermediaries,suchasSouthKoreanmanufacturerssellingintoEurope.TheeconomicsofrenewablehydrogenwillgetstrongerasregulatorsbegintofocusonParis-aligneddecarbonisationandasinstrumentssuchasCBAMsarecontemplatedandimplementedinmoremarkets.Earlydeploymentofcost-competitiverenewablehydrogenwouldacceleratedecarbonisationinAustralia.Forexample:Again,itisshapinguptobeaquestionoftiming.WhilemanyAustralianindustrialoperatorshavemadedecarbonisationcommitments,howtheywilldeliveremissionsreductionisstillbeingdetermined.Recentmarketdevelopmentssuggestthatintheshortterm,industrialplayersarelikelytopurchasecarbonoffsetsandcreditsratherthanchoosingtoswitchtorenewablehydrogen.8?SwitchingtogreenammoniainAustralia’sfertiliserproductionindustrywouldsave4.25MtCO2eeachyear.9??Switchingtorenewablehydrogencalcinationinaluminarefiningwouldsave3.5MtCO2ep.a.10Together,thiswouldaccountfor23.7%ofAustralia’semissionsfromindustrialprocessesandproductuse11ortheequivalentoftaking1.6millioncarsoffAustralia’sroadseachyear.12Thisisprincipallydrivenbytherelativelyhighcostsofrenewablehydrogenattoday’sprices–aspricesdecline,hydrogenwillbreakevenwithcarboncreditsandabsoluteemissionsreductionswillberealised.8DepartmentofClimateChange,Energy,Environment,andWater‘SafeguardMechanismReforms’(2023)9Assumes8.5kgCO2eperkghydrogen;5.4MtoffertiliserproducedinAustraliaeachyearbasedondatafromtheFertilizerAustralia10ARENA,‘ARoadmapforDecarbonisingAustralianAluminaRefining’(2022)<.au/knowledge-bank/a-roadmap-for-decarbonising-australian-alumina-refining/>11DepartmentofIndustry,Science,EnergyandResources(2022)‘NationalInventoryReport’<.au/sites/default/files/documents/national-inventory-report-2020-volume-1.pdf>12CalculatedusingtheUnitedStatesEnvironmentalProtectionAgencyGreenhouseGasEquivalenciesCalculator</energy/greenhouse-gas-equivalencies-calculator>Page14Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage151.Hydrogen’sroleinAustralia’sfutureRenewablehydrogencouldbecomeanenablerbeinsignificantdemand,including:aluminium,ofAustralia’scleanmanufacturingaspirationszinc,copper,nickel,manganese,titaniumandplatinumgroupmetals.17AnintegratedapproachtodevelopingdomesticcleanmanufacturingcapabilitieswouldthereforeconsiderhowtoleveragethisdemandwhichAustraliaisuniquelysuitedtomeet.Australiahaspubliclystatedambitionsto‘beacountrythatmakesthingsagain’13andtoinvestin‘greenmetals,steel,alumina,aluminium;cleanenergycomponentmanufacturing;hydrogenelectrolysersandfuelswitching’.14DeploymentofthescaleofrenewablesrequiredtobuildoutagloballysignificanthydrogenindustryoffersfourrelatedopportunitiesforAustraliatobuildeconomiccomplexityandmovedownvaluechainsfromourcurrentlyresourceintensivemodelto:Eachoftheseambitionsisgroundedinestablishedindustriesandcomparativeadvantages–ourexistingfootprintinminingandrefining,ourrapidlygrowingdemandforrenewablesandrenewablehydrogen.Butdeliveringagainsttheseambitionsisnon-trivialandrequiresdeliberateeffortsacrossvaluechainstosecureandlinkinputsandoutputsacrossstagesofproduction.1.LocaliseandcirculatethevalueofessentialandcriticalmineralsnecessarytobuildanddeployrenewablesandelectrolysersforhydrogenSeenfromthisperspective,renewablehydrogenoffersmorepotentialthanjustdecarbonisation.ItisakeyingredientforAustralia’scleanmanufacturingaspirations.152.3.Deploytherenewablesnecessarytoenablelarge-scaleandlow-carbonmetalsprocessinginAustralia,suchasgreenironandsteelRenewablehydrogenproducedviaelectrolysisrequiressignificantvolumesofrenewableenergytoproduce.Forexample,amilliontonnesofrenewablehydrogencouldrequireasmuchas27GWofcombinedsolarandwindgenerationcapacitytoproduceeachyear.16Thisdemandforlowcarbontechnologieswillbematerialsintensive–arecentstudyfromtheWorldBankandtheHydrogenCouncilsuggeststhatanumberofmineralsthatAustraliacurrentlyproduceswillLeveragelargeandgrowingdomesticdemandandpotentialsupplychainconstraintstomoveintosubcomponentmanufacturinginkeyrenewablesupplychains4.Combinescaledrenewablesandhydrogentoproducevalue-addedgreenmetalssuchasiron,steel,alumina,andaluminium.13HonEdHusicMP,MinisterforIndustryandScience,29November2022,‘NationalPressClubAddress’<.au/ministers/husic/speeches/national-press-club-address-building-economy-future>14HonEdHusicMP,MinisterforIndustryandScience,10October2022,‘AddresstotheAustralianSteelConvention’<.au/ministers/husic/speeches/address-australian-steel-convention>15RossGarnaut‘TheSuperpowerTransformation:MakingAustralia’sZeroCarbonFuture’(2022),LaTrobeUniversityPress16BasedonDeloittemodelling;notethatthisassumesnobatteryutilisationinrenewablehydrogenproduction17WorldBank‘Sufficiency,sustainabilityandcircularityofcriticalmaterialsforrenewablehydrogen’(2022)</en/topic/energy/publication/sufficiency-sustainability-and-circularity-of-critical-materials-for-clean-hydrogen>Page16Australia’shydrogentippingpoint:TheurgentcasetosupportrenewablehydrogenproductionPage171.Hydrogen’sroleinAustralia’sfutureCapturingtheseopportunitiesisfarfromeasy.Itwillrequirepolicymakersandindustryaliketoshiftawayfromconsiderationoflinearsupplychainstointegratedvaluechainsandproductionecosystems.18Together,theseeffortswillbuildoutAustralia’senergy-industrialcomplex.However,threequestionsremainunanswered:both10MWfacilitiesinWesternAustralia24–havebecauseofthephysicaldamagesofclimatechangeifnomeaningfulactionistaken,thusreducingeconomicactivitybyA$3.4trillionby2070.21reachedfinancialclose.Manyprojectsaretrappedinabankabilitygapbetweenofftakenegotiations,persistentlyhighelectricityprices,andconstrainedsupplychains.1.Whatistheappropriateformoftaxationforthehydrogeneconomy?TheReserveBankofAustraliahasmodelledtheimpactofanetzeroby2050scenarioonAustralianexportsofcoalandLNG,findingsignificantdeclinesby2030.22Thissuggeststhatthedeclineoffossilfuelintensiveexportswillbegintoerodeashareofthetaxbasewhilemarketpressuresonproducersexpeditetheirtransitionplansorconsignthemtostrandedassetstatus.2.Whatmagnitudeofcontributioncouldhydrogen,directlyandindirectly,maketogovernmentrevenues?Overthesameperiod,therestoftheworldhasquicklycaughtup–particularlyregionswithhighrenewablepotential.SignificantprojectsareThetimingofAustralia’sdevelopmentofrenewablehydrogenmatters3.Whenishydrogenrevenuelikelytobegintoentergovernmentcoffers?progressingintheUS25andtheGulfStates.26Theseregionsareseeinglargerprojectsreachingfinancialclose,significantpublicinvestments,andtheyaredrawingattentionandeffortfromprojectdevelopers.TheshifttonetzerohasmaterialimplicationsforregionalAustraliawherefossilfueldependentjobsareheavilyconcentrated.19Todate,transitionplansandannouncementsfortheseregionshaverelieduponforecastsofjobcreationfromcleanmanufacturingsectors.20Renewablehydrogenproductioniscentraltothesetransitionplans–bothasanenablerofindustrialdecarbonisationandafoundationforcleanmanufacturingdevelopment.AnnouncedprojectsareyettotranslateintoscaledproductionMeaningfulactiononclimatechangewillresultinagrowingnotslowingeconomy.Anexport-scalehydrogensectorprovidesanopportunitytoprovideanewtaxbaseandreplacethefossilfuelrevenuesthatwillerodeaspartoftheglobalenergytransition.ThreeyearsonfromthepublicationofAustralia’sNationalHydrogenStrategy,muchhaschanged.CSIRO’shydrogenprojecttrackerlists111prospectiveprojects,26ofwhichareexportscale.23debateaboutthesizeofthefutureindustry,YetdespitepublicfundingroundsfromARENAandseveralstategovernments,onlytwoprojects–ThispaperseekstoreenergisethedebateinAustraliaaboutrenewablehydrogen.Itdoessobyoutliningthecontoursofaninevitablepublicappropriatepolicysupportmeasures,andhowtheindustrycoulddeliverpublicvalueforAustralians.However,thisimpliesthatAustraliacanscalerenewablehydrogendevelopmenttocoincidewiththedeclineofexistingindustriessuchasthermalcoal.18Seeforexamplethefourfundamentalsfordevelopinginnovativeproductionecosystems–Breznitz,D.(2021)‘InnovationinRealPlaces:StrategiesforProsperityinanUnforgivingWorld’19Smith,W.Philips,T‘Who’sbuying?TheimpactofglobaldecarbonisationonAustralia’sregions’(2022)<.au/wp-content/uploads/2022/01/Whos-Buying-Report.pdf>ThesamechallengeswillbebornebyStateandFederalGovernmentswhorespectivelycollectfossilfuelroyaltiesandcompanytaxrevenues.ThissuggeststhatAustralia’smedium-tolong-termtermfiscaloutlookisalsolinkedtothissequencingchallenge.20SeeforexampleAustralianEnergyTransitionsInitiative‘Settingupindustrialregionsfornetzero’(2022)</wp-content/uploads/2022/06/Setting-up-industrial-regions-for-netzero-Australian-Industry-ETI-report-JUNE-2022.pdf>21BusinessCouncilofAustralia(2021)‘Achievinganetzeroeconomy’<.au/achieving_net_zero_with_more_jobs_and_stronger_regions>22ReserveBankofAustralia,‘TowardsNetZero:ImplicationsforAustraliaofEnergyPoliciesinEastAsia(September2021)<.au/publications/bulletin/2021/sep/towards-netzero-implications-for-australia-of-energy-policies-in-east-asia.html>23CSIRO,‘HydrogenMap’,November2022.24ARENA‘Australia’sfirstlargescalehydrogenplanttobebuiltinPilbara’,16September2022andReneweconomy‘Firstsolarhydrogenprojectstrikesofftakedeal,tonearlydoublesolarfarm’2February2023.Forexample,previousmodellingsuggeststhatAustralia’seconomywillsufferoverthelongrun25SeeforexampleTrammo‘’TrammoandReMoEnergysignMoU–Developmentofalow-carbonNH3&exclusiveofftakeofgreenNH3’(17October2022)</post/trammo-and-remo-energy-sign-mou-development-of-a-low-carbon-nh3-exclusive-offtake-of-green-nh3>26SeeforexampleHydrogenInsight,3October2022,‘Greenhydrogen’snewhotspot?’</production/green-hydrogens-new-hotspot-developers-pledge-42bn-spend-on-flood-of-egyptian-projects/2-1-1325823>Page18Australia’sh