Australia's biggest green hydrogen project just imploded - so Labor is betting $430million of YOUR money to roll the dice on another one
The Commonwealth financial support for the Hunter Valley facility will allow it to make the switch from hydrogen made with gas, a fossil fuel, to renewable energy.
Funding of $432million for the Orica facility was allocated under the federal government's Hydrogen Headstart program, which provides credits for the manufacture of the clean fuel.
The $2billion grant program, delivered by the Australian Renewable Energy Agency, aims to build scale across green hydrogen production and so drive down costs over time.
The Albanese government wants Australia to become a global leader in green hydrogen to power heavy industry and long-haul trucks, and to produce green metals such as iron - key to meeting global emissions targets and tackling climate change.
But the fledgling sector has struggled to find its feet.
The biggest proposal in the nation, Gladstone's $14billion Central Queensland Hydrogen Project (CQ-H2), was officially scrapped last week after private companies backed away and the state government then withdrew its support.
Federal Energy Minister Chris Bowen acknowledged the headwinds faced by the renewable hydrogen industry but said his government was rising to the challenge.
Federal Energy Minister Chris Bowen announced an Orica facility near Newcastle will get $430million in taxpayer funding and that it will be difficult for the government to pull off
'It's in the hard basket, not the too hard basket,' he told reporters on Friday.
The failed Gladstone project was a disappointment, Mr Bowen said, pointing a finger at the Queensland government rather than private sector investors.
The CQ-H2 project was the largest hydrogen development by electrolyser capacity in Australia that was in the front-end engineering phase.
It was partially funded with $20million from the federal government and another $15million from the Queensland state government.
The Queensland government-owned Stanwell Corporation withdrew from the project after the Japanese companies Kansai Electric Power and Iwatani pulled out.
Queensland Treasurer David Janetzki described the Gladstone project as 'speculative in nature' and said he 'didn't want to see the precious taxpayer dollar tipped into it'.
The federal incentives for the Hunter Valley project will go towards a 50MW electrolyser powered by renewable energy on the Kooragang Island site, capable of producing about 4700 tonnes of green hydrogen each year to support regional jobs in low-carbon industries.
Hydrogen is used to make ammonia, important in fertiliser production, so the shift to a clean fuel will allow Orica to cut emissions from its ammonia facilities.
It will also open the region to opportunities to export clean hydrogen and ammonia.
Clean Energy Council general manager of advocacy and investment Anna Freeman applauded the government's commitment to getting 'complex and challenging' renewable hydrogen projects off the ground.
'We urgently need to drive down the cost of this renewable fuel to support Australia's decarbonisation plans,' Ms Freeman said.
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