NSW to spend $100 million in grants for green hydrogen, as Minns unveils designs for ‘Centre of Excellence’

Green hydrogen’s chief backer Andrew Forrest has dropped his ambitious production targets. Meanwhile, NSW will shell out $100m in grants propping up ‘hydrogen hubs’ which won’t produce anything for another two years.

NSW taxpayers will fork out more than $100 million propping up green hydrogen projects which will not produce anything for another two years.

The state government is pushing ahead with its reliance on green hydrogen even as the industry’s chief backer – Fortescue chairman Andrew Twiggy Forrest – dropped ambitious targets to produce the clean fuel source.

Under a grant process started by former Treasurer and Energy Minister Matt Kean, $109.3 million in taxpayers’ money was promised to three companies to support “hydrogen hubs” in NSW.

BOC Limited received $28.5 million for the “Illawarra hydrogen technology hub, Hiringa Sundown Project Co. got $38.5 million for “Good Earth Green Hydrogen and Ammonia,” and Origin Future Fuels got $45 million for a hydrogen hub in the Hunter Valley. Together, the projects aim to deliver about 6800 tonnes of green hydrogen every year.

Origin confirmed the money has not yet been spent. Hiringa said their project was still in the engineering and design phase, and has engaged a number of contractors in Sydney and Moree.

Chris Minns, Premier of New South Wales, member for Riverstone Warren Kirby, Steve Whan, Minister for Skills, TAFE and Tertiary Education and Penny Sharpe, Minister for Energy make an announcement in Sydney. Picture: NewsWire / Gaye Gerard

But it will still take years before anything is produced: the taxpayer-backed projects are not expected to start generating green hydrogen until the end of 2026.

Energy Minister Penny Sharpe said hydrogen is an important way of reducing emissions in “hard to abate” sectors.

“Our hydrogen plan is in the implementation phase and we will continue to deliver it,” she said.

Energy Minister Penny Sharpe said hydrogen as important part of the future fuel mix. Picture: NewsWire / Gaye Gerard

The grant money was provided to help build “the foundational infrastructure” for a local industry.

The state government is standing behind green hydrogen even as the technology comes under increased scrutiny from experts.

Energy commentator and The Baseload Podcast host Ben Beattie said green hydrogen is “not feasible at all”.

Andrew Twiggy Forrest last week jettisoned green hydrogen production targets. Picture: NCA Newswire

He disagreed with taxpayer grants going towards clean hydrogen facilities which he said would be more expensive than other baseload power options, like nuclear.

Independent MP Rod Roberts said he was concerned that taxpayer’s money had been spent on an unproven technology.

“My concern is how much money are we dripping into this and is there ever going to be any hydrogen produced at all,” he said.

However, Grattan Institute Energy Program Director Tony Wood said there was an argument for supporting the industry in the early stages, like providing “training wheels on kids pushbikes”.

SMr Minns has argued the biggest threat to renewable transition is if we face blackouts along the way. Picture: NewsWire / Gaye Gerard

If the projects fail to meet their production targets, taxpayers will get at least some of the money back, thanks to “clawback” provisions in the grants. It is understood 95 per cent of the funding is dependent on the projects reaching "financial close”.

Meanwhile, Premier Chris Minns on Tuesday unveiled its designs for a $25 million Hydrogen Centre of Excellence, which will aim to educate plumbers on how to work with the fuel source. 

Mr Minns said the centre is designed to teach plumbers how to use hydrogen and biogas related equipment, including fuel cell and electrolyser technology, with the intention of properly fitting homes for hydrogen use.

The announcement comes at a tumultuous time for the green hydrogen industry.

Mr Forrest’s Fortescue last week announced it would put on hold its ambitious goal to produce 1.5 million tonnes of renewable hydrogen each year, by 2030, as part of a wider restructure costing 700 jobs.