Chris Bowen commits $432m for Orica’s hydrogen hub

Chris Bowen has committed $432m to chemicals giant Orica for a green hydrogen hub in the Hunter Valley, doubling down on the emerging technology despite a wave of abandoned projects across Australia.

Energy Minister Chris Bowen. Picture: Mark Stewart / NewsWire

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Energy Minister Chris Bowen has pledged $432m to revive a green hydrogen project in the Hunter Valley, sticking by the nascent energy source despite waning investor confidence and a series of abandoned hydrogen projects across Australia.

Visiting Orica’s ammonia production facilities near Newcastle on Friday, Mr Bowen said the chemicals giant would receive the funding for its planned Hydrogen Hub at the site, supporting future manufacturing and reducing the company’s reliance on gas.

The hub was initially a joint venture between Orica and Origin Energy, however the latter withdrew from the project in October 2024, citing challenges in the early-stage development of low-carbon hydrogen.

Origin chief executive Frank Calabria said at the time: “It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome.”

But Mr Bowen on Friday backed the venture as a means to secure “long-term, high-quality jobs”, arguing that the emerging fuel source would be key to decarbonising hard-to-abate, emission-intensive industry.

“This investment shows we can secure existing industries such as ammonia and fertiliser production by transforming how they’re powered – creating new clean-tech jobs and future-proofing the Hunter’s economic base,” he said.

The $432m spend marks the second major project to receive funding via Labor’s much-vaunted Hydrogen Headstart program after a planned green hydrogen project in Murchison, Western Australia, secured $814m this year.

Administered by ARENA, the Headstart program provides credits to bridge the gap between the cost of producing hydrogen and its market price, with a further $2bn to be made available in a second funding round this year.

In recent years, as countries and companies pledged to cut emissions, investors were encouraged to back low-carbon hydrogen as a potential replacement for oil and gas.

Enthusiasm has since waned, with private investors, and governments in Australia and elsewhere, beginning to shy away from backing the fossil fuel alternative.

The Australian reported on Monday that the nation’s largest hydrogen project – a $12.5bn plant and pipeline planned for Gladstone – had been terminated, joining more than 50 domestic hydrogen ventures that have either stalled or been abandoned, according to the CSIRO.

Among the projects classified by the agency as “archived” – meaning either scrapped, on hold due to market conditions, or stalled in feasibility – is a $4.5bn large-scale hydrogen export project planned for the Tiwi Islands.

Provaris Energy, the company leading the project, has said it will hold off on further progress until it secures land rights and sees stronger demand for hydrogen from customers in Southeast Asia.

Another major green hydrogen project in the Northern Territory – Aqua Aerem’s Desert Bloom venture, which aimed to produce 410,000 tonnes of hydrogen annually at an estimated cost of $US10.8bn ($16.4bn) – has also been shelved, according to the CSIRO.

While acknowledging there were challenges in the emerging sector, Mr Bowen on Monday said green hydrogen “remains very important for the decarbonisation journey”.

“I’ve seen no other option to decarbonising heavy industry and moving away from gas than green hydrogen,” he said, arguing Australia had the capacity to develop a substantial export industry for the fuel.