As of 2024, Australia stands out as a leader in the international landscape for hydrogen production, with ambitions to be a significant force in global hydrogen by 2030, both for export and the decarbonisation of domestic industries.
According to the study, this presents a major opportunity for international companies to export their products and services to the Australian market, and UK businesses are apparently in a prime position to capitalise on this.
To improve understanding of the synergies between the two countries, the UK Government commissioned Xodus to undertake a high-level overview of existing domestic capabilities in Australia that support the low carbon hydrogen sector.
As part of this supply chain readiness assessment, Xodus explored potential gaps where UK supply chain companies could provide support, and any barriers which could slow the roll out or impede participation from overseas.
While the study found that the hydrogen sector in both countries is in its formative stages, UK companies are at the forefront of research and the development technology.
Accordingly, if Australia is to fully realise its hydrogen potential, collaboration between the UK government, its supply chain, and Australian counterparts is essential to provide the capacity and skills needed to realise its significant hydrogen export ambitions, as well as serving its domestic needs, the study states. Moreover, by working together, both nations can drive innovation, investment, and sustainable growth in the hydrogen sector.
“Delivering a global energy transition that is both effective and prosperous, requires collaboration at all levels of the industry, from supply chain to government” said Simon Allison, Vice President APAC at Xodus. “Our Australian Hydrogen Market study reinforces the wider benefits that can be realised through joined up thinking and by sharing expertise across borders. Australia is emerging as a key force in the global hydrogen market, holding the world’s second-largest production capacity in active development. With numerous potential projects and growth opportunities, the country is set for significant expansion beyond 2030, with an expected annual market revenue of $24 billion (£13 billion). Clearly hydrogen is a massive growth opportunity for Australia, but it will not be able to fully grasp this potential without input from overseas and there is a real opening for UK companies to leverage their strength and capture a share of this market.”
Despite the gaps in Australia’s hydrogen supply chain, it is not a given that UK companies will be able to capture the work, with Xodus highlighting four major barriers to entry.
Among the most significant for UK developers detailed in the study are the current regulatory and policy uncertainty, specifically a lack of a clear position on the minimum requirement for renewable energy to support hydrogen production and the certification process.
Other barriers include revenue certainty due to limited Australian production-based subsidies, the absence of a meaningful carbon policy that establishes a higher tax on emissions, and the domestic fiscal regime.
Australia’s geographical distance, lack of existing infrastructure, extreme weather conditions, and unique environmental conditions were also flagged by Xodus as potential hurdles.
“Challenges are part and parcel of the energy industry, but companies should bear in mind what can be gained by overcoming them” added Mark Elliot, Commercial Lead for Hydrogen at Xodus. “Australia presents substantial opportunities for UK companies prepared to invest time in understanding the regulatory landscape and strategically positioning themselves to enter the market. The UK hydrogen industry is highly developed, with UK companies leading in hydrogen technology research and development. This expertise positions UK firms advantageously to export their products and services to expanding hydrogen markets.”
Based on desktop analysis of existing suppliers and opportunities in Australia, Xodus delivered a Red, Amber, Green (RAG) assessment to quantify and highlight the opportunities for UK businesses.
As a result, four main prospects in Australia for UK companies were identified: hydrogen electrolysis manufacturing, hydrogen fuelled gas turbines, hydrogen fuel cells and transportation.
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