'Massive incentive' to replace diesel with hydrogen

A budget tax break will help hydrogen cars run at a price equivalent to or probably less than diesel (Jennifer Dudley Nicholson/AAP PHOTOS)

Future drivers and industries could use certified green hydrogen at a pump price the same or less than diesel after production subsidies kick in, a renewable hydrogen developer says.

The new tax break in the 2024/25 federal budget was a "massive incentive" for companies and governments to embrace zero-emission hydrogen as a replacement fuel for diesel, according to the founder of Countrywide Hydrogen Geoff Drucker.

Almost $7 billion over a decade has been allocated for the production tax credit of $2 per kilogram, starting from 2027/28.

The federal budget also fast-tracked a proof of origin scheme that will force producers to show whether the hydrogen supply is green - using electrolysers and renewable energy for production - and not made from gas.

“The Hydrogen Production Tax Incentive will help deliver certified green hydrogen at a price equivalent to or probably less than diesel," Mr Drucker, executive director at ASX-listed ReNu Energy, said.

Countrywide Hydrogen MD Geoff Drucker
Geoff Drucker says the budget offers a big incentive for firms to embrace zero-emission hydrogen.

With projects near Hobart and at Launceston, and a third being considered at Burnie, the projects could create a hydrogen refuelling network across Tasmania for road transport.

But critical for the success of these projects is the delivered cost of hydrogen, because it will compete with traditional fossil fuels.

Professor Tim Harcourt, chief economist at the UTS Institute for Public Policy and Governance, said the investment in green hydrogen "could really impact Australia’s future as an energy exporter as well as meeting our energy needs at home."

Australian Hydrogen Council head Dr Fiona Simon said the support would also spark new high-value exports in green steel, green iron and green ammonia.

The $2 billion extension of the Hydrogen Headstart program was critical for early mover hydrogen projects and the $6.7 billion Hydrogen Production Tax Incentive would support others reach financial investment decisions, she said.

Queensland-based Sunshine Hydro chairman Michael Myer said the value of the production incentive for Australia's entire clean hydrogen industry was "enormous" - for the domestic and export markets.

"For example, our Djandori and Dumaresq Superhybrids will be producing close to 100,000 kgs per day of green hydrogen by 2030," he said.

According to Fortescue's executive chairman Andrew Forrest, the tax break could "trigger full employment and decades of income growth for Australian workers".

"It will also lower the cost of energy for every single Australian by making green hydrogen competitive with fossil fuels, spurring massive renewable energy projects in sparsely populated regions where employment is needed most," Dr Forrest said.

"Fortescue believes that commercial production of green iron in Australia is now possible and must be pursued," he said.

License this article

What is AAPNews?

For the first time, Australian Associated Press is delivering news straight to the consumer.

No ads. No spin. News straight-up.

Not only do you get to enjoy high-quality news delivered straight to your desktop or device, you do so in the knowledge you are supporting media diversity in Australia.

AAP Is Australia’s only independent newswire service, free from political and commercial influence, producing fact-based public interest journalism across a range of topics including politics, courts, sport, finance and entertainment.

What is AAPNews?
The Morning Wire

Wake up to AAPNews’ morning news bulletin delivered straight to your inbox or mobile device, bringing you up to speed with all that has happened overnight at home and abroad, as well as setting you up what the day has in store.

AAPNews Morning Wire
AAPNews Breaking News
Breaking News

Be the first to know when major breaking news happens.


Notifications will be sent to your device whenever a big story breaks, ensuring you are never in the dark when the talking points happen.

Focused Content

Enjoy the best of AAP’s specialised Topics in Focus. AAP has reporters dedicated to bringing you hard news and feature content across a range of specialised topics including Environment, Agriculture, Future Economies, Arts and Refugee Issues.

AAPNews Focussed Content
Subscription Plans

Choose the plan that best fits your needs. AAPNews offers two basic subscriptions, all billed monthly.

Once you sign up, you will have seven days to test out the service before being billed.

AAPNews Full Access Plan
Full Access
AU$10
  • Enjoy all that AAPNews has to offer
  • Access to breaking news notifications and bulletins
  • Includes access to all AAPNews’ specialised topics
Join Now
AAPNews Student Access Plan
Student Access
AU$5
  • Gain access via a verified student email account
  • Enjoy all the benefits of the ‘Full Access’ plan at a reduced rate
  • Subscription renews each month
Join Now
AAPNews Annual Access Plan
Annual Access
AU$99
  • All the benefits of the 'Full Access' subscription at a discounted rate
  • Subscription automatically renews after 12 months
Join Now

AAPNews also offers enterprise deals for businesses so you can provide an AAPNews account for your team, organisation or customers. Click here to contact AAP to sign-up your business today.

SEVEN DAYS FREE
Download the app
Download AAPNews on the App StoreDownload AAPNews on the Google Play Store