Australia commits US$283 mn investment into Orica’s green hydrogen project

Australia says it will invest US$283 million in a green hydrogen project led by Orica, the world’s largest explosives maker, against the backdrop of a wave of delays and cancelled projects across the country.

The funding will support the Hunter Valley Hydrogen Hub, which aims to decarbonise Orica’s nearby ammonia and explosives manufacturing operations and eventually supply the green fuel and green ammonia for export.

Climate Change and Energy Minister Chris Bowen said the funding for the project on the east coast helped secure Australia’s energy future, with the government seeing green hydrogen as key to its net-zero goals.

“By switching from gas to green hydrogen, the project will also significantly cut emissions from Orica’s ammonia production facility and help produce green ammonia for domestic use across mining, agriculture and manufacturing sectors,” Bowen said in a statement.

It is a boost for Australia’s struggling green hydrogen industry after a series of delays and exits cast doubt on its viability.

This news comes against the plans to build a A$12.5 billion CQ-H2 plant in the state of Queensland having collapsed after its lead developer, state-government owned energy company Stanwell, ended its involvement. It was one of the country’s largest and most advanced projects.

Orica’s Hunter Valley Hydrogen Hub, once a joint venture with Origin Energy, faced a major setback last year when the power producer exited, citing cost concerns and headwinds in the green hydrogen market.

Orica said the government support was “essential” to bridging the project’s “commercial gap”.

The explosives maker added that it had received strong interest from potential project partners in the past few months and would work towards a final investment decision “in due course”.

“We hope to further contribute to our domestic and international customers’ decarbonisation goals by offering low-carbon products, while supporting Orica’s next phase of decarbonisation,” CEO Sanjeev Gandhi said.