Energy giant BP may spend more than $10bn on a string of local renewable and low carbon projects but says Australia must replicate clean energy incentives put in place by the Biden administration to ensure new industries like green hydrogen can develop.
The oil and gas giant in June made one of its biggest bets on producing green hydrogen after buying into Western Australia’s $US36bn ($52bn) Asian Renewable Energy Hub in the Pilbara with plans to become a major exporter of the alternative green fuel.
BP’s Australian president Frederic Baudry will on Friday deliver a speech saying the company’s Australian portfolio of low carbon investment projects had risen to the top three within BP globally with “tens of billions of dollars” of investment available if projects can be made economic.
The energy operator pointed to the $US437bn Inflation Reduction Act in the US, focusing on energy and climate change spending, as a visionary policy which should be considered in Australia.
The Biden economic stimulus plan “shows just how seriously the US is taking green hydrogen production. We must respond to the IRA as a country,” Mr Baudry will tell the Australian British Chamber of Commerce on Friday.
“The credit stacking outlined in the IRA would entice investors to the lowest cost of production on the planet. We also need to have competing policies on how we will address it and de-risk green hydrogen in Australia.
“Therefore, and this is an essential first ask, in order to ensure Australia captures hydrogen’s economic, environmental and energy security benefits, we need a supportive investment framework that will prevent capital leakage overseas, particularly to the US.”
It marks the latest warning for the Albanese government from a hydrogen player after Fortescue Future Industries chief financial officer Guy Debelle said on Thursday that Australia risked squandering a “huge opportunity” to become a green energy powerhouse if Canberra fell behind other nations in supporting the industry.
BP, which owns stakes in both the North West Shelf and Browse gas projects in Western Australia, wants to control 10 per cent of global hydrogen markets as part of its long-term goals.
“Our analysis also shows hydrogen could have an 8-15 per cent share in global primary energy consumption by 2050, the same role natural gas plays today, the same in Australia provided we build the infrastructure to bring it to customers,” Mr Baudry will say. “It’s hard to think now, that there was scepticism about the viability of a local LNG industry 30 years ago. But industry and government collaboration made it happen to the benefit of the Australian economy and trade balance.”
The 26 gigawatt Pilbara project – which equates to a third of all electricity generated in Australia – is one of the biggest hydrogen and renewable energy projects under planning in the world and the 6500 square kilometre site will cover an area 10 times the size of Singapore.
It plans to eventually produce 1.6m tonnes of green hydrogen annually or 9m tonnes of green ammonia, putting it on course to become one of the largest global developments of its kind.
Renewable energy produced by the solar and wind farms would power 14GW of electrolysers to convert desalinated seawater into green hydrogen, which would then be converted to ammonia for export to Australia’s major trading partners.
BP is also exploring a green hydrogen and ammonia project near Geraldton in Western Australia’s mid-west and a green hydrogen hub at Kwinana to meet domestic and export demand.
“If progressed, these projects, including Kwinana, would total more than 30 gigawatts of generation, almost half of the annual capacity of the national electricity market,” Mr Baudry will say.
Lightsource BP, the company’s renewable joint venture, is also aiming to double clean energy generation in Australia to 2GW by 2025, making it Australia’s largest solar developer and owner.
Extracted from The Australian