With the goal of fast becoming a world leader in the production and export of hydrogen as a viable energy source for business and industry, Australian governments are faced with the question of whether existing planning frameworks will facilitate the quick uptake of hydrogen projects, or whether streamlined planning pathways are required to optimise development opportunities.
This article looks at current strategies for locating hydrogen facilities, considers planning and regulatory challenges presented in establishing hydrogen projects, and explores the options being pursued by state and territory governments to facilitate the quick uptake of hydrogen projects via existing and modified planning frameworks.
The Australian Government’s current strategy for locating hydrogen facilities is to co-locate ‘hydrogen hubs’ at existing industrial sites. The National Hydrogen Strategy identified this as an effective means to build scale and reduce production costs by co-locating producers, exporters and users.
The Australian Government has since invested circa $464 million of its $1.2 billion commitment towards building a hydrogen industry in the Clean Hydrogen Industrial Hubs Program. The Program encouraged applications from across Australia (with applications closing on 22 November 2021), but identified seven priority regional sites based on strong interest from industry and each location’s existing capabilities, infrastructure and resources:
- Bell Bay (Tasmania);
- Darwin (NT);
- Eyre Peninsula (South Australia);
- Gladstone (Queensland);
- Latrobe Valley (Victoria);
- Hunter Valley (NSW); and
- Pilbara (WA).
State and territory governments have also identified opportunity sites for hydrogen developments.
A key action of the NSW Hydrogen Strategy is the development of hydrogen hubs, initially in the Illawarra and Hunter regions. NSW has committed at least $70 million to its own hydrogen hub initiative, which focuses on scaling up hydrogen production for multiple end uses, particularly heavy transport and industrial sectors, as well as gas blending, export and electricity.
The NSW Government is offering incentives though the National Electricity Market (NEM) in the form of discounted transmission use of system charges for projects located connecting parts of the NEM that have spare capacity.
The Victorian Government has partnered with National Energy Resources Australia to co-fund hydrogen technology clusters in Gippsland, Greater Geelong, the Mallee and Clayton, Melbourne.
The Queensland Government has committed to establishing three Queensland Renewable Energy Zones (QREZs) – the Northern, Central and Southern zones – being areas with access to high quality renewable resources like wind and solar, that can be developed in a coordinated way.
Other states have committed to the incorporation of hydrogen in future infrastructure planning. The WA Government is also developing hydrogen hubs in the Mid West and Pilbara regions, including a $47.5 million commitment to upgrade infrastructure in the Oakajee Strategic Industrial area in the Mid West.
There is still much work being done around feasibility and identification of opportunity sites. The Australian Government, in collaboration with state and territory governments, is leading a National Hydrogen Infrastructure Assessment due for completion in 2022. This assessment will consider the infrastructure needs, availability and gaps in hydrogen supply chains across Australia, and will be an essential step in developing hydrogen hubs.
Geoscience Australia and Monash University have developed ‘AusH2 – Australia’s Hydrogen Opportunities Tool’ to help policymakers and investors make feasibility decisions regarding opportunity sites for new infrastructure and hubs.
Regulatory, land use and planning considerations
There has already been much investment in the hydrogen sector on the part of both private industry and government. According to the Australian Government’s State of Hydrogen 2021 report, private sector investment in hydrogen projects now exceeds $1.6 billion, while public sector investment reached $1.27 billion in June 2021.
This has led to the establishment of several existing pilot projects, with many larger projects at the feasibility stage. However, there are a number of regulatory challenges to be addressed before hydrogen production can reach target scales. These challenges include (among others):
- Product regulation, including the regulation of blended hydrogen;
- Streamlining planning pathways for new facilities and infrastructure;
- Developing building codes and safety standards; and
- Other site-specific challenges, such as water security and tenure.
Hydrogen regulation under existing natural gas laws
In parallel with the investment in hydrogen hubs, the Commonwealth, state and territory Energy Ministers agreed on 20 August 2021 that the national gas regulatory framework should be amended to bring hydrogen, bio-methane and other renewable gas blends within its scope.
This will include amendments to the National Gas Law and the National Energy Retail Law and their subordinate instruments. The Australian Energy Market Commission (AEMC), the Australian Energy Market Operator (AEMO) and other agencies have been tasked with progressing different aspects of these reforms on an expedited basis, and a draft legislative package is expected by mid-2022.
At state level, some jurisdictions are already taking steps to incorporate hydrogen into the existing gas framework. This will likely have implications for project facilitation options.
In NSW, the Energy Legislation Amendment Act 2021 (NSW) (which has yet to commence) will amend the Gas Supply Act 1996 definitions to enable renewable gases and hydrogen-natural gas blends to be regulated as natural gas.
In South Australia, the Petroleum and Geothermal Energy (Energy Resources) Bill 2021 proposes to expand the Petroleum and Geothermal Energy Act 2000 (SA) to include the generation of hydrogen from means not already permissible under the existing Act, such as electrolysis of water.
The proposed amendments intend to provide all hydrogen generation sectors the same leading practice regulatory and one-window to government regime as is currently provided to the oil and gas industries under the Act.
Trials are underway for the blending of hydrogen gas into existing gas networks, including a review of the regulatory framework around acceptable percentages for blending. Updates are likely to be required to existing regulations and standards, such as the standard for ‘general purpose natural gas’ used in appliances, equipment and vehicles (AS/NZ 4564), which currently allows up to 10% hydrogen in the gas stream.
Streamlined planning pathways for hydrogen?
While existing, overarching planning frameworks are generally robust enough to accommodate new industries, it is likely that amendments to planning instruments will be required to facilitate hydrogen developments. For example, the ACT Government’s review of its planning legislation identified that existing land use definitions of ‘liquid fuel depots’ and ‘power generation stations’ do not currently permit the production, storage, generation or refuelling of hydrogen, and minor developments such as hydrogen refuelling points are not currently exempt from development approval.
The Queensland Government has published a guidance note for local councils around plan drafting for hydrogen developments. The guidelines state that local government should consider how the strategic outcomes of the relevant planning scheme support the development of hydrogen, including by identifying hub locations where possible.
While incorporating hydrogen developments into the land use planning framework will involve amending instruments at the local level, there will be a role for state governments to coordinate overarching legislative changes designed to effect a quick roll out.
But perhaps the more immediate question is whether any state or territory governments are proposing to introduce streamlined planning pathways, beyond existing major project facilitation options, to specifically facilitate the expedition of hydrogen projects in line with the Australian Government’s ambitions for the hydrogen sector.
At this stage, no commitments appear to have been made to introduce legislation to specifically fast-track planning approvals for hydrogen. However, most state and territory governments are still at the early stages of undertaking more comprehensive reviews of their legislative frameworks, and in the meantime, efforts are being made at least to ensure that current planning regimes do not present a roadblock for hydrogen uptake.
The WA Government is reviewing existing legislation, regulations, and standards affecting the hydrogen industry in Western Australia to reduce barriers for this emerging industry. Although this review is not due to be completed until 2030, in the interim three green hydrogen and ammonia projects (being HyEnergy, Murchison Hydrogen Renewables and Western Green Energy Hub projects) have been awarded ‘Lead Agency Status’. This means that the Department of Jobs, Tourism, Science and Innovation will coordinate and assist with approvals processes, including by case-managing applications and facilitating the provision of advice from regulators to proponents on statutory and other requirements.
New South Wales
The NSW Government is seeking to incorporate hydrogen production and distribution within the planning frameworks for emerging Special Activation Precincts (SAPs), which are primarily industrial, freight and logistics precincts based in regional centres.
Within the SAPs, the NSW Government is in the process of establishing fast-track complying development pathways for certain types of lower-impact industrial facilities, but it is unclear at this stage whether this will include hydrogen. Certainly the Master Plan for the Wagga Wagga SAP envisages that hydrogen will be included within the streamlined planning pathways for the SAP but the accompanying Delivery Plan, which will specify this detail, has yet to be released. The Parkes SAP is being developed with the potential to add hydrogen production and distribution into the gas network.
One of the objectives of the SAP-specific ‘Regional Enterprise Zone’ is to ‘encourage the development of industry leading renewable energy generation and resource and waste management’.
In South Australia, existing major project pathways for obtaining development approval under the Planning, Development and Infrastructure Act 2016 (SA) are utilised for renewable energy projects, including hydrogen. The SA Government has committed to incorporating hydrogen into long-term infrastructure planning via Infrastructure SA’s Capital Intentions Statement – a five-year rolling annual plan that will identify specific major projects to be undertaken as a priority.
The Queensland Government has released a Technical Discussion Paper on QREZs and is seeking stakeholder feedback. The Paper details the preferred model for the design and access of QREZs, how to prioritise specific renewable resources for certain regions, and processes for connecting generators to the network. It also includes a new Ministerial power to declare renewable energy zones and associated infrastructure.
Under its Victorian Renewable Hydrogen Industry Development Plan, the Victorian Government emphasises the importance of state-wide planning for hydrogen to optimise land use and infrastructure developments. The Government has committed to establishing Renewable Energy Zones and working with local councils on planning and zoning. However, at this stage, no specific commitments have been made in terms of fast-tracked planning pathways.
The NT Government released a Renewable Hydrogen Masterplan in October 2021, which includes actions for identifying strategic locations and planning for Renewable Hydrogen Zones, as well as reviewing planning approval processes for hydrogen-related projects.
Under the Tasmanian Renewable Hydrogen Action Plan, the Tasmanian Government has set out its vision of becoming a world leader in large-scale renewable hydrogen production. By leveraging Tasmania’s abundant renewable energy and water resources, Hydro Tasmania has indicated that the cost of Tasmanian renewable hydrogen production could be 10 to 15 per cent lower than mainland Australia.
To support the development of hydrogen and other projects, the Tasmanian Government recently passed the Land Use Planning and Approvals Amendment (Major Projects) Bill 2020 (Tas). The Bill will repeal the previous ‘Projects of Regional Significance’ process in the Land Use Planning and Approvals Act 1993 (Tas), and introduce a new single assessment process for major projects.
Legal frameworks for the regulation of hydrogen, particularly including blending and distribution, and building codes and safety standards, are still under development. As these are further refined, planning facilitation needs to support the development of hydrogen projects will become clearer.
Hydrogen-specific, fast-tracked planning pathways are not currently available or proposed, meaning projects are likely to be assessed under the usual planning pathways for major projects more generally at the state and local level.
While existing mechanisms within those regimes are being deployed to support the hydrogen sector, the strong emphasis on developing ‘clean’ hydrogen for both domestic use and export will increasingly draw into focus whether hydrogen specific legislative change is necessary to further facilitate planning approvals for such projects.
 According to the Australian Government’s State of Hydrogen 2021 report, private sector investment in hydrogen projects now exceeds $1.6 billion, while public sector investment reached $1.27 billion in June 2021. Project announcements indicate the scale of hydrogen production in Australia could reach over 100MW by 2025. Clean hydrogen costs are expected to decline to between $2 and $4 by 2030.
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