Australian Federal Government to Back $2 Billion Green Hydrogen Hunter Project

The Albanese government has announced federal support for Orica’s Hunter Valley Hydrogen Hub under its $2 billion Hydrogen Headstart program, marking a key step in transitioning Australian industry away from fossil fuels.

The project, located at Kooragang Island in Newcastle’s industrial zone, will install a 50-megawatt electrolyser powered by renewable energy.

Once operational, it is expected to produce around 4,700 tonnes of green hydrogen each year, which will be used to reduce gas reliance in Orica’s ammonia and explosives manufacturing processes.

The government said the project will help ensure the long-term viability of local manufacturing while maintaining jobs in the Hunter region.

The hydrogen produced will displace gas traditionally used in ammonia production, with the aim of lowering emissions and enhancing energy resilience for industry.

Funding for the project will be released in stages, contingent on the company meeting agreed milestones. The Australian Renewable Energy Agency (ARENA) will oversee the delivery of the funding agreement.

The Orica hub is the second and final project selected under the first round of the Hydrogen Headstart program. In April, the government awarded $814 million to the Murchison Green Hydrogen Project in Western Australia, led by the Danish group Copenhagen Infrastructure Partners.

The Hydrogen Headstart program is intended to bridge the cost gap between the cost of producing renewable hydrogen and fossil fuel alternatives, supporting early-stage investment to scale the domestic industry.

“This investment shows we can secure existing industries such as ammonia and fertiliser production by transforming how they’re powered—creating new clean-tech jobs and future-proofing the Hunter’s economic base,” said Climate Change and Energy Minister Chris Bowen on July 4.

The government’s latest play comes after the Queensland LNP refused to back the massive CQ-H2 project in Gladstone with the project eventually collapsing earlier this week after state company Stanwell pulled out.

“Hydrogen is just too hard at the moment. Until the prices come down, I don’t think we’ll see those projects taking off the ground,” conceded former Labor Premier Annastacia Palaszczuk.

Gas Review Follows Supply Concerns

The announcement comes just one week after the federal government launched a review of Australia’s domestic gas market, following warnings of looming shortfalls in southern states from late 2025.

The Australian Competition and Consumer Commission (ACCC) cautioned that if Queensland LNG producers export all uncontracted gas, states such as Victoria, South Australia, and Tasmania could face critical shortages.

The review, led by Minister Bowen, will examine the effectiveness of existing regulatory tools, including the Australian Domestic Gas Security Mechanism (ADGSM), the Gas Market Code, and the Heads of Agreement with major exporters.

Bowen reiterated that while ensuring local supply remains a priority, Australia will not breach existing export contracts, warning such a move would damage the country’s international credibility.

“One thing we won’t contemplate is ripping up existing contracts, creating sovereign risk … we won’t be doing that,” he told reporters in Canberra outside Parliament House.