Former Reserve Bank of Australia deputy governor Guy Debelle has warned that the US Inflationary Reduction Act (IRA) poses a “material threat” to Australia’s efforts to become a green hydrogen superpower.
Fortescue Future Industries (FFI) director Guy Debelle said the sheer scale of the IRA threatened to drown Australia’s renewable energy interests, draw investment dollars from the country and close off potential export markets.
Debelle, formerly FFI’s chief financial officer and now head of green energy at mining giant Fortescue, said Australia was well positioned to capitalize on growing demand for zero-emissions fuel. However, it must act quickly or risk being left behind in the race to gain a share of the global green hydrogen market, he added.
Debelle said Australia’s renewable energy advantages make it an ideal place to produce green hydrogen. He also stressed that Australia has a long history of being a reliable energy exporter to Japan and South Korea, but said the IRA’s enormity threatened to topple those markets.
“I think it’s a material threat to us in this export market,” Debelle said. “There’s a real risk that when the US gets the upper hand on us through the Deinflation Act, they’re going to lock up quite a bit of the Japanese and Korean markets. We’ve got great opportunities here in Australia and we’ve got a great comparative advantage, but … if you spend a trillion dollars on something, it produces a relative advantage. I think there’s a really serious risk that when we get our act together, the market won’t be available to us.”
The Australian government has been outspoken in its push to establish a green hydrogen sector, with Energy Minister Chris Bowen describing it as the “heart” of the government’s vision of the country as a renewable energy superpower.
Bowen’s ideal is supported by the federal Department of Climate Change, Energy, Environment and Water, which in its latest annual “State of Hydrogen” report says Australia has the foundations to become a global leader in green hydrogen.
Australia’s announced pipeline of major green hydrogen projects totals more than 100 projects with an estimated potential investment value of AUD$230 billion ($153 billion) to AUD$300 billion. This is nearly 40 percent of all clean hydrogen project announcements worldwide.
However, the department warns that most of the announcements in preparation here have yet to make final investment decisions. It noted that Australia already lags behind other key global players in the number of major projects that have moved from planning to implementation. Debelle said these bottlenecks must be addressed quickly or Australia risks falling behind on green hydrogen.
“The Inflation Reduction Act was enacted last August, the details will be introduced in August,” he said. “Once it’s there, you’ll see projects starting in the US almost immediately. These projects are happening and they will start this year, not next year, this year. We have to start soon.”
Debelle said the federal government’s budget announcement of a program to scale development is a “good start” but said it needs to be launched quickly and accompanied by a clear strategy to have any chance of success.
“This is where we have to realize that we started a long way behind,” he said. “We need to be careful not to take too long to follow through on announcements. The sooner we see the details of the Headstart program and move forward with them, the better.
The Hydrogen Headstart program offers income support for investments in renewable hydrogen production with competitive production contracts. The federal government said the funding would help close the commercial gap for early projects and put the country on track to develop a gigawatt of electrolyser capacity by 2030 with two or three “flagship projects”. Supported projects are expected to start in 2026-27.
“We can’t compare the IRA across the board, but I think a more targeted response to it … is achievable especially if we think of it as an investment for the future,” Debelle said. “It’s not just money out the door, it’s an investment.”