A ‘Renewable Hydrogen Target’ in WA
The WA Government has released a consultation paper Renewable Hydrogen Target for Electricity Generation in the SWIS (Paper) [1] in relation to a proposed ‘Renewable Hydrogen Target’ scheme (the Scheme).
Scheme is a component of WA’s hydrogen policy framework
The Paper sets out:
- a proposed framework for the Scheme – that a fixed proportion of electricity delivered in the SWIS will need to be generated using renewable hydrogen; and
- options for designing the Scheme.
The Scheme, which is similar to NSW’s ‘Renewable Fuel Scheme’, [2] is the latest in a series of steps taken by the WA Government under the WA Renewable Hydrogen Roadmap (2020) in its pursuit of the WA Renewable Hydrogen Strategy (2019, updated 2021).
Scheme encourages supply by stimulating demand
The Scheme seeks to create a domestic renewable hydrogen market by stimulating demand. Local production of low-cost renewable hydrogen is consistent with the WA Government’s longer term objective—for WA to become ‘a significant producer, exporter and user of renewable hydrogen’. [3]
The Scheme is potentially far-reaching. The Paper proposes all electricity retailers and large electricity consumers connected to the SWIS will be ‘liable entities’ (a term adopted from the ‘MRET Scheme’) [4] and would be required to purchase certificates to meet the renewable hydrogen target. Electricity generators would be able to become certified and create certificates equating to the amount of renewable hydrogen based electricity generated, for sale to ‘liable entities’.
WA’s commitment to hydrogen
The WA Government is already committed to developing a hydrogen industry and is busy implementing this commitment. The Scheme sits squarely within the ‘Mission’ statement in the WA Renewable Hydrogen Strategy: [5]
Western Australia will develop industry and markets to be a major exporter of renewable hydrogen. To facilitate the export of renewable hydrogen, Western Australia will develop domestic production capabilities and applications of renewable hydrogen, improving the State’s hydrogen industry expertise, contributing to global decarbonisation and decarbonising the State’s economy.
In parallel, the WA Government continues to progress other milestone activities particularly those demonstrating WA’s investment potential to developers and private capital, such as allocating land for hydrogen hubs; establishing backbone infrastructure; funding early-stage (and inherently uneconomic) projects; building up industry expertise; and developing a skilled workforce. [6]
‘Stakeholder input will be crucial’ [7]
Consultation will focus on 21 questions
The Paper lays out the WA Government’s thinking on design options, which are broken down across 21 questions specific to the Scheme.
The design topics for consultation are wide ranging, covering threshold issues (eg, technical feasibility) and market issues (eg, costs vs benefits balancing) as well as discussion of basic scoping issues and parameters (eg, target level, term, certification mechanism).
A tabular list of the consultation questions is set out in the feedback template published alongside the Paper.
Good design = good performance
The Scheme is one of many possible pathways, each with its own long-term costs and consequences. Although the Paper emphasises the consultation process is narrowly focused, the outcomes will contribute to the shape of broader energy policy in WA for years to come.
However, going forward, public debate of the merits of Scheme options (or alternatives) will be framed by the submissions of stakeholders made during the consultation period. There may be limited opportunity for equivalent open debate in the future.
While input on the specific questions is indeed crucial, the quality of the Scheme in the future depends on the quality of inputs provided now, and the more stakeholders that engage with how the Scheme may impact them, the better those impacts can be addressed by the Scheme’s design.
What do you think about WA’s energy future?
Stakeholders are invited to provide feedback using the feedback template by email to epwa-info@dmirs.wa.gov.au.
The deadline for submissions is 5pm (Perth time) on Thursday 10 November 2022.
We have included links to relevant resources provided by Energy Policy WA, including the Paper and the consultation website (which includes links to additional resources concerning WA’s strategy and roadmap).
Please get in touch if you would like to find out more about how the Scheme could affect you.
See consultation landing website: www.wa.gov.au/government/document-collections/renewable-hydrogen-target-western-australia and the associated media statement: https://www.mediastatements.wa.gov.au/Pages/McGowan/2022/10/Consultation-opens-for-Renewable-Hydrogen-Target-.aspx
The Renewable Fuel Scheme is the third scheme under the NSW Government’s ‘Energy Security Safeguard’. It was introduced in December 2021 but remains under development and open for consultation. It will commence during 2024.
See ‘Vision’ statement on page 18 of the WA Renewable Hydrogen Strategy: “WA will be a significant producer, exporter and user of renewable hydrogen”.
The ‘Mandatory Renewable Energy Target’ scheme enabled by the Renewable Energy (Electricity) Act 2000 (Cth) and administered by the Clean Energy Regulator. ‘Liable entities’ are entities that are electricity retailers or large electricity users (except those qualifying for exemption as ‘Electricity Intensive Trade Exposed Industry’ entities).
See page 18 of the WA Renewable Hydrogen Strategy.
See pages 1 and 5-9 of Western Australia. An outstanding place for renewable hydrogen investment (June 2022) published by the WA Department of Jobs, Tourism, Science and Innovation.
See page I (Foreward) of the Paper (quote is attributable to the WA Minister for Hydrogen Industry (Alannah MacTiernan MLA) and WA Minister for Energy (Bill Johnston MLA)).
