Published name
Upload a submission
Professor Frank Jotzo
Carbon Leakage Review
Department of Climate Change, Energy, the Environment and Water (“DCCEEW”)
GPO Box 3090,
Canberra ACT 2601
11th December 2023
Submission regarding the Carbon Leakage Review (the “Submission”)
Dear Professor Jotzo,
The CCUS (Carbon Capture, Utilisation, and Storage) Network Australia welcomes the opportunity to provide a Submission regarding matters relating to carbon leakage risk in Australia and the proposed approach to assess and address this.
I. About the CCUS Network Australia
The Carbon Capture, Utilisation and Storage Network Australia (CCUSNA) is a newly formed advocacy
group consisting of industry and academic organisations involved in CCUS. CCUSNA supports the
capture, transportation, utilisation and geological storage of carbon dioxide (CO2) as a means of
reducing Australia’s carbon emissions into the future.
As recognised by the United Nations Framework Convention on Climate Change, CCUS can play a
significant role in mitigating carbon emissions and is a long-term solution for decarbonisation into
the future.
CCUSNA provides informed advice and information to industry, government and community on the
principles and processes involved in CCUS. However, CCUSNA does not promote or lobby for
individual projects.
II. Content of Submission
1. Review Context
1.1 Carbon leakage - Is the description of carbon leakage appropriate for the purpose of this
Review?
Based on section 2.1 of the “Carbon Leakage Review – Consultation Paper,” it appears that the
scope of the review of carbon leakage risk will only cover Emissions Intensive and Trade Exposed
(EITE) goods and commodities.
Upon comparison of the list of eligible EITE activities1 against the lists of Australia’s top exported
and imported goods and commodities 2, CCUSNA highlights that EITE goods and commodities
may cover approximately 80% of the top 25 exported goods and commodities, and approximately
20% of total imported goods and commodities. For details, see Table 1 and Table 2 below.
Table 1: Australia’s Top Exports of Goods Table 2: Australia’s Top Imports of Goods
Based on the above, CCUSNA suggests the scope of the review includes all goods and
commodities that may be affected by such policies as the Safeguard Mechanism reform and
other emissions reduction policies as implemented or to be considered for implementation by
Australia, to address carbon leakage. These consist of all goods and commodities that are either
(1) produced in Australia for either domestic consumption or export, or (2) imported into
Australia.
CCUSNA’s suggested scope of the review aims to ensure that the full context and extent of carbon
leakage risks for Australia are better understood.
1.2 The Safeguard Mechanism - What is your view on how your business or industry could be affected
by carbon leakage?
1Australian Government Clean Energy Regulator, 2023. “Eligible activities and activity group eligibility.” Available at: https://www.cleanenergyregulator.gov.au/RET/Scheme-participants-and-industry/emissions-intensive-trade- exposed-activity-information-for-companies/applying-for-an-exemption-certificate/am-i-eligible-to-apply-for-an- exemption-certificate/eligible-activities
2Australian Government Department of Foreign Affairs and Trade 2023. “Australia’s trade in goods and services
2021-22,” Available at: https://www.dfat.gov.au/trade/trade-and-investment-data-information-and- publications/trade-statistics/trade-in-goods-and-services/australias-trade-goods-and-services-2021-22
As highlighted in the “Carbon Leakage Review – Consultation Paper,” CCUSNA share the view that
carbon leakage can occur via two main channels (trade and investment).
CCUSNA notes that its members include CCUS project proponents, domestic CO2 emitters
including owners of Safeguard Mechanism facilities, and other key CCUS industry stakeholders.
CCUSNA and its members are exposed to carbon leakage risk in the following areas:
1. Trade: Having the Safeguard Mechanism reform in place while not having the Carbon Border
Adjustment Mechanism (CBAM) and/or other key carbon leakage policies in place will likely
eventuate in reduced manufacturing of goods and commodities in Australia due to added
cost, and increased import of the same material that is high emission (due to unregulated
manufacturing practices, added shipping etc).
2. Investment: CCUSNA’s members, who are Australian CCUS project proponents, continue to
experience “capital flight” first-hand. Prospective investors are providing feedback to our
members that, “with the USA, EU and other jurisdictions offering favourable incentives for
conducting CCUS activities in their jurisdictions, future funding availability to progress CCUS
project development in Australia will be influenced by such opportunities.”
As also mentioned in our response in section 1.1 of this document, CCUSNA suggests for the
scope of the review to include all goods and commodities that may be affected by such policies as
the Safeguard Mechanism reform and other emissions reduction policies as implemented, or to
be considered for implementation, by Australia.
CCUS can assist in emissions reduction from industries with the lowest capture cost (currently
Scope 1 emissions from ammonia production and LNG (Liquified Natural Gas) processing)
through to harder to abate industries (e.g. cement, steel) and also Carbon Dioxide Removal (CDR)
though Direct Air Capture (DAC), which have higher capture costs. Australia is advantaged over
other jurisdictions (e.g. Japan, Korea, Singapore) with excellent locations for geological CO2
storage. Since CCUS will be most cost effective through the creation of multi-user hubs with
access to shared infrastructure and storage (e.g. Darwin Low Emissions Hub, Northen Lights
project in Norway), the impact of anti-leakage policies will ensure more industries remain in
Australia, contributing to hub investment and supporting the lower abatement costs (through
economies of scale) for higher capture cost industries.
2. Assessment methods of carbon leakage risk and effects of policy options to address it
2.1 Relevant goods and commodities - Are there other goods or commodities beyond those identified
as trade exposed under the Safeguard Mechanism that should be included in the assessment?
CCUSNA support the review’s emphasis on EITE goods and commodities. Additionally, please see
our responses in section 1.1 and 1.2 of this document.
2.2 Assessing impacts of carbon leakage and policy instruments - Is this characterisation of the
potential impacts of carbon leakage and instruments to address it appropriate for the purpose?
Are there other aspects that should be considered?
As stated in the “Carbon Leakage Review – Consultation Paper,” CCUSNA support the assessment
of impact to be based on metrics that would measure:
1. changes to domestic production, investment and employment in the industries that produce
the goods and commodities that are the scope of this review;
2. changes in domestic demand for and supply for other goods because of changes in relative
prices;
3. changes in regional economic activity within Australia;
4. changes in government revenue and expenditure;
5. changes in Australia’s net emissions (Scope 1, 2 and 3)
2.3 Analytical approach - What domestic economic effects from carbon leakage and policy approaches
to address it are of particular importance for analysis and modelling? Would the analysis benefit
from an assessment of impacts on bilateral trading partners and net global emissions?
Please see our responses in section 2.2 of this document.
Additionally, CCUSNA suggests that this review assess the impacts on bilateral trading partners
and net global emissions.
To bring down global emissions, CCUS can be used to lower Scope 1 and 2 emissions but also
Scope 3 emissions (for the use of products with embodied CO2 (such as hydrocarbons and
synthetic fuels). Australia’s key trading partners (e.g. Japan, Korea) are actively engaging with
other jurisdictions to find suitable storage locations using CCUS.
CCUS provides an opportunity for Australia to support the decarbonisation of existing exports
addressing scope 1 and 2 emissions, and can also provide a solution for Scope 3 emissions
(liberated through use of our exports) by import of liberated GHG back to Australia for
permanent storage through CCS.
3. Policy options to address carbon leakage risks
3.1 Existing measures under the Safeguard Mechanism - What is the capacity of current policy settings
of the Safeguard Mechanism to mitigate carbon leakage risk into the future?
CCUSNA acknowledges the successful implementation of the Safeguard Mechanism reform to
actively addressing emission reduction. However, Safeguard Mechanism reform alone is
insufficient to address carbon leakage risks.
As mentioned in section 1.2 of this document, CCUSNA believes that having the Safeguard
Mechanism reform in place while not having the Carbon Border Adjustment Mechanism (CBAM)
and/or other key carbon leakage policy in place will likely eventuate in reduced manufacturing of
goods and commodities in Australia due to added cost, and increased import of the same
material that is high emissions (due to unregulated manufacturing practices, added shipping etc).
CCUSNA highlights that:
1. Australia is ahead of other nations in the Asia Pacific region for addressing its emission
reduction, with most nations within the Asia Pacific region significantly lagging in their pace
for implementing emission reduction policies that reinforce the “polluter pays” principle.
2. This lag will continue to be a key concern for not only the Australian industries that produce
goods and commodities, but also for the general Australian public who are the ultimate end
users of the goods and commodities.
3.2 Australian carbon border adjustment mechanism - Is an Australian carbon border adjustment
mechanism desirable? If so, which design features should be considered?
CCUSNA supports Australia’s introduction of a CBAM as a key policy mechanism for leveling the
playing field between domestic and foreign production and addressing carbon leakage risks.
CCUSNA suggests for the following key design features to be considered:
1. Determining Adjustment Quantity: Noting that a declining emissions limit (baseline) is
applied to the Safeguard Mechanism facilities when assessing the need for such facilities to
manage their excess emissions, CCUSNA suggests that an equivalent mechanism be applied
to determine the amount of excess emissions that may apply for adjustment to imported
goods and commodities. CCUSNA notes that some form of consensus building among its
key trade partners would be required for determining the emissions intensity of imported
goods and commodities. For managing discussions with key trade partners, CCUSNA
highlights that the process used, the dialogues facilitated between the government and
industries, and the associated learnings for implementing the Safeguard mechanism reform
(e.g. methodologies for determining baseline and emissions intensity of goods and
commodities) can be useful. CCUSNA also highlights Australia’s need to discuss and agree
with its key trade partners a mechanism for ongoing monitoring and verification of the
amount of excess emissions that may apply for adjustment to imported goods and
commodities.
2. Determining Adjustment Price: For imported goods and commodities that are also produced
by certain Safeguard Mechanism facilities, CCUSNA suggests consideration of Safeguard
Mechanism Credits price to be applied. Noting that CCUSNA suggests that the scope of the
review to include all goods and commodities that are either imported or produced for
domestic use and exports, CCUSNA suggests for other carbon pricing such as ACCUs
(Australian Carbon Credit Units) (and others as relevant for the specific goods and
commodities that will be covered under the CBAM) to be considered for application.
3. Use of CBAM Revenues: CCUSNA suggests that some portion of the CBAM revenues can be
utilised for:
a) funding an independent body to assess adjustment quantity (as mentioned above in
section 3.2.1 of this document)
b) financing Australia’s initiatives to address carbon leakage risks; and
c) financing Australia’s initiative to assist the energy transition of least developed
countries.
4. Rebate for export: CCUSNA highlights that a significant portion of Australia’s carbon-
intensive production serves export rather than domestic markets and is therefore at risk of
competition from higher emission sources. While export rebates may be deemed as
incompatible with international trade law, CCUSNA suggests for the review to investigate this
option as a mean to level the playing field between domestic and foreign production and to
promote Australia’s low emission goods and commodities. As mentioned in section 3.1 of
this document, there is a significant difference between Australia and other Asia Pacific
region nations regarding the pace of implementing emission reduction policies that reinforce
the “polluter pays” principle. Noting that this difference is a key concern for not only the
Australian industries that produce goods and commodities but also for the general
Australian public, CCUSNA suggests that the pursuit of all options be exhausted when
considering ways to leveling the playing field between domestic and foreign production.
3.3 Emissions product standards - What is the appropriate role for emissions product standards to
mitigate carbon leakage?
An emissions product standard is particularly useful to address carbon leakage risks for goods
and commodities that are imported into Australia. This includes refined petroleum products,
passenger motor vehicles and freight (see Table 2 in our response in section 1.1 of this document
for more detail).
So that carbon leakage is suitably measured in context of overall emissions, and a like for like
comparison made, we suggest that the review look at full lifecycle GHG emissions in their analysis
when considering emissions reductions and the impact on carbon leakage. For example, the
inclusion of GHG emitted during the manufacture, deployment, operation and decommissioning
of CCUS projects, wind turbines, solar panels etc. The review could consider the challenges posed
by rapid upscaling of renewables for green hydrogen (availability of resources, water, land access
etc) when compared to other low emissions hydrogen sources (e.g. blue hydrogen with CCUS).
3.4 Targeted public investment in firms’ decarbonisation - What is the appropriate role for public
investment measures to mitigate carbon leakage?
The CCUSNA supports Australia’s consideration for targeted public investments to decarbonise
Australian industries. This will help level the playing field between domestic and foreign
production of goods and commodities and reduce the risk of carbon leakage.
The CCUSNA highlights the “capital flight” challenges that the Australian industries face for
maintaining current production levels due to the significant levels of public investment being
made available in jurisdictions such as the USA and EU. Specifically in relation the “capital flight”
challenges for CCUS in Australia (and as also mentioned in section 1.2 of this document),
CCUSNA’s members who are Australian CCUS project proponents continue to experience “capital
flight” first-hand, with prospective investors stating that, “with the USA, EU and other jurisdictions
offering favourable incentives for conducting CCUS activities in their jurisdictions, future funding
availability to progress CCUS project development in Australia will be influenced by such
opportunities.” In that context, CCUSNA requests for the review to consider the relative balance
of public investment allocation among CCUS relative to those offered for other decarbonisation
initiatives.
To provide context on how the CCUSNA views the current level of CCUS support in Australia:
1. The last Federal grant for CCUS in 2021 was for grants up to $25 million which resulted in six
projects worth a total of $50 million of which two projects were aimed at geological
sequestration. This is compared to the $25 billion investment opportunities in other forms of
“green” initiatives.
2. More recently, with the cancellation of the $250 million 2021 “Carbon Capture, Use and
Storage Hubs and Technologies Program” in October 2022, the Federal government has
effectively paused several CCS projects in Australia. The Federal government has followed
up on this grant cancellation in 2023 with the launch of its “Carbon Capture Technology
Program.” However:
a. the total budget made available for this grant has reduced to “up to $65 million;” and
b. activities relating to the use and sequestration of carbon dioxide due to fossil fuel
production or energy generation is considered ineligible for grant application.
Comparatively, public funding of CCUS in the US, under the IRA, is underpinned by either a 45Q
tax credit (amount per tonne of abated CO2 are set at $85 (storage), $130 (utilisation) and $185
(direct air capture)) or a direct payment made for the first 5 years or full project of a CCUS project
depending on the project. This level of direct support has seen an expansion in CCUS in the US,
which will support US industry to decarbonise, and leave Australian industry exposed to a higher
cost of compliance. A similar impact will be felt by the UK’s direct funding of AUD 34 billion
equivalent (20 billion Stirling) for CCUS.
3.5 Multilateral and plurilateral initiatives - What is the appropriate role for multilateral and
plurilateral initiatives to help to mitigate carbon leakage, and the impact of unilateral measures
taken to address carbon leakage?
CCUSNA supports Australia’s leadership for addressing its emission reduction and risks of carbon
leakage. As mentioned in section 3.1 of this document, CCUSNA highlights that most countries in
the Asia Pacific region significantly lags in their pace for implementing emission reduction
policies, especially those that reinforce the “polluter pays” principle. This lag will continue to be a
key concern for not only the Australian industries that produce goods and commodities, but also
for the general Australian public who are the ultimate end users of the goods and commodities.
CCUSNA supports Australia in its pursuit of all avenues of multilateral and plurilateral initiatives
to level the playing field between domestic and foreign production and to address carbon leakage
risks.
Furthermore, CCUSNA suggests Australia to invite key trade partners such as Japan, Korea, China,
USA, India and EU to
1. participate in structured stakeholder consultation processes such as that being conducted
for this carbon leakage risk review. At a minimum, this can assist Australia to reduce the
degree of trade tension and “surprises” that its key trade partners may experience as
Australia continues to lead the Asia Pacific region in the implementation of emission
reduction policies. Sharing of assessment methods and assessment results by Australia for
feedback from its key trade partners can also help enhance the quality of Australia’s
assessment.
2. Jointly support and incentivise industries and end users of goods and commodities to choose
decarbonised product (e.g., steel, cement, ammonia or hydrogen) over "standard" carbon-
intensive conventional product alternatives (see section 4.2 of this document for more
information on this matter).
Specifically in relation to CCUS initiatives, CCUSNA highlights that Australia has a mature
regulatory regime that supports CCS and extensive well understood geology that is suitable for
large scale geosequestration. With Australia’s current greenhouse gas emissions being around
500 million tonnes per annum 3 and Australia’s CO2 sequestration capacity being approximately
434 billion tonnes 4, CCS projects can potentially offset ~870 years of Australia’s annual emissions.
This geological CO2 storage capacity suggests that significant CO2 reduction contributions can be
expected via CCS for Australia.
On 13 November 2023, the Parliament of Australia passed the Environment Protection (Sea
Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill 2023. This is a
major policy milestone for Australia, since this allows for the Australian Commonwealth
Government to progress remaining key activities to enable transboundary CCS, including (1)
engaging in detailed discussions with other nations such as Japan, Republic of Korea, and
Singapore for executing bilateral agreements; and (2) submitting its declarations on the
provisional application of the 2009 Amendment (of the London Protocol) with the International
Maritime Organisation (IMO). CCUSNA congratulates Australia for its ongoing efforts to enable
transboundary CCS. In doing so, CCUSNA expects that this would maximise economic
opportunities for Australian businesses and employment as well as forge increased international
collaboration and cooperation and assist nations accelerate global progress towards meeting
their Paris Agreement goals.
While noting the good progress being made in Australia to enable transboundary CCS, CCUSNA
also highlights that CCUS projects in Australia will need to compete with CCUS projects that are
being considered in Asia Pacific nations such as Malaysia and Indonesia. While these countries
do not have CCUS legislation fully in place (which gives Australia some advantage), these
countries offer the following to its domestic and broader Asia Pacific region CO2 emitters,
investors and CCUS project proponents:
1. Vast CO2 storage potential;
2. Proximity to domestic and broader Asia Pacific region CO2 emitters;
3. Low project development cost;
4. Clear support for CCUS from all levels of the government, championed by head of state level
government officials (i.e. prime minister / president of the nation). A good example of this is
recent announcements between the Governments of Japan and Malaysia regarding their
intent to enable transboundary CCS projects 5.
As also mentioned in sections 1.2 and 3.4 of this document, some of CCUSNA’s members, who
are Australian CCUS project proponents, continue to experience “capital flight” first-hand;
Prospective investors are providing feedback to our members that, “with the USA, EU and other
jurisdictions offering favourable incentives for conducting CCUS activities in their jurisdictions,
3 Australian Government, 2022. “Australia’s Nationally Determined Contribution – Communication 2022” Page 7.
Available at https://unfccc.int/sites/default/files/NDC/2022-
06/Australias%20NDC%20June%202022%20Update%20%283%29.pdf
4 Australian Government Carbon Storage Taskforce, 2009. “National Carbon Mapping and Infrastructure Plan –
Australia” pages 28 and 31. Available at: https://www.parliament.wa.gov.au/parliament/commit.nsf/($lookupRelatedDocsByID)/518FAC2BBA6C246648257C2
9002DB8E6/$file/NCM_Full_Report.pdf
5Nikkei Asia, 25 September 2023. “Japan, Malaysia to discuss carbon storage with aim of 2028 start." Available at https://asia.nikkei.com/Spotlight/Environment/Climate-Change/Japan-Malaysia-to-discuss-carbon-storage-with-aim- of-2028-start
future funding availability to progress CCUS project development in Australia will be influenced by
such opportunities.” In that context, CCUSNA requests for the review to consider multilateral and
plurilateral initiatives, such as those being demonstrated between the Governments of Japan and
Malaysia, to address the issue of “capital flight” from Australia (which is one of the direct
consequences associated with carbon leakage risk).
3.6 Other policy options for consideration - Are there additional policy options that should be considered
alone or as part of a portfolio of approaches to address carbon leakage?
IEA (International Energy Agency) estimates that the CO2 prices for electricity, industry and energy
production in Australia and all other OECD countries (except Mexico) needs to achieve the
following 6:
1. US$ 135 per tonne of CO2 (2022 basis) under the Announced Pledge Scenario; and
2. US$ 140 per tonne of CO2 (2022 basis) under the Net Zero Emissions by 2050 Scenario
Furthermore, the Government of Japan estimates that Japan will need to support a CO2 marginal
abatement cost of approximately JPY 20,000 per tonne of CO2 (approximately USD 182 per tonne
of CO2) in 20307 to meet its interim target.
While noting that a significant increase in regional CO2 prices is considered necessary for the Asia
Pacific region to achieve its net zero targets, CCUSNA highlights that a “cost containment
measure” has been introduces as part of the Safeguard Mechanism reform whereby the
Safeguard Mechanism facilities that exceed their baseline would be able to purchase ACCUs from
the Government at a fixed price of AU$75 in 2023-24, increasing with CPI plus 2 per cent each
year.
Once the CBAM (or an equivalent carbon leakage policy) is implemented in Australia, CCUSNA
notes that this price ceiling could potentially be removed.
Upon consideration to remove this price ceiling, CCUSNA strongly suggests that a robust
stakeholder engagement process be conducted by the Australian Commonwealth Government to
ensure that carbon leakage risks are not increased, and that the associated impacts to the
Australian industries that produce goods and commodities and the general Australian public, who
are the ultimate end users of the goods and commodities, are understood and communicated.
4. Feasibility of policy options
4.1 Guiding principles – What principles should guide Australian policies to prevent carbon leakage?
As mentioned in sections 3.1 and 3.5 of this document, Australia is ahead of other nations in the
Asia Pacific region in addressing its emission reduction, with most nations within the Asia Pacific
6 International Energy Agency, 2023. ”Global Energy and Climate Model Documentation 2023,“ page 20. Available at https://iea.blob.core.windows.net/assets/ff3a195d-762d-4284-8bb5- bd062d260cc5/GlobalEnergyandClimateModelDocumentation2023.pdf
7 Japan’s Ministry of Economy, Trade & Industry, Sep 2022. “Modelling of Decarbonisation Towards 2030 and 2050” presentation for the 50th Strategic Policy Committee Meeting, page 21. Available in Japanese at https://www.enecho.meti.go.jp/committee/council/basic_policy_subcommittee/2022/050/050_005.pdf
region significantly lagging in their pace for implementing emission reduction policies that
reinforce the “polluter pays” principle. This lag will continue to be a key concern for not only the
Australian industries that produce goods and commodities, but also for the general Australian
public who are the ultimate end users of the goods and commodities.
Therefore, the key principle that ought to be prioritised over all others is to level the playing field
between domestic and foreign production. Policies that directly align with this key principle
includes:
1. Incentivising manufacturing of cleaner (low / minimal emission intensity) products through
clear policies that positively impact their commercial attractiveness;
2. Implementation of Australia’s CBAM
3. Multilateral and plurilateral initiatives, such as those being demonstrated between the
Governments of Japan and Malaysia, to
a. address the issue of “capital flight” from Australia; and
b. demonstrate preference of decarbonised product (e.g., steel, cement, ammonia or
hydrogen) over the "standard" carbon-intensive conventional product alternatives.
Carbon leakage can be "organically" avoided when decarbonised products find a fair place in the
market. While this is rapidly and positively evolving today in North Europe and the US, Australia
cannot rely on such market conditions to eventuate soon due to the large lag between Australia
and other Asia Pacific nations.
For the carbon leakage policy to remain future focussed and adaptable, we suggest that
generation of hydrogen remain focussed on lowest cost production of low emission hydrogen.
Currently the cost of green hydrogen is many times higher than hydrogen production using
hydrocarbons as a feed stock coupled with CCUS to achieve similar emissions profile over the full
life cycle (when mining and manufacture of renewable power is factored in).
A regular review of the policy can ensure that it adapts to changes in technology, cost of GHG
abatement and market conditions
4.2 Other factors for consideration - Should other factors be considered to assess the feasibility of
potential policies?
CCUSNA hereby provides an analysis over policies deemed successful in other jurisdictions.
The IPCC (Intergovernmental Panel on Climate Change) has analysed carbon leakage for years
and have promoted the need for a unique worldwide ETS. However, this does not exist (yet).
As mentioned above in sections 1.2 and 3.1 of this document, CCUSNA does not expect that
increasing the value of the Australian Carbon Credit Unit (ACCU) or strengthening the Safeguard
Mechanism would positively impact the risk of Carbon Leakage on their own.
Worldwide, it has been observed that regardless of what a specific carbon credit or ETS pricing
may be, the risk of carbon leakage can be reduced when a decarbonised product (e.g., steel,
cement, ammonia or hydrogen) is preferred over the "standard" carbon-intensive alternative.
This market preference thrives thanks to the clear direction provided by the governments of the largest energy consumers, e.g. Japan or South Korea in the Asia Pacific region.
In Australia, the National Hydrogen Strategy is currently focused on Green Hydrogen through an applicant-defined production credit, up to $2b (Hydrogen Headstart). Together with the
Safeguard Mechanism reform, Australia aims to incentivise the production of renewable hydrogen and low emission intensity projects. The ambition seems to be more focused on exports and less on internal consumption.
In contrast, in the US the Inflation reduction Act (IRA) is much broader and has already shown how it drives the industry market by minimising the production cost of Hydrogen, especially green and blue. Hence, projects focused on manufacturing cleaner alternatives for steel, cement, ammonia and hydrogen become increasingly bankable.
On the other hand, in North Europe, e.g. UK or the Netherlands, policies have been developed not only to incentivise hydrogen consumption, but also to favour low emission intensity hydrogen production at the lowest cost today (blue), i.e., steam methane reforming combined with Carbon
Capture and Storage (CCS).
This does not mean that these countries have a preference of blue hydrogen over other sources to perpetuate the oil and gas industry. What is observed is that these countries invest in wind/solar and electrolysis hydrogen generation too, but also acknowledges that a hydrogen economy can be built more rapidly and robustly when CCUS plays a significant role.
CCUS hubs couple with a pragmatic hydrogen strategy can support the decarbonisation ambitions of the cement, steel and other hard to abate industries.
Closing
We thank the Department for the opportunity to provide this submission.
Interim Chair, Rosie Johnstone
Signed on behalf of the Carbon Capture Utilisation and Storage Network Australia (CCUSNA),
