The hydrogen push marks one of the few areas where the conservative government’s ambitions align with renewable energy advocates, who fear the government’s support of coal and gas is thwarting efforts to cut carbon emissions.

Energy and Emissions Reduction Minister Angus Taylor said the government has a strong commitment to building a hydrogen industry, as it will create jobs and billions of dollars in economic growth over the next several decades.

“Importantly, if we can get hydrogen produced at under A$2 a kilogram, it will be able to play a role in our domestic energy mix to bring down energy prices and keep the lights on,” Taylor said in a statement.

As of 2018, it cost between roughly A$5 and A$7 per kilogram to produce hydrogen, depending on the technology used, according to the National Hydrogen Roadmap released last year. The roadmap said production costs would have to come down to between A$2 and A$3 to be competitive with other energy sources.

The Advancing Hydrogen Fund will be run and paid for by the government’s Clean Energy Finance Corporation (CEFC) and will focus on projects that demonstrate the technical and commercial viability of producing hydrogen at large scale.

The CEFC hydrogen fund will be working with the government’s Australian Renewable Energy Agency, which recently called for bids for hydrogen projects to be backed by A$70 million in grants.

“We see green hydrogen as offering the most credible pathway to decarbonisation for high emitting sectors,” CEFC Chief Executive Ian Learmonth said, pointing to the transport and manufacturing sectors.

Reporting by Sonali Paul. Editing by Gerry Doyle