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The Art of Dispute: Key case law and recent developments in dispute resolution
Our newsletter provides practical advice and a concise analysis of key case law and recent developments in dispute resolution.
Australia | Publication | July 2023
The recent announcements of funding rounds and the release of State Bills and policies regulating hydrogen and its related activities provide both clarity and areas of interest for stakeholders in the growing Australian hydrogen industry.
This update provides a state-of-play of developments in the proposed funding and regulation of hydrogen across each Australian jurisdiction.
Following the 2023-24 Federal Budget announcement of the establishment of $2 billion in federal funding for the Hydrogen Headstart initiative, on 7 July 2023, the Federal Government released the Consultation Paper for its Hydrogen Headstart Program.
In a policy shift, Hydrogen Headstart focuses on green hydrogen production only, and the Federal Climate Change and Energy Minister, Chris Bowen MP, has ruled out Hydrogen Headstart funding for blue hydrogen.
As set out in the Consultation Paper, the primary goal of the Hydrogen Headstart program is to invest the $2 billion in federal funding to accelerate development of Australia’s hydrogen industry, catalyse clean energy industries and help connect to new global hydrogen supply chains.
The detailed design of the Hydrogen Headstart program will be a collaborative exercise between DCCEEW and ARENA with the aim of achieving up to 1GW of hydrogen electrolyser capacity by 2030 through support of at least two large-scale hydrogen generation projects.
Importantly, the Consultation Paper notes the process for selection and financing of projects under the Hydrogen Headstart program as follows:
Further key elements of the Hydrogen Headstart program noted in the Consultation Paper are set out below:
The Hydrogen Headstart program also allocates $4.2M in funding in the 2023-2024 financial year for ARENA to develop the program, in consultation with DCCEEW, including development of the program Guidelines referred to above.3
In addition to the $2 billion in funding for the Hydrogen Headstart Program, the federal government has also announced:
Hydrogen Headstart funding, with the additional funding summarised above, is in addition to Federal and State funding for the development of regional hydrogen hubs, which is a focus of the National Hydrogen Strategy.
The Hydrogen Headstart consultation period is open until 3 August 2023.
The existing National Hydrogen Strategy was first released in 2019. It was intended to set a vision for a clean, innovative, safe and competitive hydrogen industry that benefits all Australians.6 Relevantly, ‘clean’ in the context of the 2019 Strategy included both green and blue hydrogen and was intended to facilitate the development of carbon capture and storage projects as well.
Representatives of all Australian Governments agreed in February 2023 to review the National Hydrogen Strategy.7 The review will consider global developments in hydrogen policy and regulation since the Strategy was first released, including the impact of the Inflation Reduction Act and other policies to support hydrogen emerging overseas
The review and update of the National Hydrogen Strategy is part of the Australian Government’s adaptive approach to hydrogen industry development and is intended to allow for ongoing refinement and adaptation of the strategy as new policy, technology and industry developments emerge.
The consultation paper (National Hydrogen Strategy Review Consultation Paper) was released for feedback on 7 July 2023. Interestingly, the consultation paper notes the dramatic changes that have occurred in the hydrogen regulatory and development landscape since Australia introduced its hydrogen strategy in 2019. Such changes (it notes) include that since 2019:
With this changing landscape as context, the consultation paper seeks stakeholder feedback on a range of issues including the specific barriers that may need to be considered and addressed in order to accelerate uptake of hydrogen end uses so that Australia can reach its full hydrogen potential. These requests for feedback include the following:
Feedback on the National Hydrogen Strategy Review is open until 18 August 2023.
Despite the change in the Federal Government since the Strategy was first produced and the current review, one of the Strategy’s priorities which is continuing to be pushed forward is the adoption of ‘smart, consistent, light-touch regulation’.10 This includes regulatory reform to assist jurisdictions in removing barriers to hydrogen industry development and to promote consistent approaches to laws and other regulatory measures, wherever practicable, while ensuring State, Territory and Federal laws are fit for purpose to ensure a properly regulated, safe and efficient industry.
To this end, since 2021, the Legal Frameworks Review Working Group (a combination of Federal, State and Territory government agencies, departments and officers) has reviewed existing legislation to identify current barriers or regulatory gaps that need to be addressed in order to both promote, and properly regulate the hydrogen industry.11 The first tranche of this work has recently been released, being the list of all key Commonwealth legislation which regulates the hydrogen industry and associated supply chain for the following six example projects:
The next tranche of the work to improve hydrogen regulation has recently been announced, being the preparation of the following National Hydrogen Codes of Best Practice:
On 21 August 2021, Energy Ministers agreed that the national gas regulatory framework (National Gas Framework) should be amended and that these amendments be expedited to ensure:
Under this expedited process, jurisdictional officials, the Australian Energy Market Commission (AEMC) and the Australian Energy Market Operator (AEMO) are responsible for identifying the amendments to be made to the National Gas Framework.
In October 2021, the jurisdictional officials for energy released an initial consultation paper on a proposed approach to amend the BGL, National Gas Regulations, National Energy Retail Law (South Australia) Act 2011 (NERL) and the National Energy Retail Regulations (collectively, the National Energy Laws).
The consultation paper received submissions from 19 stakeholders with interests across the natural gas, biomethane and hydrogen industries.
A consultation draft of the National Energy Laws Amendments (Other Gases) Bill 2022 and the associated consultation paper were released in March 2022 after feedback from the initial consultation process was considered.
Following the end of the consultation period for the consultation paper and draft amendments outlined above, on 28 October 2022, Energy Ministers agreed on the amendments to be made to the National Gas Law and the associated Regulations to bring hydrogen blends and other renewable gases under the National Gas Framework.
In December 2022, The Energy Ministers released a policy paper on the extension of the National Gas Framework to hydrogen blends and other renewable gases (Policy Paper). The Policy Paper states that the following amendments will be made in relation to the National Gas Law and NERL:
Both the National Gas Law and the NERL will also be amended to enable market bodies to exercise their functions and powers in relation to covered gases, NGE and PCGs. Further, the National Gas Law will be amended to include a new third-party access regime for separate blend processing facilities.
The following elements of the NERL will be extended to NGEs and PCGs:
Importantly, the proposed extension of the National Gas Framework to cover hydrogen and other gas blends will not affect the current allocation of responsibilities between the National Gas Framework and the States and Territories. This allows for the States and Territories to retain authority over which gases can be transported by pipeline or other means to be supplied to customers in their jurisdictions.
As at the time of this article’s publication, there have not been any updates to when the draft bills for the expected changes to the National Energy Laws are purported to be introduced.
The status of outcomes of hydrogen legal and regulatory reviews differ between the States and Territories. The current status of this review process in the States and Territories is broadly summarised below:
State/Territory | Recent/Proposed Hydrogen Legislation |
South Australia |
Hydrogen and Renewable Energy Act Bill 2023 (HRE Bill) (See detailed discussion in Section 7 below):
|
Western Australia |
Petroleum Legislation Amendment Bill (No.2) 2022 (PLA Bill No.2)
|
New South Wales |
Gas Supply (Safety and Network Management) Regulation 2022
|
Victoria | The Victorian Government has published the Victorian Renewable Hydrogen Industry Development Plan, although any proposed amendments to existing legislation, or hydrogen-specific new legislation have yet to be announced. |
Queensland |
The Qld Government has released the Hydrogen Industry Bill 2023 for public consultation and comment. (See detailed discussion in Queensland: Hydrogen gas and pipeline bills below). |
Northern Territory | The NT Government has published a Renewable Hydrogen Strategy, although NT has yet to release any hydrogen related legislation. |
Tasmania | The Tasmanian Government has implemented a Renewable Hydrogen Action Plan, although it has yet to release any hydrogen related amendment legislation. |
Australian Capital Territory | There have not been any recent developments in hydrogen related legislation in the ACT at this stage. |
With hydrogen law, regulatory and policy reviews under way across the various jurisdictions, we expect further development and exhibition of Bills to address identified gaps in existing legislation in the remaining States and Territories in the near future.
The Queensland Government has also undertaken a review of Queensland legislation as part of the Queensland Resources Industry Development Plan (Department of Resources, Queensland, 2022) to identify legal and regulatory amendments required to enable hydrogen and other clean energy sources in the State.
As part of this review process, on 10 May 2023, the Queensland Government introduced the Gas Supply and Other Legislation (Hydrogen Industry Development) Amendment Bill 2023 (Qld) (Hydrogen Industry Bill). The Hydrogen Industry Bill proposes amendments to the Gas Supply Act 2003 (Qld) (GS Act) and the Petroleum and Gas (Production and Safety) Act 2004 (Qld) (P&G Act) to provide approval pathways for hydrogen pipelines and the carriage of hydrogen, hydrogen blends and other renewable gases through pipelines in Queensland. The GS Act and the P&G Act have been reviewed in consideration of the proposed changes to the National Gas (South Australia) Act 2008 (National Gas Law).
Key amendments proposed by, and objectives of the Hydrogen Industry Bill, as set out in the Bill’s explanatory note, are summarised below:
Specifics of the proposed amendments to the GS Act are set out in the Hydrogen Industry Bill, while key amendments are summarised below:
Specifics of the proposed amendments to the P&G Act are set out in the Hydrogen Industry Bill while key amendments are summarised below:
The Hydrogen Industry Bill also makes minor, consequential amendments to a range of other Queensland legislation, which is listed in Schedule 1 of the Hydrogen Industry Bill.
On 12 May 2023, the South Australian Government released a draft of the Hydrogen and Renewable Energy Bill 2023 (SA) (HRE Bill) for public consultation.
The HRE Bill introduces a streamlined licencing and regulatory framework for hydrogen generation and establishment of renewable energy infrastructure14 in South Australia. It also makes related amendments to the Pastoral Land Management and Conservation Act 1989 (SA) and the Planning, Development and Infrastructure Act 2016 (SA) (PDI Act).
The overarching purpose of the new framework is to simplify the process for establishing renewable energy infrastructure and facilities for generating hydrogen for commercial use, promote economic benefits, reduce adverse impacts to the environment and facilitate engagement with the wider community, including indigenous peoples. Currently, renewable energy facilities can be difficult to establish as there is a range of legislation applicable through the lifecycle of a facility. Streamlining the current regime will assist South Australia in reaching net zero emissions by 2050, in accordance with the State’s policy and emissions reduction targets.15
The HRE Bill proposes a new licensing scheme to provide a streamlined, one window to government regime for hydrogen projects. The key features of the proposed regime include:
In addition to HG Licences, the HRE Bill also proposes licences for:
These licences will regulate the development of largescale renewable energy assessment, research and generation in tandem with the HG Licence, in order to ensure sufficient generation capacity for the anticipated largescale production of green hydrogen.
The HRE Bill creates an environmental impact assessment regime similar to impact assessed development and the Environmental Impact Statement under the PDI Act. Before commencing any authorised operations on the relevant land, a licensee must:
The ‘statement of environmental objectives’ requires:
Contravention of a term or condition of a licence, or undertaking authorised operations otherwise than in accordance with the terms and conditions of a licence, is an offence, with a maximum penalty of $250,000.26 A change in control of the holder of the HG Licence without the Minister’s prior written consent attracts the same penalty.
The HRE Bill proposes the establishment of both a hydrogen and renewable energy fund (the Fund),27 and a hydrogen and renewable energy register (Register)28. The key role of the Fund is to assist in investing in the promotion of research into methods to reduce any potential environmental damage resulting from authorised operations. The Register will be public and will contain, amongst other things, HG Licence details.
Much of the detail of the environmental assessment process, including the preparation of consultation plans and scoping reports (relevant to projects that may also require assessment and regulation under the EPBC Act), is to be set out in the Regulations although no public consultation draft of Regulations to be made if the HRE Bill is enacted have been released.
Stakeholders will need to carefully review the Regulations once they become available for public comment.
This publication was co-authored by Edward Chan, Carmen Bradfield and Jayne Kelly.
DCCEEW 2023, Review of Hydrogen Regulation: Hydrogen Industry Consultation, https://consult.dcceew.gov.au/review-of-hydrogen-regulation (accessed 20 June 2023).
DCCEEW, ‘Commonwealth Hydrogen Regulation’, https://www.dcceew.gov.au/energy/hydrogen/regulatory-lists (accessed 20 June 2023).
DCCEEW, ‘Providing regulatory clarity to support development of Australia’s hydrogen industry’, https://www.dcceew.gov.au/energy/hydrogen/regulatory-review (accessed 20 June 2023).
Renewable energy infrastructure” means infrastructure that: (a) is necessary in assessing the feasibility of generating renewable energy from a renewable energy resource; or (b) has the primary purpose of exploiting a renewable energy resource; or (c) is of a kind prescribed by the regulations for the purposes of the definition.
South Australian Government, ‘Responding to climate change’, https://cdn.environment.sa.gov.au/environment/docs/South-Australia-Responding-to-Climate-Change.pdf (accessed 20 June 2023).
Additional renewable energy licences may be required under the HRE Bill or other South Australian or Commonwealth law, depending on the nature of the hydrogen generation facility.
s 11(2)(b), HRE Bill.
s 30, HRE Bill.
s 33(1), HRE Bill.
s 81, HRE Bill.
s 43, HRE Bill.
In compliance with section 50(2) of the HRE Bill.
s 50(1) HRE Bill.
s 53(1), HRE Bill.
An environmental impact report must: (a) take into account the environment, cultural and other values as those matters are relevant to the assessment; (b) take into account risks inherent in the authorised operations to the health and safety of the public; (c) contain sufficient information to make possible an informed assessment of the likely impact of the authorised operations on the environment; (d) include an assessment of the environmental impact of authorised operations to which the report applies against the environmental impact assessment criteria; and (e) be prepared in accordance with the requirements of the regulations.
s 83(1)-(2), HRE Bill.
s 65, HRE Bill.
s 92, HRE Bill.
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