Australia will invest AU$2 billion (~$1.3 billion) in the “hydrogen headstart” program, which aims to support two or three large-scale renewable hydrogen projects to become commercially viable, the government announced in its budget for 2023-24.

The commitment is seen as crucial for manufacturing products like steel and aluminum currently made using fossil fuels.

The government plans to use wind and solar energy to create green hydrogen and aims to have 1 GW of electrolyzer capacity by 2030.

The budget promises a total of $2 billion (~$1.3 billion), but only $156 million (~$105.5 million) will be allocated over the next four years.

The climate change and energy minister Chris Bowen said that the hydrogen commitment would position Australia to take advantage of the technology’s immense job and investment potential.

Jim Chalmers, the treasurer, said that backing hydrogen would enable cities such as Wollongong, Gladstone, and Whyalla to produce and export renewable energy and green steel.

The budget has assigned approximately AU $4 billion (~$2.7 billion) for renewable energy projects, which adds up to more than AU $40 billion (~$27 billion) of investment in renewable energy.

The funding includes a portion of the AU$15 billion (~$10.1 billion) National Reconstruction Fund that is intended to support green industries.

The budget has earmarked funds for the critical minerals industry, which is required to produce batteries and other green technologies.

A sum of AU $57.1 million (~$38.6 million) has been allocated for a program that focuses on attracting foreign investment into critical mineral projects in Australia.

The government has also announced an AU$1.6 billion (~$1 billion) “energy savings plan” as part of the budget, which includes an AU$1 billion (~$676 million) low-cost loan program to fund energy-efficient upgrades for around 110,000 households.

The loans will be used for improvements such as double glazing, solar panels, and other measures that will reduce energy costs and make homes easier to keep cool and warm.

In addition to the loan program, the government is also allocating AU$300 million (~$202.9 million) to improve social housing and another AU$310 million (~$209 million) in tax deductions for businesses investing in renewable energy and energy efficiency.

Last month, the Australian Government said it will introduce a sovereign green bonds program in 2024 to enable investors to support public projects driving Australia’s net-zero transition and boosting the country’s green finance market scale.

The Australian government also aims to increase the share of electric vehicles in new light vehicle sales to 30% by 2030 and 100% by 2035 to transition to a decarbonized transport system.