Toward net zero: Australia and Korea ink $100 million deal on clean energy technology and critical minerals investment

By Stuart MacGregor and Tristan Appleby
23 Dec 2021

The Australian and South Korean Governments have announced a $100 million funding commitment for developing clean hydrogen, carbon capture and storage (CCS), and low-emissions steel and iron ore technologies, and coincides with the Clean Energy Regulator's call for participants in the Australian Hydrogen Guarantee of Origin (GO) certification scheme.

Technology and process advancements in these sectors are seen as critical to reducing the emissions intensity of existing key Australian export commodities of iron ore and coking coal, used for steelmaking, and thermal coal and natural gas, which hydrogen would either use to power the reaction to produce hydrogen fuel from water, or which hydrogen or hydrogen carriers such as ammonia are intended to displace as an exportable fuel source.

According to Australian Bureau of Statistics (ABS) figures, these commodities collectively represented 41.8% of Australia's gross export value in 2018/19 – a figure that will likely have increased in the 2019/20 financial year, when final figures are available.

Importantly, new technology will need to deliver export-scale quantities of hydrogen at a low enough cost to supports the adoption of hydrogen and hydrogen carriers as commercially-viable transitional fuels and, so, the development of domestic hydrogen and green steelmaking industries in Australia.

Clean energy and CCS investment

This is consistent with the Australian Government's commitment to deliver on its net zero carbon emissions target by 2050 by encouraging private sector-led development of low emissions technologies, which it hopes will unlock an additional $80 billion of private and public investment in clean hydrogen, CCS and energy storage.

While there is limited detail as to how this funding will be applied or made available, the Australian Government has signalled its intention to make funding available directly to the private sector through existing clean energy grants programs, and in August 2021 expanded the remit of the Australian Renewable Energy Agency (ARENA) to allow it to invest in CCS technologies and low-emissions hydrogen fuel in addition to conventional renewable energy sources like solar and wind.

The promise of green steel

The Australian Government is also set to fund low-emissions "green steel" technologies in the hard-to-abate steel production sector. Though it's not clear at this stage whether the intention is to prioritise process advancements to allow steelmakers to (partially) replace more emissions-intensive metallurgical coal with hydrogen, which is likely to require both large volumes of hydrogen as a fuel source for blast furnaces and CCS to abate much lower but still-present carbon emissions.

The announced funding, if spent locally in Australia, would likely be put toward development of a domestic low-emissions steelmaking industry. A May 2020 report by the Grattan Institute concluded that if Australia were to secure 6.5% of the global steel manufacturing market, this would generate $65 billion in annual export revenue and create around 25,000 jobs in Queensland and New South Wales.

Critical minerals

A new "critical minerals partnership" between Australia and the Republic of Korea has also been announced, one of a growing number of bilateral arrangements between Australia and its international trading partners. The announcement coincides with the release of the Australian Government's Australian critical minerals prospectus 2021 and Outlook for selected critical minerals in Australia 2021 report.


The announcement does not specify what critical minerals are targeted, however is intended to complement the clean energy technology cooperation between the two countries. The partnership, and any funding, is likely to focus on so-called advanced technology and battery minerals, including non-ferrous metals such as lithium, cobalt, nickel and copper, rare earth elements, graphite and vanadium.

What do I need to do?

We expect this announcement will be of particular interest for Australian and South Korean businesses with ambitions to develop and invest in export-scale low or zero-emissions hydrogen fuel projects to customers in Northern Asia including the Republic of Korea and Japan as likely key export markets for Australian hydrogen.

Project developers and investors would benefit from a clearer picture of how this funding will be deployed. Recent grant programs have focused on early-stage projects with strong commercial prospects and independent financial backing, preferencing development opportunities for regional Australia and "co-operative" projects involving multiple proponents engaged in joint development activities.

We encourage clients to reach out to us to discuss this and other funding opportunities to complement new or existing investments in Australia.

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