Federal Government Commits $432 Million to Hunter Valley Green Hydrogen Project in Kooragang, Newcastle

newy.com.au – The Albanese Government has announced a $432 million investment in Orica’s Hunter Valley Hydrogen Hub, a major renewable energy project set to transform industrial operations at Kooragang Island in Newcastle. The funding, delivered through the Australian Renewable Energy Agency (ARENA), will support the installation of a 50 megawatt electrolyser powered by renewable sources, enabling the production of around 4,700 tonnes of green hydrogen annually.

The Hunter Valley Hydrogen Hub aims to decarbonise Orica’s ammonia manufacturing facility by replacing natural gas with green hydrogen, significantly reducing greenhouse gas emissions by more than 52,000 tonnes each year. The hydrogen produced will also support the development of green ammonia for use in mining, agriculture and manufacturing industries across Australia.

The facility, located within Newcastle’s industrial precinct, will be linked to Orica’s operations via a 720 metre hydrogen supply pipeline. Construction is expected to begin in mid-2025, following the completion of engineering and planning approvals, with hydrogen production slated to commence by 2027. Approximately 160 jobs will be created during the construction phase, with 10 permanent operational roles to follow.

Federal Climate Change and Energy Minister Chris Bowen said the project will both preserve existing industrial capacity and help future-proof the region. “The Hunter Valley Hydrogen Hub is securing long-term, high-quality jobs for the region, while decarbonising industries that are vital to our economy,” Mr Bowen said. “This investment shows we can secure existing industries such as ammonia and fertiliser production by transforming how they’re powered.”

Newcastle MP Sharon Claydon said the investment would help cement the region’s leadership in clean energy. “The $432 million investment will create good local jobs, drive innovation, reduce emissions, and help position Newcastle and the Hunter as a national leader in renewable energy production,” Ms Claydon said. “Newcastle and the Hunter has powered Australia for generations, and with this investment, will continue to do so, but in a way that is sustainable and future focused.”

In addition to federal support, the New South Wales Government has committed $45 million to the project. This follows earlier funding of $70 million through the Federal Regional Hydrogen Hubs Program. The hydrogen hub forms part of the government’s Hydrogen Headstart initiative, designed to close the price gap between green hydrogen production and current market rates.

While originally launched as a partnership between Orica and Origin Energy, Origin withdrew from the project in late 2024, citing uncertainties in the hydrogen market. Orica has since continued to lead the development, working with ARENA to meet key conditions before funding is released.

The Hydrogen Headstart program is now entering its second round, with consultation open for four weeks. Industry stakeholders are invited to contribute to the program’s refinement ahead of the next funding round’s launch.