WA to impose royalty on hydrogen extraction
Companies extracting hydrogen from underground in Western Australia will be charged a royalty in future under a refresh of the state’s hydrogen strategy.
But the WA Labor government says the revised strategy will not charge a royalty on hydrogen produced by electrolysis of water, which shapes as a bigger industry than extraction of geological hydrogen.
Hydrogen is a nascent sector and many Australian states are yet to clarify whether production of the clean-burning gas will attract the sort of state and federal royalties that are imposed on extracting minerals and petroleum products.
The WA government has this month asked industry to help shape the state’s hydrogen targets for 2030, which have to date sought to ensure WA’s share of the global hydrogen market is in line with its share of the global liquefied natural gas (LNG) market.
A government spokesman confirmed the strategy refresh would likely deliver the state’s first hydrogen royalty regime, but it would not affect the likes of BP, Yara and Fortescue that hope to export “green” hydrogen made by using renewable power to split water into its constituent parts.
“The government of Western Australia intends to charge a royalty on naturally occurring hydrogen, which is defined as hydrogen that is found in a natural geological formation,” he told The Australian Financial Review.
“The royalty rate for naturally occurring hydrogen has not yet been determined.
“Manufactured hydrogen (including green hydrogen) will not incur a royalty.”
The plan to charge a royalty only on extracting naturally occurring hydrogen mirrors the approach taken in South Australia, where a 10 per cent royalty must be paid on any hydrogen extracted from underground.
No prescribed royalty charge for
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