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Hydrogen vehicles a winner with $2 billion kick-start in Labor budget


EVs also benefit, while blows are dealt to internal combustion cars, plug-in hybrids and dual-cab utes

Hydrogen fuel-cell vehicles such as those in development by Toyota and Hyundai had a win in last night’s federal budget, which pledged $2 billion to help kick-start Australia’s ‘green hydrogen’ industry.

The “Hydrogen Headstart” scheme imagines an Australia producing and exporting hydrogen fuel using renewable energy, which could then be used in applications such as hydrogen fuel electric vehicles (FCEVs) like the Toyota Mirai sedan or Hyundai Nexo SUV, which are available in Australia on a special order basis.

Hyundai Nexo 2021 record setting front 3/4 driving
Hyundai’s hydrogen-powered Nexo SUV is available through a special order scheme in Australia

Hydrogen FCEVs are touted as an alternative to the current electric vehicle trend, which uses large battery packs recharged by electricity produced externally, often brown coal. Fuel-cell vehicles use hydrogen to produce their own electricity on-board, with the only tailpipe emission being water.

Hydrogen produced using only renewable energy, such as wind or solar, would mean 100 percent carbon-free motoring.

The big advantage of a hydrogen FCEV over a conventional electric vehicle is that hydrogen can be ‘topped up’ like petrol in a fraction of the time it takes to charge an EV. This makes hydrogen FCEVs an attractive alternative to electric vehicles for commercial applications such as buses and trucks. 

Toyota Hilux Hydrogen 2023 front 3/4
Toyota has previously shown off a hydrogen-powered Hilux concept

Currently most hydrogen is produced using fossil fuel-based methane gas reforming, but the cost of ‘green hydrogen’ is expected to drop dramatically in the coming decades.

While the automotive industry moves en-masse to electric vehicles, Toyota and Hyundai continue to believe in a hydrogen fuel-cell future, having spent decades investing heavily in the technology.

The Federal Government pledge comes as the United States allocates billions to its own green energy industry, threatening to poach talent and opportunities from Australia.

2023 Tesla Model Y Performance red rear 3/4
Electric vehicles such as Tesla’s Model Y also benefitted from a healthy budget boost

Meanwhile, electric cars also benefitted from last night’s budget with $7.4 million to boost establishing stricter fuel efficiency standards, likely aligning Australia’s regulatory environment more closely with Europe – and making it harder to sell internal combustion cars in Australia.

Plug-in hybrid electric vehicles were dealt a blow, the government planning to strip their current fringe benefits tax exemption.

Sales of new dual-cab utes might also be impacted, the Albanese government reducing the maximum claimable under the Instant Asset Write-Off Scheme from $150,000 to $20,000 effective July 1. Any business taking delivery of a brand new dual-cab ute next financial year will be affected, even if they ordered it this financial year.