Hydrogen Industry

Mr WHETSTONE (Chaffey) (14:21): My question is to the Minister for Trade and Investment. What does the cessation in discussions for an Australian-European Union free trade agreement mean for South Australia's hydrogen sector? With your leave, sir, and that of the house, I will explain.

Leave granted.

Mr WHETSTONE: The Australian trade minister, Don Farrell, previously described Australia's access to hydrogen as a big advantage for free trade agreement negotiations. Hydrogen had been a key priority in negotiations for the proposed South Australian Frankfurt trade office. With the breakdown in negotiations, it appears that we have been left with high tariffs and limited market access.

The Hon. P.B. MALINAUSKAS (Croydon—Premier) (14:22): I thank the shadow minister for his question. The state government, naturally, has been working collaboratively with the commonwealth, particularly the Minister for Trade, on a range of different opportunities and a range of trade issues facing the state, and there may yet be an opportunity later in question time to address some of them.

With respect to the hydrogen sector, the focus of the government's hydrogen policy in the first instance is entirely domestic. We see the rollout of the hydrogen industry in our state over the course of this decade being done in a very deliberate way, where it commences with the state government's Hydrogen Jobs Plan in conjunction with the opportunities around the hydrogen hub at Port Bonython and potentially other announcements to follow.

Let me be clear about this: our preference as a government in the first instance is for hydrogen production to be principally for domestic consumption, domestic consumption by the Hydrogen Jobs Plan itself but particularly from local industry, particularly manufacturing.

The export opportunity around hydrogen the state government does believe to be real, as does the commonwealth, and there has been a range of investments by the commonwealth over the course of successive federal governments, both Liberal and Labor, to explore those opportunities, but the time lines associated with that aren't necessarily in the immediate future.

Hydrogen export is likely to come in a number of forms. Ammonia is the one most aggressively pursued at the moment and is potentially foreshadowed at the Port Bonython development, but the prospect of export of hydrogen molecules in their more pure form we don't see as being something that is likely to happen in the immediate future. The deliberations coming out of the free trade agreement do not deter or have any practical implications on the immediate state government policy that we have around hydrogen production.

This state government's view around hydrogen export in the medium term I think is best represented by the green iron or hot briquetted iron (green iron pellets) opportunity. Green steel is something that has been talked about going back some time, particularly from Sanjeev Gupta and GFG, and that's something we would love to see happen.

But what's far more likely in our assessment and something that we are working on with GFG amongst others is the potential for the use of domestically produced hydrogen in the Upper Spencer Gulf being used in conjunction with our local magnetite resource, which is one of the world's best, both in terms of quantity and quality, combining them with our domestic steel manufacturing industry to produce green iron pellets (HBI), and exporting that to existing steel producers in countries that are principally outside of Europe: Japan, Korea, but potentially also China, and then the European opportunity is in Germany.

We don't see the timing of the breakdown, if you want to characterise it that way, of the free trade agreement negotiations with Europe impeding those efforts. Naturally, I think the whole country hopes that there is a successful free trade agreement with the EU at some point in the future, but that can never be done at the expense of our priorities as a country. Sometimes I think there has been a rush to free trade agreements just to say, 'Hey, you beauty, we got a free trade agreement!' without them necessarily representing the national interest.

I, for one, take comfort from the fact that we have a federal government and a federal minister first and foremost protecting the national interest before we rush to a positive announcement that might be having a deleterious impact on our economy into the future.