The hydrogen economy, once heralded as the future of clean energy, is unravelling as I write. A few years back, I argued that hydrogen’s promise was overshadowed by practical and economic barriers. Despite the buzz, its high production costs, inefficient storage, and logistical challenges make it a poor fit for widespread adoption.
Everybody knew this except renewables zealots, especially Minister for Climate Change and Energy, Chris Bowen.
And just like that, the mirage has vanished.
Senator Matt Canavan’s recent post on X echoed this sentiment, declared the hydrogen boom ‘busted before it started’, and urged the Australian government to abandon billions in subsidies for this ‘pipe dream’. He’s right.
The allure of hydrogen as a renewable energy saviour ignores its inefficiencies. Hydrogen’s low energy density requires vast volumes to transport, driving up costs and infrastructure demands. Worse, it’s expensive and it needs extra wind turbines and solar installations (and the associated wiring) to produce hydrogen. It’s a lot like spending $500 to save 50 cents.
I tried to warn people when these absurd hydrogen hubs were announced that they were a waste of time.
I was ridiculed and now our nation has lost billions.
How about we just drop this net zero madness and concentrate on doing what works? pic.twitter.com/jYhpEEhxLJ
— Senator Matt Canavan (@mattjcan) July 1, 2025
The policy landscape, noting government enthusiasm that is often centred in Canberra, has outpaced reality. Further, hydrogen’s role is limited by its high production energy requirements and the impracticality of retrofitting existing logistics networks. Canavan’s scepticism is justified, as is his criticism of the pivot to hydrogen as a distraction from ‘real energy’ solutions like coal and gas (and nuclear), which offer reliability.
The economics are stark. Green hydrogen, produced via electrolysis, is six to eight times costlier than grey hydrogen derived from fossil fuels or pink hydrogen from nuclear (but you don’t need hydrogen if you use fossil fuels or nuclear).
Even with projected efficiency gains, the cost of input electricity dominates, rendering scale irrelevant. Subsidies might prop up projects, but they drain public funds for marginal gains.
Canavan’s call to redirect investment reflects this reality. Even hydrogen’s niche applications, perhaps in heavy industry, don’t justify the hype.
The hydrogen ‘narrative’, driven by political posturing rather than pragmatism, has already diverted resources from proven technologies. So much for nuclear being ‘not right for Australia!’
Australians ought to demand fiscal accountability for Labor’s failure to pick technology winners (yet again). The truth is that hydrogen’s failure isn’t a setback but a wake-up call. But there’s an ice flake’s chance in hell this government will prioritise energy solutions grounded in economics, rather than dreams.
Besides, Labor’s next winner is just on the horizon.
Dr Michael de Percy @FlaneurPolitiq is the Spectator Australia’s Canberra Press Gallery Correspondent. If you would like to support his writing, or read more of Michael, please visit his website.
