SA Government Rejects Claims Hydrogen Office Closure Shows Waning Commitment, Opposition Disagrees
The South Australian government has rejected suggestions that shutting down its standalone hydrogen office signals a diminished commitment to hydrogen energy, despite criticism from the opposition, which claims the plan has collapsed.
Originally established to deliver Labor’s pre-election promise of constructing a hydrogen power station and electrolyser near Whyalla, the Office of Hydrogen Power SA will now be disbanded. According to Energy Minister Tom Koutsantonis, its duties will be absorbed into the Department for Energy and Mining.
The same restructuring applies to the Office of Northern Water Delivery, which was overseeing plans for a large desalination plant on the Eyre Peninsula. Its responsibilities will also shift to the department.
The hydrogen project, valued at nearly $600 million, was a key Labor pledge in the 2022 election, expected to generate jobs, cut emissions, and lower energy costs. However, the plan was effectively shelved earlier this year. The funds were redirected to a $2.4 billion joint federal-state rescue package for the Whyalla steelworks, which had entered administration.
Despite the project’s cancellation, Mr Koutsantonis told parliament the long-term requirement for hydrogen to decarbonise steel production remains.
“Eventually, a hydrogen facility will be needed to decarbonise steel,” he said. “That will depend entirely on the new steelworks owner and their investment timeline for direct iron reduction and an electric arc furnace.”
Hydrogen Vision Falters
More than four years after the project’s announcement, its future remains uncertain. The government previously faced criticism for maintaining the hydrogen office and keeping its director, Sam Crafter, on a salary exceeding $500,000, even after the hydrogen plant was put on hold.
Mr Koutsantonis confirmed that Mr Crafter has been reassigned as the State Lead for Whyalla Steelworks Industrial Transformation within the Department for Energy and Mining.
Opposition Leader Vincent Tarzia seized on the developments, labelling the government’s hydrogen initiative a failure.
“Shutting down the Office of Hydrogen Power and the Office of Northern Water Delivery proves the government’s state prosperity plan has failed and key election promises have been broken,” he said.
“These two cornerstone projects are now effectively in ruins. A staggering amount of taxpayer money has been wasted on what amounts to a hydrogen hoax and poor handling of the water project.”
Desalination Project Depends on BHP Agreement
Last year, the government committed $100 million toward a feasibility study into building a desalination plant on the Eyre Peninsula, with mining giant BHP contributing another $77 million.
Mr Koutsantonis insisted that discontinuing the Northern Water Office signals progress, not abandonment.
“The office has completed its mission. We’re now entering the next phase: negotiating with BHP,” he said.
He stressed that a final decision on the project hinges on securing a purchase agreement from BHP.
“We’re not going to build the plant speculatively. We need a binding agreement confirming BHP will buy the water,” he said.
