There would be no royalty on hydrogen produced by electrolysis of water.
Australia has around 40 per cent of all announced global hydrogen projects, with the Australian pipeline valued from $230 billion to $300 billion.
"Western Australia has established itself as a global leader in the emerging renewable hydrogen industry in less than four years,” Mr Johnston said.
“Global hydrogen use is forecast to grow to 500 to 800 million tonnes a year by 2050 – current demand is 115 million tonnes.
“We have around 30 different proposals for gigawatt scale projects that extend across the State.
“The project pipeline to 2040 has indicated the potential for 200 gigawatts worth of renewable energy generation.
“These projects could supply millions of tonnes of renewable hydrogen every year to Europe, Japan, South Korea and Singapore.”
The consultation paper said that while WA was one of the first jurisdictions to develop a Renewable Hydrogen Strategy (2019) the international hydrogen market is rapidly developing, with more than 20 countries releasing national hydrogen strategies.
“Funding support globally has also seen a marked increase in recent years, as nations strive to become competitive in production, use and distribution of renewable hydrogen,” the paper said.
“Russia’s invasion of Ukraine has impacted global energy security, particularly in Europe, increasing the speed of transition from oil and gas to renewable sources (including renewable hydrogen).
“Western Australia’s ability to compete in the global market will be challenged by ambitious policy support from other nations, which will reduce the cost of their renewable hydrogen and hasten the development of their industries.
“The change in pace and scale of renewable hydrogen support increases the need for Western Australia to quickly develop competitiveness and capture the advantages associated with being a first mover in areas of sustainable competitive advantage.”
The updated strategy will focus on three broad pillars, production, domestic hydrogen use, including for transport and remote applications, and export.
On production, the paper said: “Renewable electricity and renewable hydrogen generation at scale requires large amounts of suitable land to be viable.
“Despite the State’s significant expanses of land, there is a high level of competing interest for conservation, mining, industrial and pastoral uses, and investment is required to transform some land to become project ready.
“An ability to balance competing interests and uses, along with the approvals needed to enable land access, is a key consideration for project viability, environmental and community benefit.
“In addition, land and infrastructure for equipment imports, such as wind turbine blades, needs to be planned.”
Other challenges included approval times, renewable electricity capacity, sustainable water use, offtake certainty, access to high voltage infrastructure and cost-competitiveness.
On domestic use, it said WA’s public and private sectors should prioritise the highest impact end uses such as decarbonising heavy industry and use as a feedstock for production of green steel, cement, aluminium, and glass production and refining.
Low-cost transport, storage and distribution of renewable hydrogen remain important challenges to overcome.
The paper said the global market for renewable hydrogen is expanding, presenting an important economic opportunity for WA as a leading energy and resource export economy.
“The renewable hydrogen export market has many prospective players, and the infrastructure and technology to export renewable hydrogen is changing quickly,” it said.
“Growing low-cost competition and offtake certainty are key challenges facing the renewable hydrogen export market.
“Additionally, significant work needs to be undertaken on the possibility of transforming existing export infrastructure to become suitable for hydrogen export. Improving technical feasibility to produce green commodities using renewable hydrogen is also an important step.”