Australia: Australias hydrogen economy – hype or hope?

What is so exciting about hydrogen?

Hydrogen is the simplest (one proton, one electron, no neutrons) and most abundant element in the Universe. Hydrogen though, has had a bad rap over the years – think the Hindenburg airship disaster in 1937 and hydrogen bomb testing in the 1950s. Now hydrogen is being viewed in a much more positive light: unlike with fossil fuels, when hydrogen is burned there are no CO2 emissions, just water vapour and heat.

The concept of a hydrogen economy – one where hydrogen replaced fossil fuels – first started to get legs in the 1970s. Of course, it is not an easy task to knock fossil fuels off their perch. The hydrogen economy is now making a comeback as the world contemplates how to limit global warming but still keep our vehicles, trains and ships running, still keep our buildings warm in winter, and how to complement and store wind, solar and hydro electricity generation.

Launched at the World Economic Forum in January 2017, the Hydrogen Council is a global, industry led effort to develop the hydrogen economy. The Hydrogen Council vision sees fuel-cell electric vehicles (FCEVs) playing a big role in both private vehicles and long distance commercial transport. Renewable hydrogen can replace "dirty" hydrogen currently used in industrial processes and can supplement gas for heating.

Surplus renewable energy can be stored in the form of hydrogen for later use. The vision is that, by 2050, hydrogen will account for almost one-fifth of total final energy consumed globally. Realising the vision does not come cheap, an estimated investment of US$20-25 billion a year to 2030 is required.

In Australia, Hydrogen Mobility Australia (HMA) was formed at the beginning of 2018 to pursue a vision of a hydrogen society built upon clean and renewable energy technology, including hydrogen powered transport. HMA's members are a collection of vehicle manufacturers, energy companies, infrastructure providers, research organisations and governments with a mission to make this hydrogen vision a reality in Australia.

Japan – the game changer

From an Australian perspective, the breakthrough moment was when Japan published its Basic Hydrogen Strategy in December 2017. Japan was dealing with the aftermath of the Great East Japan Earthquake of 2011, its impact on the availability of nuclear power and the demands of having to meet its emission reduction commitments under the 2016 Paris Agreement. Overlay then Japan's almost total dependence on imported fossil fuels for almost all of its primary energy supply.

The Basic Hydrogen Strategy report stated that hydrogen is attractive to Japan because "it can be used as an energy carrier to store, carry and use renewable energy, due to its storability, portability and flexibility". Instead of importing fossil fuels, Japan sees itself instead importing hydrogen produced in two forms:

  • the so-called renewable hydrogen, where electrolysis is used to split water molecules into hydrogen and oxygen, powered by wind, solar and hydro power
  • carbon capture and storage (CCS) hydrogen, where coal and gas can be processed in countries like Australia to produce hydrogen, with the unwanted CO2 emissions captured and sequestered. There is a current Japanese-led demonstration project in the Latrobe Valley in Victoria using brown coal, involving Kawasaki Heavy Industries.

Japan's strategy sets out a roadmap to become a hydrogen-based society by the middle of this century. They propose to use the 2020 Tokyo Olympic Games as a showcase, using hydrogen fuel-FCEV buses and hydrogen for the athletes' villages.

Japan has a three phase plan:

  • Phase one: dramatic expansion of fixed fuel cells and FCEVs to capture the global market for hydrogen and fuel cells – Japan aims to have 40,000 FCEVs on the road by 2020;
  • Phase two: by second half of 2020s, a full fledged introduction of hydrogen power generation and establishment of a large scale hydrogen supply system; and
  • Phase three: by 2040 combine hydrogen production with CCS and renewable hydrogen to establish a totally CO2-free hydrogen supply system.
  • What is Australia doing?

With strong market signals being sent from Japan, the COAG Energy Council commissioned a report from the Hydrogen Strategy Group, chaired by Dr Alan Finkel. Their report was delivered in August 2018. In his covering letter, Dr Finkel said this: "...why now, given the idea of a hydrogen economy has been seriously and frequently proposed since 1972. The answer is Japan's commitment to be a large scale enduring customer, and the hundredfold reduction in the price of solar electricity in the past four decades." Dr Finkel points out that South Korea has also expressed strong commitment to hydrogen.

Dr Finkel's report found that the key opportunity is to capture the hydrogen export market, with associated benefits in the domestic economy. Consultants ACIL Tasman put value of export opportunity (in their medium scenario) at $2.225 billion in 2030 and $5.7 billion in 2040. To put those numbers in context, Australia's exports of coking coal are about $30 billion, thermal coal $20 billion and LNG $40-50 billion.

In addition to the export of renewable and CCS hydrogen, the report outlines domestic uses: additive to or replacement of natural gas for domestic cooking, heating and in industrial processes; stored then used to generate electricity; FCEVs as an alternative to battery-powered EVs (BEVs) – with a particular advantage for long haul transport due to the weight of batteries needed.

Most states have hydrogen initiatives of their own. Western Australia for example has established a Renewable Hydrogen Council with membership including LNG major, Woodside, which sees hydrogen production, initially from gas and later from renewable energy, as an adjunct to their core LNG business.

Also very active in the hydrogen space is Western Australia iron ore major, Fortescue Metals Group (FMG). In November 2018 FMG and CSIRO entered into a five year agreement whereby FMG will fund and support select CSIRO technologies in the hydrogen space. The first of the agreements will focus on CSIRO's metal membrane technology, which will make the transportation of hydrogen economically viable. FMG has made it clear that they want to be involved in the large scale production and export of hydrogen. FMG has recruited a CSIRO expert, Michael Dolan, as their first Hydrogen Innovation and Development Lead.

In September 2018 the Queensland Government issued its own discussion paper (Advancing Queensland's Hydrogen Industry) and provided funding into some research and demonstration projects. Queensland has followed up quickly with a five year Hydrogen Industry Strategy with a view to placing Queensland at the forefront of renewable hydrogen production in Australia for both use domestically and for export. The Queensland strategy is backed up by $19 million in budget funding including $15 million for a Hydrogen Industry Development Fund to facilitate private sector investment and leverage third party funding. From our discussions with members of the Queensland Government team involved in Queensland's hydrogen push, we understand the focus is to commercialise this emerging market as soon as possible, through the development and deployment of new technologies and public private partnerships.

Queensland and Western Australia hold a notable competitive advantage over other jurisdictions in the race towards a hydrogen production and export industry. Both states are internationally recognised as being natural resource export hubs with a friendly investment climate. In addition, both states have a well developed LNG production and export market, providing access to existing infrastructure and expertise that will be vital in the development of a hydrogen industry.

In December 2018 the COAG Energy Council accepted Finkel's proposal to develop a national hydrogen strategy. A public discussion paper was released for public comment in March 2019 and a final national strategy will be presented to the COAG Energy Council in December 2019. In the meantime the Council is overseeing some "kick-start" projects in 2019 including commencement of work to allow up to 10 percent hydrogen in the domestic gas network, both for use in place of natural gas and to provide at-scale storage for hydrogen.

What to expect?

The global focus on hydrogen is likely to be elevated as a result of the upcoming G20 meeting in Japan. Before the meeting a report from the International Energy Agency entitled "The future of hydrogen" which sets out some potential quick wins to advance the hydrogen economy.

By the end of 2019 we are going to have government hydrogen strategies aplenty in Australia. These will need coordination and national leadership. At the same time, the States will inevitably try to outcompete each other.

Finkel says the prime opportunity for Australia is the export of hydrogen to Japan and South Korea. This is going to require a serious investment by both governments and private industry. The prize is worth pursuing, but it is not going to replace the value of our thermal coal exports, for example. Nor will we have it all our own way, with competition for hydrogen exports likely to come from Norway, Saudi Arabia and Qatar.

Domestically, we can expect to see a series of FCEV trials supported by car makers like Toyota and Hyundai. Like BEVs, the key will be the availability of fuelling stations. A more likely prospect is the roll-out of hydrogen fuel cell buses, with trials already underway in Europe.

Final comments

Hydrogen is being heralded as the solution to many issues faced by our transitioning global energy including:

  • the intermittency risks of renewables due to the storage possibilities of hydrogen;
  • emissions reduction in the transport sector thanks to FCEV; and
  • wide spread decarbonisation of the manufacturing sector once hydrogen substitutes existing gas and coal fired generators.

Australia is taking steps to position itself to be able to capitalise on each of the above, but with the sadly standard issues facing energy policy in Australia persisting, Australia's success in becoming a market leader in hydrogen production and export is uncertain. Unless Dr Finkel's report, due at the end of the year provides a national plan which is adopted by all levels of government and political parties, it is likely the Swiss Cheese policy approach across states and parties will continue. With the big dollars required to develop this sector, an uncertain investment framework will likely see Australia miss out on investment and lag behind the other countries aggressively pursuing this opportunity.

The feature of the hydrogen landscape which gives somewhat more hope than hype, is the overwhelming support this emerging industry is receiving from well established, large, private sector players. With a strong investment from corporates dedicating time, money and resources to ensure they are on the front foot for hydrogen development, the holding pattern which has plagued renewable energy development in Australia for 10 years could be bypassed, leading to the hydrogen boom in Australia that it is so well placed for.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions