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.
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.
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