Hydrogen just might be the next big energy export

hydrogen exports, the venture magazine

Last year, Australia became the world’s top exporter of liquefied natural gas (LNG) for the first time. Whilst the nation remains well-positioned to be a leader in that market for years to come, hydrogen is emerging as an energy source that will challenge LNG. And, there’s a good chance Australia will be a major player in the hydrogen economy too.

State of the Market

Though global demand for hydrogen for energy was just 1 million tonnes last year, it is 40 per cent more efficient than LNG. According to a 2018 Council of Australian Governments report, that will translate into a demand for at least 8 million tonnes by 2030 and 35 million tonnes by 2040. “Australia could feasibly be exporting about 137,000 tonnes of hydrogen a year by 2025, about 500,000 tonnes by 2030, and about 1.4 million tonnes by 2040,” the report states. The first step came in March, when Queensland University of Technology exported a small amount of green hydrogen made from renewables to Japan’s JXTG.

Australia already supplies significant percentages of LNG imports to Japan, South Korea, and China. As rising demand for LNG in those countries bumps into an expected shortfall in supply, they will turn more and more to alternative energy sources. With this in mind, Labor leaders announced in January their $1.14 billion National Hydrogen Strategy.

It “is a clear signal to industry both here and overseas, and to potential international customers such as Japan, the Republic of Korea, and Germany that Australia is serious about hydrogen,” Labor Shadow Assistant Minister for Climate Change and Energy Pat Conroy said at March’s Hydrogen and Gas 2030 Conference in Sydney. “We have a strategy that supports hydrogen from infancy to full-blown maturity. Wherever along the product life cycle a particular hydrogen technology is, Labor will have a policy that could support it.”

The faster Australian companies can scale exports, the better positioned they’ll be to control a significant portion of the market. The Australian Renewable Energy Agency (ARENA) forecasts a $10 billion export market over the next 20 years, with 16,000 jobs created.

Current and Potential Projects

hydrogen exports, the venture magazine

The Labor plan would give $1 billion to the Clean Energy Finance Corporation (CEFC) to support clean hydrogen and would establish a National Hydrogen Innovation Hub in Gladstone, QLD. It would also require ARENA to put up to $90 million into developing hydrogen technologies.

Among projects ARENA is already funding is the Toyota Australia Hydrogen Centre. The $7.4 million venture will convert the Toyota plant in Altona, VIC, that closed in 2017 into a renewable energy hub. ARENA is providing $3.1 million of the cost. The plant will produce at least 60 kilograms of renewable hydrogen daily. It will also host a fuel cell refilling station.

“Australia holds a competitive advantage to play a global role in the emerging hydrogen export market due to our existing expertise and infrastructure,” ARENA head Darren Miller said. “We’re excited to see Toyota add their skills to the mix and be a major player in increasing the uptake of hydrogen applications in different sectors.”

The Western Australia government is putting $10 million toward a $30 million microscale LNG plant in Kwinana that will also research scaling hydrogen export to make the cost of production economically viable. Labor and the Northern Tasmania Development Corporation (NTDC) have set their sights on Bell Bay for a potential facility that could produce 50,000 tonnes of hydrogen annually. NTDC chair John Pitt said the growing hydrogen market could eventually match LNG in terms of demand. Labor’s Conroy said a study is still ongoing but Bell Bay seems ideal. “You’ve got access to pumped hydro through the Battery of the Nation, you’ve got access to great water resources as well, and you’ve got a deep water port where you could export the hydrogen to the rest of the world,” he said.

Getting to Green

There are three ways to produce hydrogen gas. “Brown” is made from coal, “blue” from natural gas, and “green” from water. Green, or clean, hydrogen uses electrolysis to separate the hydrogen and oxygen molecules of water. As opposed to brown and blue, it uses electricity from renewables instead of fossil fuels and is emission-free. The ultimate goal is to make green hydrogen as cost-effective and profitable as possible.

University of WA professor of gas processing told Perth Now that at the Kwinana plant, blue would be seen as a stepping stone to green since it is currently less expensive to produce. “Once you get a sufficiently big (blue) export trade going that will provide the driving force to push the price of green hydrogen down,” he said.

Woodside Petroleum chief executive Peter Coleman agrees that blue is the thing to focus on now, with exports reaching scale by 2030. “The earlier we can shift (to green), the faster we can reduce emissions, he said.

Green’s affordability may have taken a big step in March, when scientists at Stanford University in California announced they had found a cost-effective electrolysis using seawater instead of expensive purified water. With current technology, 9 litres of water produce 1 kg of hydrogen. If this breakthrough proves effective, there are many, many litres of seawater that could yield clean energy.