INSIGHT

Hydrogen

Energy Oil & Gas

Updates to hydrogen across Australia

In November 2019, the COAG Energy Council released Australia's National Hydrogen Strategy. The Strategy provides a framework for leveraging Australia's significant natural resources and experience with resource development to develop a strong domestic hydrogen sector, which in turn will allow us to become a leading global exporter of hydrogen. A key element of the framework will be the development of hydrogen hubs – clusters of large scale demand – in places like ports, cities and remote areas, and the pursuit of the use of hydrogen in transport, industry and existing gas distribution networks. The focus at this stage is on providing targeted support for priority pilots, trials and demonstration projects and assessing supply chain infrastructure needs. This is reflected in the existing projects currently being developed in Australia.

These include:

  • Jemena's Western Sydney Green Gas Project, which will convert solar and wind power into hydrogen (via electrolysis) which will then be stored for use in the existing Jemena Gas Network, the biggest gas distribution network in Australia;
  • the multi-billion dollar H2-Hub Gladstone facility that will produce renewable hydrogen for use as an energy source and as feedstock in the production of ammonia;
  • ATCO's Clean Energy Innovation Hub in Western Australia, a $3.3 million research and development facility which includes a demonstration project involving the storage and use of hydrogen produced by solar powered electrolysis, and the injection of blended hydrogen into a demonstration gas network;
  • Australian Gas Networks' Hydrogen Park in South Australia, a $11.4 million demonstration project involving the supply of a blend of 5% renewable hydrogen in natural gas, delivered to customers through the existing gas network; and
  • Engie and Yara Pilbara's demonstration-scale renewable hydrogen and ammonia production project. ENGIE and Yara Pilbara are together investigating the feasibility of producing hydrogen to convert into ammonia which will be sold into domestic and international markets.

Ultimately, the Strategy includes as its measures of success for the hydrogen market in Australia, being one of the top three exporters of hydrogen to Asian markets, having an excellent safety track record, providing economic benefits and jobs in Australia and having a robust, internationally accepted, provenance certification scheme in place. In early progress towards these goals, Australia has signed the Joint Statement on Cooperation on Hydrogen and Fuel Cells with Japan which encourages Australia and Japan to exchange views on national hydrogen strategies and to shape the global hydrogen market regulations. A letter of intent has also been entered into with South Korea regarding the intent to collaborate and to develop a hydrogen action plan.

From a legal perspective, the Commonwealth Government is focused on removing market barriers while maintaining safety and environment protections with a nationally consistent regulatory framework. States are now considering whether regulatory reform is required to address the growing hydrogen industry and are developing their own investment programs and strategies to encourage investment and innovation.

Energy Minister Angus Taylor has provided that the first specific goal will be 'H2 under $2' (hydrogen under $2 per kilogram). BloombergNEF's recently published Hydrogen Economy Outlook predicts that Australia could deliver renewable hydrogen at US$1.48 per kilogram by 2030 and 84c/kg by 2050, and that hydrogen produced for US$0.8 to US$1.6/kg is equivalent to gas priced at US$6-12/MMBtu. According to BloombergNEF, this means that renewable hydrogen could cut the global greenhouse gas emissions of the fossil fuel industry by more than a third, while remaining competitive with natural gas from a cost perspective. To achieve this, significant subsidies and investments in hydrogen infrastructure will be required. However, the future is bright for hydrogen.

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