Imagine a zero-emissions fuel that exists on Earth in abundance, can be easily extracted using basic chemistry and offers jobs and investment in Australia for decades to come.
That substance exists: it’s called hydrogen. Just like natural gas, hydrogen can be used for heating and cooking in homes. Instead of petrol and diesel, hydrogen fuel cells can power electric trucks, trains and cars.
We’ve produced it in large volumes for more than a century, for use as a feedstock in industry; and it’s been shipped and stored with an exemplary safety record for all that time. Now hydrogen is surging to the top of the global decarbonisation agenda.
Our hydrogen potential
In a vector animation, white clouds circle planet Earth. A fast descent to the Australian continent. White icons appear on the green Australian landmass. Hydro turbine icons turn above some water symbols, a sun rises above solar panels and wind turbines spin on a mountainside.
Countries around the world are working to reduce emissions, and this is driving a transition towards a clean and secure energy future. In this future energy picture, we all need clean, flexible, storable and safe fuels. Hydrogen ticks all of these boxes. When used as a fuel, it doesn't produce any carbon emissions. It produces water.
An animated water droplet falls into a body of water. Below, a white stick figure scratches its head.
The only thing is, we don't usually find hydrogen in the form we can use as a fuel. That's because it's bound up in substances like water, natural gas, coal and biomass. This means we have to extract it. We can extract hydrogen from water using renewable electricity.
In a schematic-style animation, two circles, one that has renewable energy icons inside it and the other a water droplet, are linked to a vertical rectangle. Inside the rectangle a ‘positive’ and ‘negative’ icon are positioned above diodes in a tank. Hydrogen and oxygen labelled bubbles rise up from the tank. The schematic extends to two circles on the right, one has the chemical symbol for hydrogen inside it and the other oxygen.
This method releases no carbon emissions. We can also extract hydrogen from natural gas, coal and biomass using heat to drive chemical reactions with water.
A second schematic has icons for gas, coal and biomass linked with a flame and water icon to a power plant. The schematic extends to two circles on the right, one has the chemical symbol for hydrogen inside and the other carbon dioxide. The carbon dioxide symbol becomes a padlock.
This method does release carbon emissions and we need to make sure these are captured and stored safely.
In the earlier animation, white clouds circle planet Earth. A fast descent to the Australian continent. White icons appear on the green Australian landmass.
In Australia, we have an abundance of the natural resources you need to make clean hydrogen, making hydrogen an ideal clean energy solution to help power Australia.
In a vector animation, a gas tanker bobs its way out of a city harbour.
A fast ascent and a white arrow curves up from the Australian east coast to Japan and Korea.
There is also an opportunity for Australia to become a global supplier of hydrogen. Countries like Japan and South Korea have made commitments to using hydrogen to fuel their societies. By adding hydrogen to our economy, we could create jobs, especially in regional areas, and increase prosperity.
In a vector diagram, a central circle has the hydrogen chemical symbol inside. Other circles diverge and form branches around it. Inside the various circles are icons for a house, a city, a briefcase and numerous dollar symbols.
The diagram becomes a double page in an open book. The pages of the book turn. The book closes and the cover reads ‘National Hydrogen Strategy’.
It's for these reasons that Australian governments are working together on a National Hydrogen Strategy. You can read about the work Australian governments are doing at industry.gov.au/hydrogen. Australian Government.
The Australian government coat of arms. The COAG Energy Council logo is a circular rainbow-coloured aperture.
A fuel for the twenty-first century
For nations like Japan, the options for low-emissions energy are few. It is an energy-intensive economy without the land for wind and solar electricity or the appetite for a major expansion of nuclear power. Imported hydrogen is a versatile and attractive alternative – if the costs can be driven down to parity with the landed price of LNG.
Most of the hydrogen produced today for industry is made from fossil fuels. The process is emissions-intensive, even if the hydrogen itself is clean-burning. An alternative low-emissions pathway is required. There are two commercially viable options: splitting water molecules into hydrogen and oxygen, using electricity generated from renewable sources; or refining fossil fuels like coal and natural gas, using carbon capture and storage to mitigate the unwanted emissions.
On either pathway, Australia is a prime contender to be a dominant supplier.
Australia’s competitive advantage
Australia has a number of competitive advantages as a hydrogen exporter:
- expertise and infrastructure we can leverage to develop hydrogen export energy supply chains
- proximity to markets in Asia and well-established trading relationships
- an abundance of renewable energy and low-cost fossil-fuel resources
Two international reports have confirmed Australia’s potential as a future major hydrogen supplier. The World Energy Council’s International Aspects of a power-to-x roadmap identified Australia as a ‘giant with potential to become a world key player’. The International Energy Agency’s World Energy Outlook projects that Australia could easily produce 100 million tonnes of oil equivalent of hydrogen. This could equate to 3% of global gas consumption today.
Japan has already committed to be a large-scale enduring customer for Australia through a world-first project to produce hydrogen in Victoria.
Capitalising on this growing demand for hydrogen could result in an export industry worth $1.7 billion by 2030, and could provide 2,800 jobs. Most of the jobs created by this new industry are likely to be in regional areas.
A hydrogen export market will have important domestic spill-over benefits and opportunities for Australia. Hydrogen used as energy storage can contribute to the resilience of our major electricity systems. Long-term energy storage in micro-grid sites, such as remote mine sites, will benefit.
Clean hydrogen technologies can also help our domestic sectors to decarbonise. Heavy vehicles powered by hydrogen fuel cells could meet the increasing demand for zero emissions transport, with the advantage of long range, rapid refuelling and moderate costs. Replacing natural gas with hydrogen could in many cases decarbonise direct combustion at less cost than can electrification.
Developing a national hydrogen strategy
There is a limited window of time to capitalise on these opportunities.
In December 2018, the COAG Energy Council agreed on the need to develop a national hydrogen strategy.
The Hydrogen Working Group is working quickly to ensure our strategy will be delivered by the end of 2019. A national strategy will enable Australia to define its role in the promising export market and position government and industry to implement it from 2020.
We are taking a coordinated approach, working with industry, experts, end users, environment and community groups. We are also consulting with the public on key issues to ensure our policies and measures benefit all Australians.
Our strategy aims to be bold and ambitious, balancing the need for safety, cost-effectiveness and commercial viability. A vibrant hydrogen industry will rely on healthy competition. Our policies will be technology-neutral to support any hydrogen technology.
Our next round of consultations explore various aspects of the emerging hydrogen industry. I encourage you to read our issues papers and respond.
With your input, we can build a clean, innovative and competitive hydrogen industry and position Australia as a major global player by 2030.
Dr Alan Finkel AO