Potential energy: the future of clean hydrogen is now
How the earth’s most abundant element — hydrogen — can help decarbonise energy production, hard-to-abate industries and support more renewables in the electricity grid
How the time is now for the fuel of the future
In the 1960s it was hydrogen fuel cells that helped humans reach the moon. Since then — and probably earlier — hydrogen has been labelled a fuel of the future. Now, in the transition to a clean energy future, renewed interest is being shown in hydrogen as part of a suite of solutions to help reach net-zero carbon emissions.
The value of hydrogen is its abundance, versatility and the fact it has zero carbon emissions when used as a fuel. Plus, it has only one by-product — water.
As world energy demand increases alongside the need to meet international climate change commitments, hydrogen has many beneficial applications:
- to produce energy; for example, grid electricity, as well as energy for use in hard-to-abate industries, such as the production of steel or chemicals and for transport
- use as a natural gas additive (helping to decarbonise the electricity and gas sectors, as well as for heating and transport fuels)
- to produce fertilisers, ammonia, chemical feed stocks and other industrial products.
The International Energy Agency (IEA) has found that achieving net-zero emissions by 2050 will require a ‘complete transformation of the global energy system’.
Hydrogen has a critical role to play filling the gaps not met by renewable supply, as a transport fuel and energy source for heavy industry. And that work is starting now. A 2021 report by the Hydrogen Council identified 228 hydrogen projects across the globe, with governments having pledged US$70 billion in support for the hydrogen industry.
In Australia, hydrogen has the potential to position the country as an energy exporting powerhouse. Conservative estimates developed for Australia’s National Hydrogen Strategy indicate a domestic industry could generate over 8,000 jobs and $11 billion a year in GDP by 2050.
Hydrogen is one of earth’s most abundant elements. But it comes with a catch. It tends to combine with other elements — like oxygen to make water — so it’s not freely available as a gas.
Scientists describe hydrogen as an ‘energy carrier’ because it doesn’t exist in nature on its own. You need energy to make it. But once you do — and this is the benefit for a clean energy future — clean hydrogen produces no carbon emissions.
Clean hydrogen can be made in a couple of ways:
- using fossil fuels such as gas (steam methane reforming) or coal (gasification) coupled with carbon capture and storage technology (CCUS) — lowering emissions
- produced from renewable electricity using a process called ‘electrolysis’ where electricity is used to extract hydrogen from water. When renewables are used to power electrolysis no carbon emissions are produced.
Due to hydrogen being one of the smallest and lightest elements on earth, it needs to be turned back into a carrier by liquefaction to be transported. Alternatively, it can be converted into another chemical that contains hydrogen, such as ammonia, to be transported for later reversion to hydrogen. It can be safely transported by truck, ship or by pipeline.
The connection between hydrogen and a net-zero-emissions future
As a zero-carbon energy carrier, hydrogen is critical for reaching net-zero. It can be used to produce grid electricity, as well as helping to decarbonise the gas network.
Clean hydrogen can be also used in hard-to-abate industries, such as cement and chemical production, as well as creating low-carbon steel and assisting with transport. The International Energy Association estimates 40% of global energy is used by emissions-intensive industries.
Hydrogen has uses across the transport industry from passenger vehicles, buses, trucks and trains, to ships and aircraft. In most cases, hydrogen is used to produce electricity in fuel cells that power electric and even hybrid motors.
Fuel cell electric vehicles have long driving ranges and can be quickly refuelled making them suitable for low emission heavy transport such as trucks, and trains. Only 10% of Australia’s rail network is currently electrified.
Alongside other low emission technology, such as enhanced oil recovery (EOR) hydrogen can also play an important role in fuel security, due to Australia’s reliance on imported fuels.
Australia and the new hydrogen economy
More than 33 countries are moving to having hydrogen strategies, according to analysis by the World Energy Council. By 2025, these strategies would cover countries that account for 80% of global GDP.
In fact, a 2021 IEA report identified 228 hydrogen projects around the world — with 46 across Asia and Oceania.
Not only does clean low-carbon hydrogen have a key role to play as part of the new energy mix in the transition to net-zero, it has the potential to:
- sustain Australia’s role as leading energy exporter
- position Australia as a global technology leader
- create jobs and economic growth.
Clean hydrogen is seen as a potential major driver of economic development in Australia, which is already one of the top three exporters of hydrogen to Asia. The COAG Energy Council forecast that within 30 years, the hydrogen industry could generate about 8,000 jobs and $11 billion in GDP 1.
The same Energy Council adopted Australia’s National Hydrogen Strategy in 2019, to create a clean, innovative, safe and competitive industry, positioning Australia as a major global player inside this decade. The strategy was developed by Dr Alan Finkel, Special Advisor to the Australian government on low-emissions technology and former Australian Chief Scientist.
A central plank of the strategy is establishing hydrogen hubs in metropolitan, regional and remote areas. As a result the federal government announced the $300 million Clean Energy Finance Corporation - Advancing Hydrogen Fund and the $100 million ARENA Hydrogen Deployment Funding Round.
Since 2019, all states and the Northern Territory have developed either a hydrogen strategy or action plan. In addition, the 2020 Technology Investment Roadmap named hydrogen as one of five priority low emissions technologies.
Australia has unique advantages in developing a hydrogen export economy, guided by the National Hydrogen Strategy. These include abundant natural resources to make low-carbon and clean hydrogen, large-scale energy industry experience and infrastructure and strong energy supply relationships — particularly with regional trading partners.
By 2030, demand for hydrogen is expected to top 3 million tonnes in Japan, South Korea and China alone. The flow-on economic impact in Australia would be 16,000 jobs by 2040 and $8.4 billion in revenue.
Up and running. The projects building Australia’s hydrogen future
In its report ‘Net-zero by 2050’, the IEA called for ‘increased and reprioritised’ R&D spending from governments on clean energy innovation including electrification, hydrogen, bioenergy and CCUS.
In Australia, there are 61 clean and low-carbon hydrogen related projects according to a recent NSW Parliamentary report, with more than half of the projects in Western Australia and Queensland. Both of these states now have ministerial portfolios for hydrogen that focus on the acceleration of hydrogen projects and industry development. A few projects, such as the Hydrogen Energy Supply Chain Project in Victoria and the ATCO Green Hydrogen Project in WA are in early and exploratory phases.
So far, ARENA has invested $55 million in 28 hydrogen projects, from early-stage research and development to early stage trials and deployments2.
Opportunity cost. The economics of producing hydrogen
In 2020, the Australian Government released its $1.9 billion Technology Investment Roadmap. It sets one big hydrogen target, and makes another hydrogen prediction:
- Producing clean hydrogen for $2 per kilogram. At this price point it becomes competitive in applications such as producing ammonia, as a transport fuel and for firming electricity as well as comparison to hydrogen from fossil fuels.
- Manufacturing with hydrogen produced by renewables won’t be commercially competitive until 2040.
Currently, the average production cost of hydrogen is about $8 per kilogram according to the IEA. And in Australia, ARENA puts today’s cost of producing renewable hydrogen at between $6 and $9 per kilogram.
In order to reach the government’s target — and with the central role hydrogen can play in getting to a net-zero future — it’s important to take a technology neutral approach to producing clean hydrogen.
Creating hydrogen is currently emissions intensive as it uses fossil fuels. And creating hydrogen from renewables is prohibitively expensive. Technologies such as carbon capture utilisation and storage (CCUS) and the Allam Cycle can be used with Australia’s abundant natural resources to produce clean and affordable hydrogen while renewable hydrogen becomes more cost effective. The Technology Investment Roadmap found using carbon capture and fossil fuel-derived hydrogen “might be the lowest cost clean production method in the short term”.
In fact, it reported that coal with CCUS can be approximately three times cheaper than hydrogen produced by grid-connected electricity. It can be 13 times cheaper than hydrogen produced by curtailed renewable energy.
Low emission technologies and the hydrogen industry
In its 2020 report Energy Technology Perspectives, the IEA found that low-carbon hydrogen or hydrogen produced from fossil fuels in combination with CCUS or from low carbon electricity would be an important part of the energy mix.
LETs have a critical role to play in the hydrogen economy in the decades it will take for hydrogen production from renewables to become economically viable and as currently 95% of hydrogen production uses fossil fuels in two main processes — reforming and gasification.
The tested and proven technology of CCUS captures carbon from industrial and/or power production for safe storage underground of use by industry. There are now 63 commercial CCUS facilities currently operating or in development across the world. This technology has the capacity to capture, store and use over 100 million tonnes of CO2 a year.
Reducing emissions from some hard-to-abate industries is extremely difficult through electrification from renewable sources. Often the only alternative is the direct use of CCUS or through the use of hydrogen as an alternative fuel. To produce enough net-zero emission hydrogen for industry, CCUS is essential.
Lord Adair Turner, Chair of the UK Energy Transitions Commission has said CCUS is an important ‘cross-cutting technology’ to reduce carbon emissions from elements of industry from which there is no other way to decarbonise. “Hydrogen and CCUS go hand in hand to realise decarbonisation on all sides,’’ he said.
Emerging low emission technologies, such as the Allam Cycle, can also be used to produce clean hydrogen. The technology uses carbon dioxide instead of steam to drive turbines that generate power. The Allam Cycle eliminates carbon emissions, as the CO2 can be reused in a loop and/or captured for storage or use by industry.
Feasibility studies, funded by LETA and Invest Victoria, are currently assessing the viability of Allam Cycle projects from brown and black coal in Australia. The establishment of an Allam Cycle plant, in conjunction with a carbon hub, could help to play a role in Queensland’s fledgling hydrogen industry.
LETs and hydrogen are both identified as central to reaching a net-zero emissions future - even more so because of the way they can work together to produce clean hydrogen and unlock new opportunities.
Clean hydrogen, including that produced by LETs, is part of the suite of technologies that can support increasing levels of renewable electricity and decarbonise hard-to-abate sectors. In the process it can become a key economic driver of economic development in Australia, and position the country as a global energy leader.
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