Nation must consider all pathways to clean hydrogen for net zero future
Australia’s National Hydrogen Strategy favours taking advantage of carbon capture and storage technologies to produce low-emissions hydrogen from coal and natural gas.
The global momentum behind clean hydrogen presents a significant opportunity for Australia to develop a world-leading hydrogen industry for export, energy security and as a key part of our net zero strategy. While the benefits of clean hydrogen are clear, there are several production methods that warrant consideration in effectively shaping Australia’s hydrogen future.
Clean hydrogen can be produced through two mature pathways: electrochemical and thermochemical.
It’s termed green hydrogen when generated via electrolysis using renewable energy, resulting in zero emissions. Blue hydrogen is produced from fossil fuels through thermochemical processes, with carbon capture and storage (CCS) to mitigate emissions. And there are also emerging methods that typically use renewable electricity to develop cleaner ways to extract hydrogen.
The May federal budget focused exclusively on green hydrogen, allocating substantial funding for the clean energy transition through the Future Made in Australia initiative, leaving other production pathways to clean hydrogen without additional support. This approach contrasts with the views of many experts who believe blue hydrogen plays an important role in the energy transition.
Even countries that have traditionally championed green hydrogen are reassessing their strategies.
For instance, Germany, which previously focused solely on green hydrogen in global discussions, has recently acknowledged blue hydrogen as a viable short-term measure. This shift aims to expedite the development of the hydrogen industry and support the German economy. Due to lower production costs, Asian markets are reportedly favouring blue hydrogen, as green hydrogen remains too expensive for end consumers.
Australia’s National Hydrogen Strategy (NHS), initially released in 2019 and currently under review, acknowledges an important role for blue hydrogen in the country’s hydrogen economy, seen as a transitional solution that can help bridge the gap while green hydrogen production scales up.
The strategy states that Australia is “well situated to take advantage of carbon capture and storage technologies to produce low-emissions hydrogen from coal and natural gas”.
And that carbon capture is likely to be more cost-effective for hydrogen production than for electricity generation, because the carbon emissions are separated as part of the hydrogen production process.
In its submission to the National Hydrogen Strategy review currently underway, the Australian Hydrogen Council, which represents the clean and green hydrogen industry, stated it is agnostic about production methods provided hydrogen has sufficiently low emissions to meet regulatory, investment and buyer criteria, which it expects to be about 95 per cent capture. It stated: “The Australian Government should remain open to blue hydrogen projects for regions that can support it without unnecessarily delaying renewable/green hydrogen developments.
“In practice, the issue is not one of colour but of emissions intensity, supported by robust measurement and reporting.”
Low Emission Technology Australia (LETA) chief executive, Mark McCallum, says while the government has acknowledged the role of hydrogen through the Hydrogen Production Tax Incentive and the expansion of the Hydrogen Headstart program, LETA urges the focus to be broadened to include all clean hydrogen production pathways.
“LETA invests in technology solutions that support Australia’s transition to net zero,” McCallum says.
“The budget announcement of increased investment in hydrogen is a start but it misses an opportunity to focus on all hydrogen production pathways including clean hydrogen using coal, natural gas or biomass with CCS.”
He says that supporting all production pathways and technologies that are capable of producing clean hydrogen gives Australia’s emerging hydrogen industry flexibility to pursue the pathways that best meet customer preferences as global markets emerge.
“Limiting investment in hydrogen to renewable sources only stands in contrast with the approach taken internationally,” McCallum says, “ … such as in the US, for example, through the Inflation Reduction Act, which provides significant support for CCS and for all forms of clean hydrogen production”.
He says Australian industry and international customers have already committed billions of dollars to projects that will supply the world with the low carbon liquid fuels that will be required in the transition to a net zero future.
“LETA would like to see the government go further in adopting a technology neutral approach to investment in the pathway to net zero to ensure that Australia is not left behind as nations across the world look to build clean energy economies of the future,” he says.
“As other nations invest in low emission technology, our long-term traditional trading partners like Japan and Korea are looking to Australia for similar signals that we can be relied upon as a leading energy exporter and ensure international competitiveness in a lower-carbon future.”