Explainer: Why hydrogen is set to play a major role in the future of energy
“You now have +80% of the world’s GDP countries with a hydrogen strategy. This is backed up by +$70 billion of committed public funding. This has been followed by large heavy emitters nominating hydrogen in their strategy … so it has moved from public policy to corporate objectives," says Martin Carolan, GEV.
Hydrogen – an explainer
Australia’s hydrogen movement
Transporting hydrogen
How can Buru Energy help?
What more can be done
“Hydrogen is not an answer to all the questions on the clean energy system of the future, but it can answer some of the hardest.”
So said the EU’s Energy Commissioner Kadri Simson.
And thus, in a post COP26 world, we find ourselves (at least in Australia) speaking about hydrogen as one of the most prominent energy alternatives in the fight to clean up the planet.
If that is the case, it seems strange that we haven’t come to a hydrogen solution until recently.
Buru Energy Ltd (ASX:BRU) executive chairman Eric Streitberg tells Proactive, “the costs of production were high and there was no advantage to using hydrogen as it was produced from fossil fuels.
“Now what has happened is that firstly decarbonisation is a major driver. Secondly, the production through electrolysis using renewable energy has a horizon that may see it become cost-competitive. Thirdly, the use of CCS (carbon capture storage) will make hydrogen from methane without carbo emissions.”
While hydrogen is a key plank in the fight against climate change, Streitberg says hydrogen is just one solution.
Global Energy Ventures Ltd CEO Martin Carolan agrees.
“The key point is that any country that has committed to net-zero needs a mix of strategies to decarbonise and hydrogen is required as one pillar to achieve net-zero ambitions given its role in the hard-to-abate sectors.
Carolan also says that the rise in hydrogen is due to a larger set of shared goals.
“You now have +80% of the world’s GDP countries with a hydrogen strategy. This is backed up by +$70 billion of committed public funding. This has been followed by large heavy emitters nominating hydrogen in their strategy… so it has moved from public policy to corporate objectives.
“GEV is now receiving interest from some global brands who are not traditional energy buyers now wanting to procure and transport hydrogen to blend with their energy requirements.”
We will come to how Buru and GEV are helping to change the hydrogen landscape shortly, but what is hydrogen and why is it so important? Hydrogen – an explainer
Hydrogen, otherwise known as H2, is the most common element in the universe.
You would have studied that fact in a chemistry class somewhere down the lifeline.
However, you may not know that there are three types of hydrogen - green, grey and blue.
You may also fail to realise that not all hydrogen is equal in the lean, mean and clean stakes.
For the purposes of this explainer and, when we talk about using hydrogen in an emissions reduction capacity, we are talking about green hydrogen.
Firstly, let’s recap the three colours of hydrogen.
As Proactive’s Oliver Haill reported:
‘Grey’ hydrogen is the currently dominant form of hydrogen manufacture, but as it is made using fossil fuels such as from coal gasification or steam methane reforming, this is not really green fuel at all.
‘Blue’ hydrogen is where the CO₂ emitted during the production of grey hydrogen is sequestered via carbon capture and storage (CCS), so producing energy with pretty low emissions, with around 90-95% of CO₂ captured.
‘Green’ hydrogen, made by electrolysis using renewable energy, is the only version of the fuel that is free of CO₂ at the point of use and at the point of production.
So how do you produce green hydrogen?
To produce large amounts of hydrogen you need water, a big electrolyser (hello Queensland) and plenty of electricity.
To produce green hydrogen, the electricity will be generated from renewable sources such as wind, solar or hydro, at which point the only carbon emissions are from those embodied in the generation infrastructure.
Green hydrogen is at the top of the heap when it comes to reducing emissions and Australia aims to be a world power in supply. Australia’s hydrogen movement
While he said a lot without saying much, Australian Prime Minister Scott Morrison is backing hydrogen to play a major role in Australia’s future.
Hydrogen is a prime fixture of the Australian Government’s Net Zero 2050 strategy … and exports are a key plank.
In fact, by 2030, Australia aims to be among the “top three exporters of hydrogen to Asian markets”.
According to the government, it is ‘investing $464 million in seven clean hydrogen industrial hubs to concentrate demand for hydrogen in one geographic region to reduce costs and share information. These hubs will bring hydrogen producers, users and exporters together. They will lower the cost of production, encourage innovation and enhance skills and training efforts.
“This is funding for a $3 million feasibility study and $30-70 million for implementation for these hubs. I think this is just the tip of the iceberg to ensure we start to see investment in large scale facilities,” Carolan says of the funding.
The government’s strategy highlights the potential economic benefits: thousands of new jobs, billions of dollars in economic growth, including an additional $26 billion in GDP and 17,000 jobs by 2050.
The government will scale up activities in the next few years:
Hydrogen will be in high demand as a storable, transportable, exportable and versatile energy commodity. It could be used to supply high-temperature heat for industry like steel mills and storing energy where batteries would be too large, such as long-distance transport.
Plans have been underway for some time to better utilise hydrogen.
In October 2021, mining billionaire Andrew ‘Twiggy’ Forrest announced that Central Queensland would become the home of the world’s largest hydrogen manufacturing facility.
The plant is expected to double green hydrogen production worldwide and will make electrolysers that extract hydrogen from water.
Further to this, Forrest’s Fortescue Future Industries (FFI) plans to build a 15GW green hydrogen project in Argentina – the first renewable hydrogen project in the country and the largest announced in Latin America.
Along with former PM Malcolm Turnbull, Forrest is championing The Green Hydrogen Organisation, which seeks to increase investment and put pressure on governments to prioritise green hydrogen in energy policy. It posits that its “growth is dependent on a fundamentally different set of policy settings and investment decisions than fossil fuel hydrogen”.
It is Forrest’s ambition to produce 15 million tonnes of green hydrogen a year by 2030. He has been espousing hydrogen’s virtues since earlier in the year and has even said calling gas-based hydrogen clean was a “great lie” like “clean coal”.
FFI CEO Julie Shuttleworth said, “FFI is rapidly expanding renewable energy and green hydrogen projects that will lead to around 300 gigawatts of power capacity.
“In Tasmania alone, we are assessing a project to build a 250-megawatt green hydrogen facility at Bell Bay.”
So, we get the big picture, but there are several smaller pictures to this grand plan to turn Australia into the hydrogen capital of the world that involve a couple of Australian small caps. Transporting hydrogen
Hydrogen shipping will play a vital role in the transition to net-zero emissions. It fits well into The Getting to Zero Coalition’s Strategy for the Transition to Zero-Emission Shipping.
The strategy identifies key aspects required for the transition from fossil fuels to zero emissions.
The World Economic Forum states, “efforts to decarbonise shipping have intensified since the adoption of the International Maritime Organization’s (IMO) Initial Strategy on GHG Reduction in 2018. The IMO’s greenhouse gas (GHG) strategy called for at least a 50% reduction (compared to 2008) of CO₂ emissions from shipping by 2050.
While not directly related to hydrogen shipping, the moves being made illustrate just how much of a role shipping will play in reaching net-zero targets in the coming decades.
Taking a lead role in hydrogen shipping is Global Energy Ventures, which is developing the full supply chain for a green hydrogen project in the NT.
The company recently spoke with the ABC with regard to its NT project and how up to 100,000 tonnes of green hydrogen could be produced on the Tiwi Islands for export to Asia.
This will be the first large scale export project for green hydrogen gas in Australia, if not the world.
“There are no available industrial-scale storage and marine transport solutions for hydrogen gas,” Carolan tells Proactive.
“I think from an onshore perspective the largest scale is up to 1,000kg (or 1 tonne). Our shipping solution is scaling up from 430 tonnes to 2,000 tonnes using simple and efficient method of compression. There are now three to four companies globally proposing to design, approve and construct hydrogen ships and GEV is one of those.
“In time by 2040/50 you will see a need for hundreds of these ships as the world transitions from oil/coal/gas to green fuels such as hydrogen.”
GEV is working with Province Resources and Total Eren and has its HyEnergy Hydrogen export study involving PRL’s HyEnergy Project in Western Australia, in the Shire of Carnarvon, within the Gascoyne region.
The project is being developed in phases totalling up to eight gigawatts in installed renewable energy capacity.
Carolan says the landholding of Province is world-class for solar and wind renewable generation.
“It is also located very close to the coast, and importantly, an area of the coastline that we can develop a sustainable offshore loading facility (not a fixed berthing facility).
"You then bring Total Eren who have a global portfolio of 3.5 GW operating renewable projects. They have design, funded and built projects globally, including in Australia and they have an aggressive plan to add to the portfolio here given Australia’s abundance of land with good renewable generation capacity.
"Finally, they have balance sheet support and a network of customers from their major shareholder in Total Energies.”
If successful, the whole of GEV’s body of work will lead to a strong emission-free transport business.
“Our goal is to implement competitive transport solutions with a delivered cost of hydrogen that is competitive with the alternative carriers. Over time the costs will come down, and then service multiple countries within a 2000-4000 nautical distance of the supply point across the northern coastline of Australia.” How can Buru Energy help?
Buru Energy is also making great strides in its hydrogen ambitions.
While Buru is an oil and gas exploration and production company focused on exploring and developing petroleum resources of the Canning Basin in the southwest of Western Australia’s Kimberley region, its subsidiary 2H Resources is making progress with its focus on natural hydrogen and associated helium which have a role to play in driving the global transition to zero-emission fuels.
2H is focused on gold hydrogen, a colour we are yet to cover, but is just as important in the overall hydrogen play.
“2H is targeting natural or gold hydrogen which is carbon-free,” Streitberg tells Proactive.
“This is a recently recognised resource with hydrogen produced from underground deposits. 2H has the technical skills and resources to succeed in producing natural hydrogen in commercial quantities.”
Buru itself also has a role to play in the Canning Basin via its specialised hydrogen mudgas detection unit.
“This is one part of our strategy to understand the presence and prospectivity of natural hydrogen by detecting where it is present in the subsurface and helping to understand how it is formed and trapped.”
Effectively, Buru’s work could lead to a hydrogen discovery in the basin, though it should be said that the significance of hydrogen indications needs further evaluation.
One further strategy in Buru’s arsenal in helping the country achieve its net-zero target is looking to become a “one-stop shop” for emitters.
"Our geovault subsidiary is establishing a ccs presence with the plan to become a service provider to emitters that wish to sequester their carbon dioxide emissions,” Streitberg says.
“We have world-class technical expertise in our business and are working with a range of service providers to provide a 'one-stop shop' for emitters.”
What more can be done
There is an enormous amount to consider in the transition to net-zero.
Hydrogen is just a small component, with electric vehicles also taking centre stage along with wind and solar energy solutions.
“The demand side also needs to be addressed: oil and gas consumption is actually increasing,” Streitberg says.
“More importantly, government needs to provide regulatory certainty and do that in consultation with industry.”
As for Carolan, he says incentives will be required.
“Incentives to entice investment will be critical. The industry also needs to be practical about the development scale and timelines, otherwise we will end up with another LNG industry which was littered with cost-overruns, disappointment on schedule and did not meet expectation.
"That is why at GEV we take the approach of what is simple and efficient will get our projects to be first to market, and we are doing it with actions, not with strategy.”
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