There is a source of hydrogen without all the downsidesThe big...

There is a source of hydrogen without all the downsides

The big downside with hydrogen is having to make the stuff in the first place. But South Australia has the gas as a natural resource.

Alexander Downer

From where I’m sitting to write this column, I can see in the far distance a wind farm at a place called Starfish Hill. The 22 wind turbines produce 33 MW of electricity which power the equivalent of around 30,000 houses a year. This was the first wind farm built in South Australia and dates back to 2003.

The trouble is, on a still day, it generates nothing and that is the weakness of wind and solar power – they need to be backed up somehow with base load power from a more reliable source.

A bit beyond Starfish Hill is Backstairs Passage the other side of which lies Kangaroo Island which you wouldn’t associate with base load power. It is after all, a very desirable tourist destination and has successful agricultural and fishing industries.

But here’s a surprise. In the 1930s, wells were drilled on both Kangaroo Island and the nearby York Peninsula in a search for oil.

None was found but what the drilling did reveal was large quantities of natural hydrogen.Hydrogen has ebbed and flowed as a fashionable energy source.

In the 1930s hydrogen had very little use – although those of you with a sense of history will recall that in 1937 the German airship, the Hindenburg, caught fire and was destroyed. Its death gave hydrogen a bad name.

A couple of decades ago, Japanese and Korean carmakers invested heavily in developing hydrogen cars and so far, the billions of dollars invested in the relevant fuel cell technology haven’t yielded much – although hydrogen cars are on the market.In recent years, there has been a change of sentiment towards hydrogen.

First, the growing concern about climate change and the direct action governments have taken to reduce greenhouse emissions has given hydrogen a prominent place as a potential alternative source of energy.

But secondly, the United States, Europe and Japan have all come to realise that it’s in their security interests to reduce their dependence on energy from unstable or even adversary states. Germany’s decisions to phase out their nuclear power programs and instead become dependent on gas from Russia have turned out to be a catastrophic mistake.

The current German government realises that the country needs to be relyon either its own energy or from allied or sympathetic countries. This has significantly changed the energy debate beyond just climate change mitigation to a debate which links those measures with geopolitics and energy security.

Big changes in energy policy have to be affordable. The world has learned through the pandemic that pumping an extra $US15 trillion ($21.5 trillion) into the global economy is inflationary with all the consequences which flow from that. So, climate friendly and reliable energy sources have to be affordable. What is more, if the energy available to citizens is too expensive, then expect an electoral revolt from the punters.

So back to South Australia. Based on the 1930s data, it is estimated there are between 1.3 billion and 9 billion kilograms of natural hydrogen under Kangaroo Island and the York Peninsula. What is more, these reserves are expected to be renewable given the natural evolution of the hydrogen in that location.

Natural hydrogen has the potential to revolutionise hydrogen as an alternative fuel to fossil fuels.

Hydrogen has many natural advantages, not least its high intensity which is much greater than gas. Hydrogen can be used not only to drive transport, produce electricity and power homes, it also has the potential to be used for steelmaking in the place of coking coal.

So far, no other method has satisfactorily been developed.Every fuel source has its weakness. Wind and solar aren’t much use on a still day or at night. They need to be supplemented by base load power.

Gas in varying degrees generates greenhouse gas emissions but is on the whole relatively cheap. Nuclear power excites concern about accidents at Three Mile Island, Chernobyl and Fukushima. Hydropower means dams and if you’re old enough you will remember the Tasmanian dams controversy of the early 1980s.

Hydrogen’s downside is that it has to be “made”. The standard method of making hydrogen is electrolysis and the electricity has to come from somewhere.Falling pricesIn recent times, much has been written about the evolution of green hydrogen. That is, hydrogen made by electrolysis separating the hydrogen from oxygen in water using power from renewables, in particular solar panels.

Green hydrogen sounds like a good option except for the price. At present, producing green hydrogen is expensive compared to alternative energy sources. Given the interest there is globally in hydrogen, this electrolysis technology is likely to get substantially cheaper as time goes on. What is more, US President Joe Biden is promising to subsidise the production of hydrogen by up to $US3 a kilogram. That will lead to the expansion of the hydrogen industry. There will be more hydrogen cars, more freight will be carried by hydrogen-driven vehicles, steelmaking may gradually shift from coking coal to hydrogen and so on.

If natural hydrogen can be extracted from those reserves on Kangaroo Island and the York Peninsula, its price would be exceptionally low – around 50 cents a kilogram. That’s well below the cost of green hydrogen. At that price, South Australia could harness the hydrogen to very good effect. Not only could it drive power generation for South Australia, it could trigger investment in hydrogen industries and importantly be a major revenue earner if exported to hydrogen hungry countries such as Japan.

South Australia could become an important regional energy hub. Over the next few months, survey work and drilling will establish more precisely the accessibility of South Australia’s natural hydrogen and the cost of extracting it. But here is a really exciting opportunity for Australia.

So enthusiastic am I about this project that I have agreed to become the chairman of a company called Gold Hydrogen which last week was listed on the ASX. This company is working up the hydrogen reserves on Kangaroo Island and the York Peninsula.

It’s one thing to write a column about something like this, but I’ve wanted to do more. I want to back it up with my time and energy because it has such potential for Australia