Investment in hydrogen is soaring
By DAMON KITNEY
COLUMNIST- UPDATED 5:47AM JUNE 19, 2024, FIRST PUBLISHED AT 12:00AM JUNE 19, 2024
Australia’s National Hydrogen Strategy is forging a pathway to position the nation as a major global player by 2030, as the potential pipeline of investment in local projects soars to almost $300bn.
The federal government’s hydrogen strategy, first released in 2019 and currently being reviewed in consultation with the states and territories, has identified green hydrogen as a true alternative to gas to help dramatically reduce emissions across the nation’s energy and industrial sectors.
Biomethane is also being viewed as an alternative option to hydrogen to support industry decarbonisation because it can be used with existing technology, eliminating the need for equipment upgrades.
The federal government’s vision has prompted the biggest players in the energy industry including Woodside, Origin Energy, Santos, APA Group, Jemena and Fortescue Metals to make significant investments in renewable gas technology.
But the market for these gases is still in its infancy and the private sector is calling for a combination of policy and financial support for producers and consumers – as occurred with renewable electricity – and the removal of existing regulatory barriers, to help renewable gases underpin the nation’s emissions reduction goals.
“The biggest barrier to the widespread adoption of gases like hydrogen and biomethane is cost – the technology is there, but it is not currently commercially viable to produce these products at scale,” says APA chief executive Adam Watson.
“The recent federal budget recognises this, with significant investment in a range of measures for the industry.”
APA believes government support for a market based scheme will help drive the development of renewable gases, a position backed by Origin Energy, which has argued that any policy settings designed to drive domestic consumption should be technology neutral and not directly prescribe whether or how gas is consumed.
One of the biggest roles to be played by renewable gases in the energy transition will be in the decarbonisation of the industrial and manufacturing sectors.
In the short term, green hydrogen can be a direct replacement for gas to achieve immediate emission reductions in industries using fertiliser for farming or explosives production.
For example, for the production of ammonia, a critical ingredient of fertiliser, hydrogen is the only known pathway to decarbonise production.
“We know some industries cannot easily electrify their processes either because they rely on gas for their operations or it is too costly,” says Jemena managing director David Gillespie.
“These customers are going to need a low-carbon option to continue to operate in Australia and biomethane and hydrogen are providing that opportunity.”
Jemena’s Western Sydney Green Hydrogen Hub is currently working to prove up the concept of using green hydrogen as a stored renewable energy.
At times of excess renewable supply, electrolysers are using excess grid-connected renewable electricity to generate green hydrogen, which can then be stored in gas infrastructure.
At times of high electricity demand, the stored hydrogen can be used to generate electricity.
As part of the National Hydrogen Strategy, it is also being proposed to introduce renewable gases directly into the existing gas distribution network by mixing them with natural gas.
Jemena says gas networks offer an early opportunity to deploy a blend of renewable gases without any disruption to the consumer or significant alteration to existing gas infrastructure or end user appliances.
“Australia already has an extensive gas network that is delivering natural gas into homes and businesses. Repurposing that existing network and blending biomethane and hydrogen through pipelines will mean we can avoid costly build-outs and support a lower cost transition,” Gillespie says.
At least 12 commercial-scale carbon capture utilisation and storage (CCUS) projects are also at various stages of development across Australia, including the $US220m ($333m) Moomba CCS hub, a partnership between Santos and APA.
“APA is already investing in a range of clean technologies, including future fuels such as hydrogen, and CCUS complements these technologies and has the potential to reduce emissions across energy generation, natural gas or hydrogen production and heavy industries,” says APA’s Adam Watson.
“The energy industry has great capability to support other parts of Australian industry to explore the development of CCUS projects which have the potential to support the decarbonisation of our economy and hard-to-abate sectors.”
He also says there is potential to use existing gas infrastructure and pipelines to develop the CCUS industry.
Woodside says there is a significant trend towards new Liquefied Natural Gas (LNG) contracts for export being packaged with CCUS, hydrogen or ammonia opportunities.
Japan’s largest power generation company JERA and LNG Japan, a joint venture owned by Sumitomo and Sojitz, recently agreed to purchase a 10 per cent stake in the Scarborough Energy Project. This included an agreement to collaborate on global opportunities in new energy, which could include ammonia, hydrogen, CCUS and carbon management technology.
“We are focused on introducing new products and services into our portfolio that can help our customers avoid or reduce their Scope 1 or 2 emissions, such as hydrogen and carbon capture and storage,” says Woodside chief executive Meg O’Neill.
“Our Scarborough agreements with JERA and LNG Japan include arrangements to strengthen co-operation in these areas. We also have several feasibility studies underway with existing and potential customers to support the future development of regional supply chains in lower-carbon products and services.”
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