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Australia’s hydrogen potential: A message from the Chief Scientist

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1 July 2019

Imagine a zero-emissions fuel that exists on Earth in abundance, can be easily extracted using basic chemistry and offers jobs and investment in Australia for decades to come.

That substance exists: it’s called hydrogen.

Just like natural gas, hydrogen can be used for heating and cooking in homes. Instead of petrol and diesel, hydrogen fuel cells can power electric trucks, trains and cars.

We’ve produced it in large volumes for more than a century, for use as a feedstock in industry; and it’s been shipped and stored with an exemplary safety record for all that time.

Now hydrogen is surging to the top of the global decarbonisation agenda.

A fuel for the twenty-first century

For nations like Japan, the options for low-emissions energy are few. It is an energy-intensive economy without the land for wind and solar electricity or the appetite for a major expansion of nuclear power. Imported hydrogen is a versatile and attractive alternative – if the costs can be driven down to parity with the landed price of LNG.

Most of the hydrogen produced today for industry is made from fossil fuels. The process is emissions-intensive, even if the hydrogen itself is clean-burning. An alternative low-emissions pathway is required. There are two commercially viable options: splitting water molecules into hydrogen and oxygen, using electricity generated from renewable sources; or refining fossil fuels like coal and natural gas, using carbon capture and storage to mitigate the unwanted emissions.

On either pathway, Australia is a prime contender to be a dominant supplier.

Australia’s competitive advantage

Australia has a number of competitive advantages as a hydrogen exporter:

  • expertise and infrastructure we can leverage to develop hydrogen export energy supply chains
  • proximity to markets in Asia and well-established trading relationships
  • an abundance of renewable energy and low-cost fossil-fuel resources

Two international reports have confirmed Australia’s potential as a future major hydrogen supplier. The World Energy Council’s International Aspects of a power-to-x roadmap identified Australia as a ‘giant with potential to become a world key player’. The International Energy Agency’s World Energy Outlook projects that Australia could easily produce 100 million tonnes of oil equivalent of hydrogen. This could equate to 3% of global gas consumption today.

Japan has already committed to be a large-scale enduring customer for Australia through a world-first project to produce hydrogen in Victoria.

Capitalising on this growing demand for hydrogen could result in an export industry worth $1.7 billion by 2030, and could provide 2,800 jobs. Most of the jobs created by this new industry are likely to be in regional areas.

A hydrogen export market will have important domestic spill-over benefits and opportunities for Australia. Hydrogen used as energy storage can contribute to the resilience of our major electricity systems. Long-term energy storage in micro-grid sites, such as remote mine sites, will benefit.

Clean hydrogen technologies can also help our domestic sectors to decarbonise. Heavy vehicles powered by hydrogen fuel cells could meet the increasing demand for zero emissions transport, with the advantage of long range, rapid refuelling and moderate costs. Replacing natural gas with hydrogen could in many cases decarbonise direct combustion at less cost than can electrification.

Developing a national hydrogen strategy

There is a limited window of time to capitalise on these opportunities.

In December 2018, the COAG Energy Council agreed on the need to develop a national hydrogen strategy.

The Hydrogen Working Group is working quickly to ensure our strategy will be delivered by the end of 2019. A national strategy will enable Australia to define its role in the promising export market and position government and industry to implement it from 2020.

We are taking a coordinated approach, working with industry, experts, end users, environment and community groups. We are also consulting with the public on key issues to ensure our policies and measures benefit all Australians.

Our strategy aims to be bold and ambitious, balancing the need for safety, cost-effectiveness and commercial viability. A vibrant hydrogen industry will rely on healthy competition. Our policies will be technology-neutral to support any hydrogen technology.

Our next round of consultations explore various aspects of the emerging hydrogen industry. I encourage you to read our issues papers and respond.

With your input, we can build a clean, innovative and competitive hydrogen industry and position Australia as a major global player by 2030.

Dr Alan Finkel AO

Chief Scientist

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