May 09, 2023 • 3 min read
Renewable hydrogen: scaling up production in Australia
What steps can Australian hydrogen producers take to establish a leading position in the global hydrogen economy by 2030?
“Australia has vast renewable energy resources to power electrolyzers and produce renewable hydrogen at scale,” says Scott Badger, Vice President of Hydrogen, Asia Pacific. “There are lots of opportunities for producers, with options to export renewable hydrogen overseas or distribute it locally to decarbonize Australia’s own energy intensive industries.”
However, there is currently a disparity between opportunities and actual investments in projects. So, how can producers scale up renewable hydrogen production across Australia?
Levelizing the cost of renewable hydrogen to compete with hydrogen from fossil fuels
For renewable hydrogen to be a commercially viable prospect in a range of industries, the cost of producing it needs to fall.
And right now, it's still deemed too expensive an alternative for hydrogen producers to move away from their current operation models.
“Currently around 95 percent of hydrogen globally is made through cheap but carbon intensive processes using fossil fuels,” Badger continues. “Applying carbon capture and shifting to lower carbon hydrogen is a step forward in the short term, using established fossil fuel infrastructure.
“However, to become truly carbon neutral in the longer term, producers will need to make new investments in renewable hydrogen facilities and infrastructure. And this depends on the financial and technical viability of these projects.”
Badger describes some of the shifts in approach that could lower the costs of renewable hydrogen production by 2030.
The pathway to cost competitiveness depends on delivering projects differently. We’re exploring ways to standardize renewable hydrogen facilities to reduce costs and delivery time. We’re simplifying procurement and forming new partnerships to leverage the expertise of companies across the supply chain. And we’re using digitally integrated technologies to monitor and operate production facilities more efficiently.
Capitalizing on government investment and expanding global partnerships
While most facilities in planning aren’t standalone cost competitive with fossil fuel alternatives yet, government funding is driving the growing interest in Australian renewable hydrogen projects.
“Australia currently has over 15 renewable hydrogen projcts that have passed final investment decision (FID), and a further 80 projects in the planning stages,” says Badger. “This includes plans for one of the world’s largest renewable hydrogen plants in Western Australia. Once completed, it will be capable of producing up to 640,000 tonnes of renewable hydrogen each year.”
And the volume of renewable hydrogen projects across Australia is only set to grow over the coming decade.
“In late 2023, the Australian government unveiled its Hydrogen Headstart Program which will provide AU$2 billion of revenue support to large scale renewable hydrogen production projects. The aim is to accelerate the development of Australia’s hydrogen industry and improve the overall technical and commercial viability of renewable hydrogen production,” says Badger.
Another key element of Australia's hydrogen growth will be the creation of hydrogen hubs.
“Over AU$526 million of investment has been provided towards the Regional Hydrogen Hubs Program,” continues Badger. “This will support the development of eight hydrogen hubs in places such as Gladstone, Townsville, the Hunter Valley, Bell Bay, and the Pilbara.
“These hubs will be key for Australia to develop a ‘Hydrogen Road’ and lead the international export of renewable hydrogen and green ammonia. By partnering with other countries to attract investment, encourage collaboration, and advance research and development, Australia can position itself as a world leader in producing and exporting renewable hydrogen as a commodity.”
This plan is moving at pace, according to Badger.
“Australia’s potential to be a major exporter of hydrogen to Asian markets by 2030 has been supported by Japan announcing its plans to participate in the first round of the AU$150 million Australian Clean Hydrogen Trade Program and import renewable hydrogen and green ammonia into the country.
“The Australian government predicts that renewable hydrogen exports and domestic use could be worth up to AU$50 billion within 30 years and could directly support 16,000 jobs by 2050.”
But no project, company, or government initiative can deliver this potential alone.
Collaborating to deliver renewable hydrogen infrastructure
Increases in government funding and regulation changes have sparked a wave of enthusiasm for Australia’s hydrogen industry. From power and transmission infrastructure owners to heavy industries that need lower carbon fuels.
However, the quality of collaboration will ultimately determine the success of Australia’s renewable hydrogen industry.
“It’s a big challenge to generate enough renewable electricity to produce renewable hydrogen at scale, and build the infrastructure to store and transport it,” says Badger. “That’s why there is still a role for carbon capture and storage to reduce CO2 emissions from fossil fuel hydrogen pathways and create a large scale hydrogen economy.
“There are a few ‘hydrogen hurdles’ we need to address to reach economies of scale for renewable hydrogen producers,” continues Badger. “But carbon intensive industries – both domestically and in the Asia-Pacific region – need this carbon neutral energy carrier to meet their decarbonization goals. And Australian producers are perfectly positioned to benefit from industry collaboration and ultimately meet this demand.”