Executive Overview The AEC has proposed an economy-wide interim emissions target of 55 per cent
reduction on 2005 levels by 2035 as a milestone on the way to net zero. This paper is one in a series of papers exploring the implications of the 55 by 35 target. This paper looks at the opportunities for emissions reduction using green hydrogen – hydrogen produced from the electrolysis of water using zero emissions electricity. Hydrogen is both a potential substitute for liquid fuels and an emerging complementary technology to intermittent renewable energy (wind and solar). Surplus electricity produced by renewables can be converted into hydrogen via electrolysis. Hydrogen is a fuel, albeit challenging to manage. Green hydrogen will need to be compressed, stored, transported to where it is needed and then consumed to produce electricity, provide heat for industrial processes or power engines. Developing a low-cost hydrogen supply chain could, in theory, be able to replace much of the existing fossil fuel supply chain. Hydrogen is not a single technology. It requires multiple processes: production, compression, storage, transport and use in generators and other industrial processes. Each of these stages is challenging.
Introduction Hydrogen is the smallest, lightest, least dense and most abundant element in the universe. It is the antipode of most conventional resources: ubiquitous yet difficult to manage and contain. It is part of some of the most common materials on earth: water, sugars, oil and gas, coal, timber and plastics. Isolated as hydrogen gas it featured prominently in many 20th century industrial and energy systems. Now it is being re-purposed and re-cast to solve new 21st century energy challenges. Hydrogen as an energy commodity of the 21st century requires a re-think of conventional resource economics. It is not scarce nor geographically constrained. Anyone can make it, with caveats: access to abundant, low-cost renewables are likely to be an advantage in both scale and lower production costs. Access to large scale natural storage (like specific salt caverns in certain parts of the world) may also be an advantage.
more than triple by 2030. Sequestration is a proven but expensive technology that consumes large amounts of energy in the extraction, compression and pumping of the carbon dioxide. Analysts Gaffney Cline estimate the current cost of grey hydrogen (in the absence of a price on carbon) is around USD$1-2.50/kg, compared to USD$3-4/kg for blue hydrogen and USD$4-12/kg for green hydrogen.
Certification There is an expectation that some customers will want – or need for regulatory purposes – to know the source or “colour” of their hydrogen, to understand its underlying emissions. To this end, several countries have begun developing a Guarantee of Origin (GO) scheme that will certify the source of hydrogen from their country. It will function in a similar way to renewable energy certificates (REC), although it is not directly associated with a compliance scheme like RECs are. International harmonisation of standards of certification will be important as a hydrogen export sector develops. The Australian Government is developing a GO scheme for locally produced hydrogen. Following consultation, the Clean Energy Regulator (CER) has been chosen and funded to run the trials of a hydrogen GO scheme.
STORING HYDROGEN While there is growing output and increased funding for development of green hydrogen, there remains a wide range in the forecasting of future costs and time frames for commercialisation of different technologies. This scale of uncertainty is consistent with immature technologies. The scale of global hydrogen electrolysis and production growth is currently only a few megawatts of capacity each year, but the IEA are predicting global electrolysis capacity could be increasing by 1500MW a year by 2023, and global demand for blue/green hydrogen could reach 8 million tonnes a year by 2030. In 2019 the Australian Renewable Energy Agency announced a $70 million Renewable Hydrogen Development Funding Round with seven (mostly 10MW electrolyser) projects shortlisted and the successful projects announced in 2021. There are reportedly 69,000MW of hydrogen electrolyser projects proposed in Australia alone. Proposed does not mean delivered. The largest electrolyser in the world was commissioned in January in Canada by Air Liquide. The 20MW PEM electrolyser will run continuously using hydroelectricity to produce green hydrogen. The choice of hydro to power the facility is to reduce cost and increase output, but is not a practical example of how hydrogen would complement intermittent renewables. The largest electrolyser in Australia is currently a 1.25MW PEM electrolyser built by Siemens and installed by the Australian Gas Infrastructure Group (AGIG) in the Hydrogen Park in Adelaide. It is a high-cost, demonstration project to blend 5 per cent of hydrogen gas into the local natural gas network. Fortescue Future Industries has commenced construction of a 2GW electrolyser factory in Queensland.
TRANSPORTING HYDROGEN Of all the four “tasks” of developing a hydrogen economy, the process of moving hydrogen at scale may be the most challenging. Like other technical discussions, the debate around how to move hydrogen is evolving. Proponents suggest transport of hydrogen by pipeline, by cryogenic storage or by converting hydrogen into other more easily movable substances including ammonia or radical new pastes. Hydrogen can be transported in pipelines in the same way natural gas is currently moved. The Hyblend project by the US National Renewable Energy Laboratory (NREL) is exploring the technical challenges in blending hydrogen in natural gas pipelines. Pipeline transmission of hydrogen is possible, but will require investment in specific infrastructure that uses polymers rather than steel, which are more resistant to the evasive nature of hydrogen atoms and their corrosive impacts on metals. Cryogenic storage and transport is, to date, used mainly in rocket science where the high cost of storage is reflected in the high value of its use. The Hydrogen Energy Supply Chain (HESC) project in Victoria’s Latrobe Valley has been exploring liquefying and shipping hydrogen to Japan. Converting hydrogen into ammonia as a hydrogen carrier is being explored as a way of reducing the extreme physical properties of hydrogen. The cost of this is estimated in the National Hydrogen roadmap of $1.10-$1.33/kg. Lower liquefaction temperatures make it cheaper and easier to move ammonia than hydrogen. Ammonia could then be used itself as a future fuel.
Among the least likely outcomes is a wholesale switch from natural gas to hydrogen for small users. This would require a choreographed changeover of millions of appliances as well as significant expenditure to ensure the reticulated distribution networks are fit-for-purpose for pure hydrogen transport. Electrification remains the most likely approach for small users with the potential for some sub-networks to deliver biomethane if sufficient feedstocks can be obtained.
CENTRALISED VS DECENTRALISED HYDROGEN he location and integration of future hydrogen production and storage is likely to be influenced by the future costs of different parts of the hydrogen supply chain and the stability and capacity of a high renewables electricity market. The option of centralised versus decentralised hydrogen production is discussed in the CEFC’s Australian Hydrogen Market Study. The challenges of storing and moving hydrogen mitigate in favour of a decentralised approach to hydrogen production, where facilities are located as close as possible to the end user (steel mill, port, power station) so that these costs are minimised. This requires a proximate supply of sufficient fresh water (9 litres per kilogram of hydrogen) and sufficient transmission infrastructure to move the electrons to the electrolysers. A decentralised approach sees hydrogen electrolysers co-located with key inputs like water and then the hydrogen is piped to consumers, like the current gas pipeline network. This would require low transport costs and possibly geographic advantages (like water access or underground storage capacity) that make this more cost effective.
SUMMARY There is understandable global interest in the potential for hydrogen fuel technologies to provide a cost effective, clean energy storage solution and a new global energy vector. Genuine progress on hydrogen technologies is being made, but there is still uncertainty in key parts of the hydrogen supply chain over optimal technology (for electrolysers), costs and applications. These uncertainties are symptomatic of an immature technology development process and hydrogen does not appear to be anywhere near market-ready yet. There is still a lot of work to do to realise the enormous opportunity of hydrogen as a large-scale clean energy vector for the 21st century.
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