‘Green hydrogen’ to become cheapest ‘transformative fuel’ within a decade

Analysts believe “green hydrogen” made with wind and solar electricity could become the cheapest form of what Australia’s conservative Liberal-National government has described as a “transformative fuel” much faster than expected.

Chinese manufacturers have reported making systems to create hydrogen with renewable energy for up to 80 per cent less than official Australian estimates from just two years ago.

Guardian Australia reports energy analysts said it suggested green hydrogen was likely to leapfrog hydrogen made with gas and coal as the most cost-effective form of the energy before the end of the decade, and by the time an industry could be developed at scale.

The government has nominated “clean hydrogen” as a priority low-emissions technology that could eventually help replace fossil fuels in transport, electricity and in industrial processes as the world moves to cut greenhouse gas emissions.

However, it has not defined what “clean hydrogen” would mean in terms of emissions.

Its recent low-emissions technology statement forecast the cheapest way to produce it in the short-term might be to use gas or “coal gasification” with carbon capture and storage (CCS).

It said production methods using renewable energy would become cheaper as demand grew.

However, an analysis by BloombergNEF (BNEF) has found electrolysers used in China could already be as little as a fifth of the cost estimated in a CSIRO roadmap released in 2018, which has been used as the basis for government estimates.

BNEF suggested green hydrogen could cost less than US$2 a kilogram, the “”stretch goal” nominated by Energy Minister Angus Taylor, at which the fuel would become competitive with existing technologies, before 2030.

“We think electrolysers can get much cheaper much sooner than most expect,” said Kobad Bhavnagri, BNEF’s Sydney-based global head of industrial decarbonisation.

“The way we see it is there is very little demand for hydrogen from fossil fuels with CCS. It doesn’t fit the scale-up model for an emerging industry.”

The International Renewable Energy Agency (IRENA) last year also acknowledged in a report last year that Chinese manufacturers had claimed electrolysers were already available for a cost that had been considered a best-case scenario for 2040.

Guardian Australia reports the government estimates hydrogen could create more than 8000 jobs and generate about $11 billion a year in GDP by 2050.

Major economic powers including Germany and Japan are eyeing Australia as a potential source of hydrogen as the world moves away from fossil fuels, in line with the goals of the United Nations sponsored Paris Agreement.

Germany has dedicated more than $15bn of COVID-19 stimulus spending to developing a domestic hydrogen industry, and has agreed with Australia to undertake a joint feasibility study into its potential as an energy source.

The European Commission recently launched a strategy that positions green hydrogen as central to the continent’s goal to reach “climate neutrality”, net zero emissions, by 2050.

In Australia, the most ambitious proposal to date is for what is known as the Asian Renewable Energy Hub.

Planned for the Pilbara, its scale is extraordinary: 1600 large wind turbines and a 78 square kilometre array of solar panels working to power 14 gigawatts of hydrogen electrolysers.

Guardian Australia reports that speaking at an online summit hosted by the Smart Energy Council this week, the hub’s executive director, Alex Hewit, said the scale of the proposed development, which he described as the world’s largest power plant, meant it could create green hydrogen for less than the government’s benchmark of $2 a kilogram.

“That’s the beauty of very intense, massive, properly correlated renewable energy,” he said.

Green hydrogen is created by using an electrolyser to run an electrical current through water, separating it into hydrogen and oxygen.

Gas is used to make hydrogen through a different process involving high-pressure steam and a catalyst such as nickel, known as steam-methane reforming.

One of its by-products is carbon dioxide, which is either released into the atmosphere or, under the government’s proposal, captured and pumped underground.

The hope is that hydrogen will prove an emissions-free alternative to coal and gas in industries that operate at incredibly high temperatures.

Guardian Australia reports while estimates about the scale of a future industry vary significantly, experts believe it is likely to be more cost effective if used to help create local green industries, such as emissions-free steel, rather than converted into liquid form, as gas is, before it is exported.

BNEF projected that green hydrogen would cost US$1.33 a kilogram by 2030, falling to about $0.76 a kilogram by 2050.

By comparison, it suggested hydrogen created using gas with CCS was likely to cost about $1.92 a kilogram at both dates assuming gas prices stayed cheaper than it had been in recent years, and using coal with CCS would cost US$2.51 a kilogram.

Dr Alan Finkel, Australia’s chief scientist and head of the council advising the government on its technology roadmap, has recommended a “certificate of origin” be attached to every kilogram sold that listed how much CO2 had been emitted in its creation.

In an interview with ABC News, he said no country would buy hydrogen that was not “clean”, as the industry was being developed specifically as a replacement for fossil fuels, and some countries had indicated that included creating it using fossil fuels and CCS.

However, he said: “I think realistically the scale of hydrogen made from solar and wind is going to precede any other source.”

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