Australia’s hydrogen industry poised to export its moment of truth

Australia is on course for a remarkable century – but not on the cricket pitch. About 98 hydrogen projects have been identified in recent months, a significant number targeting a future export market. And in February, one of them, Victoria’s Hydrogen Energy Supply Chain (HESC), caused a bit of a stir with Japan’s first test shipment of liquid hydrogen.

Australia is eager to gain a foothold in the nascent hydrogen market to counter its established and climate-compromised position as a major exporter of coal, LNG and crude oil.

The opportunity is definitely worth pursuing. Australian hydrogen demand could exceed 3 million tonnes per year by 2040, which could be worth 10 billion Australian dollars per year, according to the Australian Renewable Energy Agency.

Hydrogen projects began to emerge in Australia around a decade ago as HESC was announced in 2018. On February 25, the Suiso Frontier carried liquid hydrogen from the port of Hastings in Australia to Kobe in Japan , demonstrating the ability to transport fuel long distances at minus 253 degrees Celsius.

The cargo has received ironic remarks from hydrogen cynics for carrying only 2.6 tonnes of liquid hydrogen against a capacity of 75 tonnes. The fact that the hydrogen on board was produced via the gasification of coal has also drawn criticism.

Yet HESC remains confident that it can reduce costs through economies of scale so that by 2030, when the project is expected to reach commercial status, production of 225,000 tpa will be competitively priced and affordable. low carbon emissions, thanks to carbon capture and storage.

There are other projects that exemplify Australia’s ambition and penchant for technology.

For example, the Tiwi Hydrogen project plans to export compressed hydrogen in purpose-built carriers from 2026.

This project plans to produce 100,000 tonnes/year of renewable hydrogen as it seeks to benefit from a shorter route to market from the northern tip of Australia.

SunHQ Hydrogen Hub in Queensland meanwhile aims to produce renewable hydrogen by the end of 2022 for fuel cell trucks. In subsequent phases, project participant Ark Energy plans to export the energy carrier and thereby help decarbonize its parent company, Korea Zinc.

Mega projects

Current and projected renewable and low-carbon hydrogen capacity in Australia is approximately 8 million tonnes/year assuming normalized capacity factors, according to S&P’s Hydrogen Generating Assets Database. Global Commodity Insights.

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Seven hydrogen hubs are in the design stage while megaprojects such as those developed by InterContinental Energy range up to the 50 GW Western Green Energy Hub, spanning 15,000 km2 and aiming to produce 3.5 million tons of renewable hydrogen or 20 million tons of renewable ammonia.

“Australia is well positioned to make hydrogen its next big export,” according to the country’s National Hydrogen Strategy. “We have all the natural resources needed to produce it, experience building large-scale energy industries and a reputation as a proven partner to Asia’s largest energy importers.”

build bridges

With its hydrogen power generation, fuel cell vehicles and fuel cell ships projects, Japan is Australia’s main target market.

Mitsui & Co., Japan Oil, Gas and Metals National Corporation, Marubeni, IHI Corporation, Itochu and Sumitomo – all are involved in various hydrogen projects.

Other relationships are also maintained. A June 2021 declaration of intent with Germany saw the joint funding of the Hydrogen Innovation and Technology Incubator, or HyGATE.

Meanwhile, Australia and Singapore announced a AUD$30 million partnership in 2021 to accelerate the deployment of low-emission fuels and clean hydrogen in maritime and port operations.

And the Port of Rotterdam and Western Australia signed a memorandum of understanding in November 2021 to develop a renewable hydrogen export supply chain.

Take flight

The next big step will be the signing of the first hydrogen purchase contracts.

Australia’s Port Anthony Renewables in Victoria invited expressions of interest on Feb. 14 for the offtake of renewable hydrogen to be produced at the port and shipped overseas or sold domestically from 2025.

HESC and InterContinental Energy say they are actively in talks with potential buyers.

Australia is targeting a price below A$2.00/kg ($1.43/kg) for renewable hydrogen as part of its technology investment roadmap, which is below current levels of more than A$5/kg.

Finally, Fortescue and Airbus have signed a memorandum of understanding to cooperate in the development of hydrogen as an aviation fuel, with a view to having the first zero-emission aircraft in service by 2035.

For the Australian hydrogen business, this would be a big victory worthy of a standing ovation.