Australia – A Hydrogen Powerhouse … in the Making!

“Lucky country! – You’ve done it again!” Australia has a knack of getting lucky. Or is it that Australia makes its own luck? Regardless of how one sees it – Australia is well on its way to becoming a global HYDROGEN POWERHOUSE. With Hydrogen - a commodity that the world is lining up for now, Australia is all set to cash in

For decades Coal sustained the Australian economy. Then came Natural Gas, cleaner than coal and in great demand. And soon there will be HYDROGEN – 100% clean and in demand

What is motivating Australia’s quest to be a global Hydrogen supplier? Two things – market pull and government push

Pressure is mounting on economies of the world to meet their respective commitments under the Paris Accord on Climate Change to reduce net GHGs to zero. The target may seem a distant 2050 but there are intermediate milestones along the way, significantly in 2030, that are forcing countries to find clean, green fuels to replace dirty fuel in order to meet these targets, fast!

HYDROGEN is a key energy vector that figures very highly in these quests, owing to its impeccable green credentials. With humongous projects in the pipeline for manufacture and supply of Hydrogen and Hydrogen-related fuels, Australia will soon be ready to stake its claim in the global top tier of Hydrogen powerhouses

Market Pull

Hydrogen will re-write the global energy map. Depending upon how one approaches, conservatively 17% (Statista) to optimistically 25% (BloombergNEF) of the global energy demand is expected to be met by Hydrogen by 2050

US Energy Information Administration, estimates global energy demand will be 700 (in 2030) rising to 900 (in 2050) quadrillion BTUs. This is equivalent to (using 1 BTU = 1.055 KJ, 1 kwh – 3600 KJ, 1 kg of H₂ = 33 kwh) = 135 - 199 million tons by 2050

At $2 / kg of H2,_, considered the holy grail target, this is equivalent to USD 400 BILLION in 2050. Key price drivers like advances in electrolyzer technology and increasing scale of Hydrogen production are trending in the right direction to achieve the holy grail of “H2 under $2”

Credit – Australia’s National Hydrogen Policy - Range of possible Hydrogen demand to 2050

How much of this market ends up with Australia is the moot question? While most countries are setting out strategic plans of how Hydrogen will be consumed and applied, very few countries are actually thinking of how this demand of Hydrogen will be produced and supplied. Australia is and as a result looks well prepared as a future major supplier

Driving Australia’s export demand will be chiefly Japan, which expects to use 10 million tons of Hydrogen per year by 2050. Add, Korea demand which is expected to be nearly 2 million tons by 2030. Plus Germany and other Asian economies too will figure high in the list

Frenzy of Activity

If recent number of capital raisings on the Australian Stock Exchange related to Hydrogen and Hydrogen-fuel related projects is any indicator, then it clearly indicates that corporate Australia is in full swing with regards to Hydrogen investments. Here is a sample: (Disclaimer: see at bottom)

• Fortescue Metals recently allocated $400M to produce green Hydrogen for use in steel-making (green steel) and towards developing a pipeline of 300GW of green energy and green Hydrogen at its Pilbara plant, WA
• Santos, Glencore, Boral and others – and others — $50M funding from Australian government to create blue Hydrogen and capture CO2 using CCS (Santos and Glencore) and for manufacturing of aggregates (Boral) — Jun 2021
• ATCO received $29 million from Australian Renewable Energy Association (ARENA — a Government entity) to develop its Clean Energy Innovation Park Project (CEIP) –Australia’s first commercial scale green hydrogen supply chain, with 10MW electrolyser producing 4.0 tons/day of Hydrogen, along with storage and delivery to the gas network
• Province Resources (ASX:PRL) tied up with French renewables company Total Eren to evaluate a green hydrogen project of up to 8GW — May 2021
• Verdant Earth Technologies raised $2M pre-IPO, and is involved in two major Hydrogen projects — one to setup the largest green Hydrogen plant on the East Coast of Australia and two, tying up with Darwin Port to develop it into a green Hydrogen export hub for exports into Asia — Apr 2021
• Infinite Blue Energy (ASX: IBE) raised $6M with a vision to become the first zero-emissions or green hydrogen company to list on the Australian Stock Exchange – Apr 2021
• Global Energy Ventures (ASX:GEV) is a unique player which is positioning itself as a Hydrogen carrier by designing special ships that could carry compressed hydrogen exports — March-2021

Government Push

In November 2019, Australian Government released its National Hydrogen Strategy. This envisioned Australia as creating a clean, green, innovative Hydrogen industry and positioning Australia as a significant exporter by 2030

A key element of Australia’s approach will be to create hydrogen hubs – clusters of large-scale demand - eg at ports, in cities, or in regional or remote areas - to provide the industry with its springboard to scale. Hubs will make the development of infrastructure more cost-effective, promote efficiencies from economies of scale, foster innovation, and promote synergies from sector coupling

Government Support

The Government has planned the establishment of the Hydrogen industry in a phased manner — scaling up then large scale

• Scale-up Activities — support for pilots and demonstrators, develop demonstrator hubs, assess supply chain needs, develop supply chains for hubs
• Scale-up Support — drive technology development, develop industry expertise, promote foreign collaboration, develop country-to-country agreements
• Large Scale Activities — identify signals that large-scale markets are developing, scaling up in response, enable domestic markets
• Large Scale Support — financing clean Hydrogen supply chains, policies to attract private investment, policies for domestic demand, provide long-term governance structures
• Overall Support — responsive, light-touch regulation, harmonizing standards and developing schemes to track and certify origin of clean Hydrogen

Hydrogen Hubs and Large Projects

• Western Australia — The Asian Renewable Energy Hub, is a 26 GW hub of Solar and Wind currently under development in the Pilbara region and expected to bolster the Australia’s ambitions to become a world-leading exporter of the zero-emissions fuel
• Norther Territory — Darwin singled out by the government as the ideal location for a future clean hydrogen hub, to receive $275m in government cash to make it a reality to produce clean Hydrogen alongside carbon capture, use and storage (CCS/CCUS)
• Darwin is also being developed as a green Hydrogen hub with superlative-laden terms — world’s biggest solar PV plant (10GW), world’s biggest battery system (30GWh) and world’s longest high voltage direct current (HVDC) transmission cable link (4,500 kms) from Darwin to Singapore
• Queensland — The sunshine State is developing a 3GW electrolyzer based green Hydrogen plant in Gladstone and expects to ship this to Japan upon project culmination. Besides this, the Government has strategic tie-ups with Japanese corporates and Universities in Japan
• South Australia — SA is in overdrive with regards to Hydrogen and Hydrogen-related fuel projects. From a 75MW electrolyzer, 40 tons/year of green Ammonia project for shipment to Japan, in the Eyre Peninsula, a 50MW, 25 tons/day of green Hydrogen electrolyzer project, world’s largest co-located wind, solar, battery and hydrogen production facility in Crystal Brook, called the “Hydrogen SuperHub” plus other mini demonstrators, SA is well-positioned to enhance its and Australia’s credentials as a green place
• Victoria – With strong Renewable Energy Targets (RETs), they are setting up in Latrobe Valley, the World’s first fully integrated Hydrogen Supply Chain to demonstrate a full supply chain starting from Hydrogen production and ending with its transportation to Japan, using a 15GW wind and solar plant, powering electrolyzers at an initial capital cost of around $22 billion
• New South Wales — Jemena Western Sydney Green Gas Project — A $15 million facility to co-funded by the ARENA, is a demonstrator project to inject and store a small percentage of hydrogen (less than 2% by volume) into part of the Jemena Gas Network, Australia’s largest gas distribution network

Conclusion

The popular saying goes – “well begun is half done”. It aptly applies to Australia. With its resources, and skills and backed by a well-intentioned government, Australia has setup itself to take advantage of increasing global momentum for clean Hydrogen and turn into a major energy export. This will potentially generate thousands of new jobs and billions of dollars in economic growth between now and 2050, whilst simultaneously helping to reduce GHGs emissions in Australia and the world

Disclaimer

Author is not a shareholder in any of the stocks mentioned in this article and cannot in any way whatsoever be held responsible for any action you take based on information below or in the linked web pages)

References

1. Keynote address at CEDA 'Future Direction in Energy Technologies' event, Sydney | Ministers for the Department of Industry, Science, Energy and Resources
2. The Hydrogen Rainbow and the Pot of Gold (medium.com)
3. Hydrogen use needs to hit 212 million mt by 2030 for net-zero: IEA | S&P Global Platts (spglobal.com)
4. Australia’s National Hydrogen Policy - Range of possible Hydrogen demand to 2050
5. S2.1-P.E.Franc,HydrogenCouncil.pdf (europa.eu)
6. EIA projects nearly 50% increase in world energy usage by 2050, led by growth in Asia - Today in Energy - U.S. Energy Information Administration (EIA)
7. South Korea’s Hydrogen Strategy and Industrial Perspectives | IFRI - Institut français des relations internationales
8. Fortescue to produce green hydrogen from 2023, and targets green steel | RenewEconomy
9. Pot of Gold? Yes, but only at one end of the Hydrogen Rainbow | by Sandeep Chandra | May, 2021 | Medium
10. Hydrogen boom: Infinite Blue Energy closes pre IPO round and announces major offtake - Stockhead
11. ATCO receives $28.7m from arena for green hydrogen production
12. Verdant Earth Technologies eyes strategic green hydrogen alliance with Australia’s closest port to Asia (msn.com)
13. Sweetman Renewables aims to be one of the largest green hydrogen players - Sweetman Renewables
14. Lion Energy (ASX:LIO) eyes green hydrogen market - The Market Herald
15. 4 ASX hydrogen shares powering forward in 2021 (fool.com.au)
16. Global Energy Ventures targets hydrogen shipping opportunities in Europe | TradeWinds (tradewindsnews.com)
17. Queensland Hydrogen Projects
18. Hydrogen Projects in South Australia - Renewables SA
19. Australia’s National Hydrogen Strategy | Department of Industry, Science, Energy and Resources
20. Hydrogen Insights 2021 - Hydrogen Council
21. Asian Renewable Energy Hub
22. world’s biggest battery system (30GWh) and world’s longest high voltage direct current (HVDC) transmission cable link (4,500 kms)
23. Hydrogen and Hydrogen-related fuel projects
24. Hydrogen Supply Chain

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