Hydrogen – Calling an Ace an ace and a Spade a spade

Australia has a GO-lden chance to get its way in the new emerging trillion-dollar Hydrogen economy.

GO - or Guarantee of Origin - is a tracking instrument that certifies whether a given quantity of Hydrogen is generated using renewable means or not. Australia is leading two of the three main pathways (study groups) in the multi-national panel (International Partnership for Hydrogen and Fuel Cells in the Economy – IPHE) setup to define standards and terms for issuing GOs. What this means is that protocols drafted in Australia based on Australian trials will most likely be considered for adoption as the international standards for certifying renewable Hydrogen

It also means that Australia could be amongst the first out of the blocks in establishing a GO scheme based on the new global GO standards as these gain international ratification.

This would give Australian Hydrogen producers a huge leg-up in a market that is hotting up rapidly.

This is a big deal for the large Solar/Hydrogen (green Hydrogen, green Ammonia) projects taking shape in Queensland, NSW and WA and for the multi-billion $ Natural Gas industry which is adding CCUS to current / new SMR (blue Hydrogen) and Coal-gasification (brown Hydrogen) projects

Honestly speaking, once Hydrogen is produced it is impossible to state whether it was produced using renewable means or not. In a world, when global effort is directed towards replacing dirty fossil fuels with zero- or low-carbon fuels, such as Hydrogen, this is simply not good

Hence, a scheme is required whereby it is easy to determine the source and the carbon footprint of Hydrogen produced easily, transparently and confidently. This is the role of the GO Scheme

Features of the GO Scheme

It is a scheme to verify and track emissions associated with hydrogen production to verify whether renewable electricity was consumed

It is patterned on Europe’s CertifHy scheme

Products Scope

Initially Hydrogen will be scoped in the scheme Later Hydrogen derivatives will be included:

Hydrogen
Ammonia
Bio-methane

Pathways Scope

The three main methods of Hydrogen production are all included. For details on colors of Hydrogen, refer The Hydrogen Rainbow

Electrolysis – leads to Green Hydrogen
SMR with CCS – leads to Blue Hydrogen
Coal gasification with CCS -– leads to Brown Hydrogen

Hydrogen Value Chain

Ideally a Guarantee of Origin must apply to the entire value chain of Hydrogen. This way the lifecycle emissions associated with a unit of Hydrogen are captured. This means emissions associated with obtaining of raw material to the endpoint of Hydrogen consumption and even beyond to the point of disposal of remnants or recycling are all aggregated. The stages in the value chain are depicted below:

Source – Department of Industry, Science, Energy and Resources, Australian Government

For complete transparency and to account for true cost of Hydrogen, downstream stages of transporting Hydrogen to customer site will need to be included. However, in the initial scope, cradle-to-gate only is considered

For instance, for cradle-to-gate Green Hydrogen, this will include emissions related to electricity generation using Solar or Wind, obtainment and purification of Water and processing via Electrolyzer till Hydrogen production

For cradle-to-gate Blue Hydrogen, this will include emissions related to extraction of natural gas from mines, transportation of it to factory site, processing using SMR to produce Hydrogen. The additional step, which converts this Grey Hydrogen to Blue, ie capture and storage of by-product CO₂, would be dealt with as an Offset, so that there will be a gross emission figure and a net emission figure, difference being the quantity of emissions offset by virtue of the CCS

Another important aspect of the GO scheme is the treatment of co-products has been included. By definition Co-Products are products that are created at the same time as Hydrogen is created

Emissions associated with co-products are subtracted from the aggregate emissions calculated over the value chain. For example, in case of Green Hydrogen that results from Electrolysis, oxygen is produced as a co-product. To ascertain emissions associated with production of such oxygen, one would determine emissions associated with same quantity of oxygen that would be replaced by this co-product oxygen (which would normally be produced using cryogenic distillation of air)

Governance and Administration

For best administration, credibility is required. Therefore, the most preferred entity for the purpose of GOs is the Government. In the case of Australia, a suitable candidate is a statutory body called the Clean Energy Regulator, backed by the Federal Government which is well-established since 2012 and enjoys superb credentials for measuring, managing, reducing or offsetting Australia's carbon emissions

Innovation Enters – Blockchain-backed Authentication

A blockchain is defined as a distributed ledger of information, replicated across various nodes on a peer-to-peer network for the purpose of ensuring integrity and verifiability of data stored on the ledger

The idea of a Guarantee of Origin is very similar, that is, to ensure integrity and verifiability of a claim that a unit of Hydrogen is exactly as it is claimed to be

Recently this has been implemented. A new platform, GreenH2chain, launched in Spain in February, 2021 aims to enable customers globally to verify and visualise the entire green hydrogen value chain in real time. It provides data for calculating the carbon dioxide emissions that are avoided with its use. It is a blockchain based solution that allows renewable Hydrogen consumers to quantify, record and monitor the decarbonization process of their units of Hydrogen supply and to verify its transportation and delivery process.

This platform goes beyond cradle-to-gate to include the next step in the Hydrogen value chain – transportation and delivery

Overall, there is a drive towards transparent reporting of carbon emissions in energy supplies and increased demand for trust in reporting. Blockchain based solutions are emerging to address this. KPMG also recently announced a blockchain-based solution that will help organisations more accurately measure and report their greenhouse gas emissions

While Government involvement is extremely important to lend credibility, blockchain based solutions deserve closer examination of how these can support and complement the proposed standards for GO scheme

Conclusion

It is acknowledged that, inadvertently or otherwise, stakeholders may claim a given unit of Hydrogen having the desired renewable credentials when it may not actually be true. A Guarantee of Origin scheme will go a long way in defining and verifying origin to weed out doubts. However, it must also be recognized that this will tempt arbitrageurs to pass off cheaper non-renewable sourced hydrogen as more expensive renewable hydrogen. Or for buyers to claim ESG benefits based on renewable hydrogen when instead non-renewable hydrogen is being consumed. For all such cases and other gray areas it is critical that the GO scheme be accompanied by a stringent regulatory and penalties mechanism

There are amazing successful examples, for example the State of California's LCFS Scheme (Low Carbon Fuel Standard) that has over a 10-year period not reported malpractice. Lessons from such schemes are required to be learnt and applied before the GO scheme is finalized and implemented

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