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The Hydrogen Economy - exciting opportunities for Australia

Gavin  Mooney's picture
Solutions Advisor SAP

Hi, my name is Gavin Mooney. Thanks for taking time out to read my profile. I am a Melbourne-based Solutions Advisor with SAP and help Utilities to simplify, innovate and run better with SAP...

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  • Oct 1, 2019

Hydrogen has become a major topic of conversation in the energy space. Since a landmark report from the Hydrogen Council in 2017, there have been reports in Australia from Acil Allen for ARENA (August 2018) and Alan Finkel, Australia’s Chief Scientist (August 2018) as well as a more recent report from the International Energy Agency (June 2019).

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The interest in hydrogen centres on its potential as an option for the deep decarbonisation of global energy systems. 

This first part provides context and an overview of the opportunities. Part two will look at things in more detail.

What’s the big deal about hydrogen?

There’s a lot to like about hydrogen.

Hydrogen is a gas much like natural gas that can be used to heat buildings and power vehicles. However, unlike other liquid or gaseous fuels, when hydrogen is burned there are no carbon dioxide emissions. The only by-products are water vapour and heat.

Hydrogen is an excellent energy carrier. Each kilogram of hydrogen contains more than twice as much energy as natural gas. This energy can be released through combustion or as electricity using a fuel cell.

Hydrogen is also versatile. Hydrogen can store, move and use energy in different ways. It can be transported as a gas in pipelines or in liquid form by trucks and ships.

Using hydrogen in place of fossil fuels offers a way to decarbonise energy systems. The problem is that it generally doesn’t exist in its free form, and energy must be expended to produce it, typically from fossil fuels, biomass or water.

The vast majority of global hydrogen production releases carbon dioxide into the atmosphere. The most common process is steam methane reforming (SMR) which combines high temperature steam and methane to release hydrogen and carbon dioxide. 95% of hydrogen currently produced in the United States is made via SMR.

For hydrogen to be able to decarbonise energy systems, “clean hydrogen” needs to be used. There are two broad approaches to this. 

  • Blue hydrogen uses the SMR process but looks to capture and store the carbon dioxide without releasing any to the atmosphere. This technology is still expensive and unproven at the scales required. 
  • Green hydrogen is produced by using renewable energy to power electrolysers that split water into hydrogen and oxygen. 

Why now?

The widespread use of hydrogen as a low-carbon energy source (the “hydrogen economy”) was initially raised back in 1972 by John Bockris, a professor at Flinders University. Since then it has been seriously proposed but never proved competitive at scale, until now.

Clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly.

The reason for the current re-emergence of global interest is the growing pressure on countries to reduce their emissions, along with falling renewable energy costs and emerging export markets. Countries without the capacity to produce their own low carbon energy will increasingly look to imports to meet their Paris commitments.

In the words of Alan Finkel, Australia's Chief Scientist:

I ask myself “why now?”… The answer is Japan’s commitment to be a large-scale enduring customer, and the hundredfold reduction in the price of solar electricity in the past four decades.

Since the Great East Japan earthquake of 2011, the availability of nuclear power in Japan has declined. Japan currently depends on imported fossil fuels for 94% of its primary energy supply and lacks suitable land for significant renewable energy projects. This, combined with Japan’s commitments to the Paris Agreement, led the country to publish its Basic Hydrogen Strategy in December 2017, outlining how it intended to put imported clean hydrogen at the heart of its economy.

Japan is aiming to get 40% of all its energy from hydrogen by 2050, this could amount to almost 38 million tons a year.

South Korea is similar to Japan, currently importing 81% of its energy, looking to decarbonise and with policies likely to increase the uptake of hydrogen. 

Why Australia?

A number of factors put Australia in a good competitive position to produce and export clean hydrogen at scale:

  • Australia has vast availability of land and high-quality renewable energy resources.
  • Australia is located close to the emerging hydrogen import markets in Asia
  • Australia is already an energy export superpower with expertise and experience in construction of large-scale energy infrastructure
  • Australia is already a trusted and established energy exporter to Japan, which buys almost half of Australia’s LNG exports.
  • Australia’s stability and low sovereign risk make it attractive to large infrastructure investors.

Hydrogen opportunities

There are three main opportunities for hydrogen in Australia, as outlined in the diagram below. In addition to the export opportunity, hydrogen has a range of uses in the domestic economy. It can replace natural gas for heating, cooking and hot water. It can be used in high-temperature industrial processes such as making alumina. And it can be used in electric vehicles through hydrogen fuel cells.

In addition, the electrolysers that are used to create the hydrogen represent a flexible load that can be rapidly scaled up and down in line with the availability of renewable energy. Hydrogen can also be stored and used to generate electricity when needed. 

The main downside of hydrogen is inefficiency and the difficulty of transporting it. This will be explored more in the second part of this series.

Hydrogen benefits Australia

Source: Hydrogen for Australia’s future briefing paper for the COAG Energy Council – Hydrogen Strategy Group

This first part has covered why there is interest in hydrogen at the moment, in particular in Australia. The second part to this will look at these opportunities in detail and how hydrogen compares to the alternatives. 

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Bob Meinetz's picture
Bob Meinetz on Oct 1, 2019

Gavin, using nuclear electricity diverted from the grid to produce green hydrogen is far more cost-effective and predictable than using renewables, especially when there are gigawatts of low-cost, unneeded generation available at night.

Three More Nuclear Plant Owners Will Demonstrate Hydrogen Production


Gavin  Mooney's picture
Gavin Mooney on Oct 1, 2019

Hi Bob - thanks for the comment. That's a good point but while that may be the case where nuclear exists, this article focuses on Australia which has no nuclear and probably never will. 

Bob Meinetz's picture
Bob Meinetz on Oct 1, 2019

Gavin, for the country with the second highest per-capita carbon emissions in the world (after Saudi Arabia), the failure of Australians to replace coal with nuclear should be a national embarrassment.

Are Australians really that afraid of 21st-century nuclear technology? It can't be concern for the environment (they certainly don't shy away from mining and selling profligate quantities of uranium to other countries).

John Barilaro gets it:

"This year, both elections were named by many analysts as “polls on energy and emissions policy”. Perhaps as no surprise to many, the real solution that seems to tick every box was hardly raised at all. That solution is, of course, nuclear power.

It’s guaranteed baseload energy with zero emissions, no fossil fuels and probably the cheapest cost to the average Australian household. So why wasn’t nuclear a “referendum” issue at either of these elections? Because political parties from all sides (with some minor exceptions, such as Mark Latham), believe it is just too politically risky to talk about.

The combined impacts of the Cold War and disasters such as Chernobyl back in the mid-1980s essentially shut down any debate or discussion in this country — and those willing to raise the prospect of anything nuclear in Australia have been shouted down ever since. In other words, the vast majority of us are not aware of the technological changes the industry has gone through for the past 45 years."

Gavin  Mooney's picture
Gavin Mooney on Oct 3, 2019

Bob, yes the high per capita emissions are a national embarrassment. The absence of nuclear is not, in a country with - essentially - the best solar and wind resources in the world. Nuclear is too expensive and takes too long to build. By the time a new reactor comes online we could have renewables + pumped hydro done and dusted. 

For the nuclear points of view, Tim Buckley wrote a piece earlier this week:


Matt Chester's picture
Matt Chester on Oct 3, 2019

I'm intrigued that even with Australia being the seeming testbed and industry leader in battery storage technology that you point to pumped hydro as the go-to resources, Gavin. Is that just because of the current commercial viability (where pumped hydro is still way more affordable and effective) or do you see pumped hydro retaining its status as storage king in Australia long-term?

Gavin  Mooney's picture
Gavin Mooney on Oct 4, 2019

Hi Matt - currently batteries are best for shorter term storage and offering grid support such as frequency control. For several hours of storage pumped hydro takes over. Snowy 2.0 for example will have 175h of storage. Battery prices are falling fast but I don't know if we'll ever see batteries for more than a day's worth of storage. 

There is more info here:

Matt Chester's picture
Matt Chester on Oct 4, 2019

Thanks for the reply and the resource, Gavin!

Matt Chester's picture
Matt Chester on Oct 1, 2019

All clean energy sources, nuclear and renewable, can and should be put into play for hydrogen with excess generation. And the beauty of hydrogen is it really doesn't care about it's source (though of course we do for the sake of economics, carbon footprint, and other factors). 

Bob Nikon's picture
Bob Nikon on Oct 9, 2019

Good talking point Gavin, Thanks. Hydrogen has been tantalizingly out of our reach for over century now. Water splitting is the only way by we get stuck with a kind of energy to do. The energy must be clean(renewable), unconditional and has no running costs. Otherwise it  will not make sense for hydrogen production. But that is what we have tried for this long, even nuclear. Nothing has ever worked because we have worked against Mother Nature.  She is very well alive, powerful and shrewd. She actually has something very beautiful and righteous for us but we have to work for it and that's about to be revealed.

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