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Why hydrogen is becoming an important energy source

Hydrogen as an energy source continues to grow in popularity. Once confined to industrial processes such as refining crude oil, it is now being recognised as a potential solution to the problems of electricity generation, transportation and storage.

Over the next thirty years, global energy demand is predicted to grow by at least 30-40%. At the same time, the share of energy generated from fossil fuels has stayed almost static at 81%. While renewable energy technologies such as solar and wind are getting cheaper, they can only be generated on an intermittent basis. To make them commercially practical to use, they must be combined with high-energy batteries and backed with other energy sources.

Hydrogen may be the solution. Excess energy generated by other renewable sources during peak periods can be stored as processed hydrogen for later use. There is also the potential for hydrogen to be stored using existing gas pipelines, obviating the need to build new infrastructure.

Unsurprisingly, governments and private industries around the world are looking at hydrogen with new eyes. According to the Hydrogen Council, hydrogen could meet up to 18% of global energy demand by 2050 and be worth up to US$2.5 trillion.

Over the past five years, the Federal Government has invested over $146m in hydrogen-related projects. The National Hydrogen Strategy, released by the COAG Energy Council in November 2019, outlines a regulatory and strategic approach to enable Australia to utilise this fast-growing energy sector.

States and territories are increasingly focused on hydrogen, with each putting a strategic plan into place. Initiatives include: 

•    In Queensland, the H2-Hub, which is projected to include electrolysed capacity up to 3,000MW to produce renewable hydrogen and 5,000 metric tons of ammonia per day.
•    Tasmania has set an ambitious 2040 target to produce 200% of the state’s energy share using wind and hydropower to produce cheap green hydrogen. This will be sold as a ‘clean-power battery for the rest of Australia.
•    Western Australia will become the base for the Green Hydrogen Consortium, formed by global mining companies BHP, Fortescue Metals and Anglo American as well as engineering consultancy firm Hatch. The consortium will encourage the adoption of green hydrogen technologies and contribute to development activities. The government has also established a $10 million Renewable Hydrogen Fund, which has so far provided funding for feasibility studies for proposed projects.
•    South Australia is funding a demonstration project with Gas Networks Australia that uses a 1.25MW electrolyser to produce green hydrogen using renewable energy. 
•    The ACT is exploring the possibility of replacing natural gas with renewable hydrogen, and will open the first public refuelling station for hydrogen vehicles in 2020.

National reports and funding initiatives reflect this focus and the Australian Renewable Energy Agency (ARENA) is also offering two sets of major funding for hydrogen-related projects.

The first is the ‘Renewable Hydrogen Deployment Round', a $70 million funding round announced 15 April 2020, intended to develop at least two large-scale renewable hydrogen projects. The projects must include a new build electrolyser with a minimum capacity of 5MW and powered by renewable sources. The second is a $1.25million fund to support an existing feasibility study for a renewable 10MW hydrogen demonstration plant in Queensland.

The Advancing Hydrogen Fund, announced in November 2019 by the Government, will receive up to $300million from the Clean Energy Finance Corporation (CEFC). The Fund will back projects to build Australia’s hydrogen industry into a global export industry by 2030, in line with the National Hydrogen Strategy. The government aims to get hydrogen produced at under $2 per kilogram to make it competitive with alternative energy sources at scale.

The Grattan Institute’s Start with Steel report calls for government investment in a ‘green steel’ plan to create a new export industry as well as cutting emissions. Hydrogen, produced from renewable energy, would be used in place of metallurgical coal to reduce iron ore to iron metal. Thanks to Australia’s extensive wind and solar energy resources, the scheme would allow us to produce steel more cheaply than competing countries. It estimated that the new industry could secure 6.5% of global steel production, generate $65 billion in annual export revenue and create 25,000 manufacturing jobs in NSW and Queensland.

Hydrogen has the potential to become a significant part of the global energy mix. ‘Green’ hydrogen, produced from renewable sources, offer a solution to the problem of intermittency that has held those technologies back. Hydrogen is scalable, stable and transportable, with the potential to utilise existing infrastructure. While there are still logistical and technological challenges to meet, the future of hydrogen looks promising.

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