A RECENT report from the Institute for Energy Economics and Financial Analysis (IEFFA) has warned that a lack of government funding along with inaction around policy settings means that Australia could lose its leading position as a future hydrogen powerhouse.
The report titled Great Expectations followed the unveiling of Europe's Hydrogen Strategy - largely based on green hydrogen production - but focuses on the role that Australia and Asia more broadly will play in the future energy export space.
According to IEFFA financial analyst Yong-Liang Por there are around 50 viable hydrogen projects announced over the last financial year, with a total capacity of 4 million tonnes of renewable hydrogen per annum and a power capacity of 50 gigawatts.
"The biggest projects are being planned for Australia and the Middle East, as economies of scale are required for export-orientated plants," Yong-Liang Por said.
While Australia is poised to take advantage of its proximity to Asian gas markets, there is however a "serious risk" that some projects may fall by the wayside due to "unfavourable economics and a lack of financing" along with government planning.
"Governments need to urgently back this industry by developing policy settings encouraging private industry to invest the much needed capital, given the industry must ‘learn by doing'," Por said.
Por said Australian policy makers needed to ensure a future hydrogen economy and robust export market based on hydrogen would require transitioning ports from coal to hydrogen.
"With the green hydrogen industry still in its infancy, it is important for ports to move quickly to establish themselves as a hydrogen centre through promotion as a usage, production, import and trading hub," Por said in his report.
These ports, in Queensland and Western Australia, are already close to potential production sites for hydrogen plants. Key markets would include Japan, Korea and Europe, already important markets for Australia's current energy exports.
According to the report, Australia's exports of hydrogen were more likely to come in the form of liquified hydrogen, owing to the country's already well-established LNG expertise and infrastructure.
Hydrogen must be stored at minus 253°C versus LNG at minus 163°C, calling for tankers with more sophisticated insulation.
Creating a large enough fleet in time to beat other countries is ambitious, although IEFFA noted Japan had begun building its first liquified hydrogen gas tanker in December last year.
Trials of liquified hydrogen cargoes are expected to begin by March next year.
Por noted that Australia had the "most ambitious" hydrogen export plans but initial projects were backed by companies with a "lack of resources" to drive successful completion.
This is despite BHP and Woodside Petroleum being shortlisted for the Australian Renewable Energy Agency's $70 million hydrogen funding round. AllianceBernstein noted last week the two were some of the earliest movers in the oiler space.
"In Australia at present, most hydrogen ventures are pilot projects and are regulated on a case-by-case basis without the need for lengthy formal assessment and approval processes," Por said.
That said if these pilot projects are successful, it would be likely that public consultation and further assessments would be needed, which would in turn lengthen project delivery schedules. Australia by no means is ready to win the hydrogen export race.
Source: Energy News Bulletin
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