According to Wood Mackenzie, low-carbon hydrogen could become a US$50 billion to US$90 billion export business for Australia by 2050.
Australia typically ranks towards the top of the solar irradiance rankings and has enormous potential for large-scale carbon capture and storage (CCS). It has paved the way forward for the rest of the globe with its stationary battery storage flexibility at the much-heralded Hornsdale power reserve project and has moved rapidly to capitalize on low-carbon hydrogen generation.
With a rising project pipeline of 2.94 gigatonnes (GW) of named green hydrogen electrolyser capacity by 2020, Australia has surpassed the Netherlands as the world’s second largest owner of hydrogen projects. Australia’s pipeline of advanced and early stage project development has increased by 45 percent this year to 4.25 GW.
Speaking at the APPEA conference today, Wood Mackenzie Head of Markets and Transitions, Prakash Sharma said: “Australia’s key export markets – Japan, South Korea, China, India and Europe – are large carbon emitters and net importers of natural resources. Their import needs have steadily increased in the past two decades and now average at more than 70% of their total energy demand. As these countries raise climate ambitions, they will need to source clean energy to decarbonise steel, chemicals, cement, heavy-duty mobility, shipping and power generation.
“In a net-zero emissions world, a stable and reliable source of low-carbon hydrogen supply becomes essential because it is impossible to tell how a given molecule of hydrogen has been produced. A guarantee of origin is therefore crucial to allow for minimal environmental impact, i.e., carbon leakage. Standards also help with risk assessment and transparent market pricing. Australia stands to benefit as rules of hydrogen shipping, transport, storage and product quality are set and accepted internationally.
“Australia’s share in the globally traded market for low-carbon hydrogen or its derivatives could reach 25-45 million tonnes (Mt) by 2050, equivalent to US$50 to US$90 billion in potential export revenue.”
Cost competitiveness remains a lingering issue; however, Wood Mackenzie believes that end-user segments can achieve competitiveness. Cost reductions will be primarily driven by large-scale, automated electrolyser manufacture, system sizing, and a fall in the cost of renewable electricity.
The issue is establishing the optimal mode of transport for Australia’s export supply chains. Each of the three modes of seaborne transportation considered thus far, liquid hydrogen (LH2), liquid organic hydrogen carriers (LOHC), and ammonia (NH3), has a number of advantages and disadvantages. The most appropriate carrier is determined by the final usage, purity, and storage requirements. For instance, LH2 is recommended when the end use demands liquid or ultrapure hydrogen, such as in mobility applications. On the other side, ammonia gains value in applications where it may be used directly as a feedstock, reducing the cost of regenerating hydrogen from NH3.
Sharma said: “Our proprietary hydrogen costing and energy transition scenario modelling show Australia’s hydrogen delivered costs can fall below US$2/kg longer-term, making it competitive in all end-use cases in key markets of northeast Asia.
“We estimate ammonia would be the first hydrogen-carrier in the export market facilitated by Australia from mid-2020s. Low-carbon hydrogen demand in Japan and Korea reaches 30 Mt in 2050 with ammonia taking one-third market share on this route.”
Although there is no exploration risk associated with green hydrogen generation, the export supply chain — storage, compression, transport, and decompression – is complicated and embryonic at the moment. The magnitude of the reward for Australia is contingent upon the rate and scope of global hydrogen market development; the range is vast, ranging from 73 to 145 Mt in 2050, and opportunities abound.
Sharma said: “We believe Australia can overcome hydrogen’s logistical challenge like it successfully did in coal seam gas to LNG projects, automated trucks and remote-control mining operations and large-scale CCS deployments. Leveraging experience from hydrogen pilot programmes and greater investment in research and development, consistent government support, partnerships and offtake agreements from Japanese and Korean firms would be crucial.
“This is a lifetime opportunity for Australia to harness its renewable energy resources and become a dominant player in the zero-carbon energy trade. It would be difficult for large Asian economies to reach climate goals without clean energy supplies from Australia.”
