Can hydrogen from Australia be an alternative to oil and gas?

The deal between Australia and Germany is not really “close” at a distance of 16,000 kilometers. But the distance is not the biggest problem.

The substance is as old as the sea, the agreement still quite green behind the ears. Environmentally friendly hydrogen from Australia is intended to reduce Germany’s dependence on Russian oil and gas in the escalated Ukraine conflict and is seen as an important building block for achieving climate targets. Most recently, the EU competition authorities also gave the green light for the multi-billion hydrogen subsidy to support the energy transition.

Initial results of the “HySupply” feasibility study commissioned by both countries are now available. “In summary, it can be stated so far that the geographical distance between Australia and Germany does not speak against the establishment of a supply chain for green hydrogen,” says Dr. Gabriele Rose, managing director of the German-Australian Chamber of Industry and Commerce (AHK) in Sydney by IPPEN.MEDIA. According to the study, factors other than direct transport costs are much more decisive for the price and thus for the market maturity of green hydrogen for Germany. Hydrogen as an alternative would have to become globally available on an industrial scale and at a price that can compete with fossil fuels.

Russian gas in the Ukraine war: hydrogen deal between Australia and Germany

The production of hydrogen is nothing new – it has long been used in fertilizer production and oil refining. Water is split into hydrogen and oxygen using electrolysis. Until now, however, the primary energy source for production has usually been natural gas, a fossil fuel with high CO2 emissions. The hydrogen is considered “green” if the electricity used to split it was generated from renewable sources such as wind or solar power.

The technology is there – it’s the cost of renewables that is currently holding the industry back. That’s where Australia and its seemingly endless potential for wind and solar power come in as the basis for cheap energy. And cooperation with Germany is said to be the key to bringing the new technology to market.

According to official calculations, Australia needs around 880 gigawatts (GW) of newly built solar plants to export comparatively as much energy in the form of hydrogen as it currently does in the form of liquefied natural gas (LNG). The solar panels would cover an area of about 10,400 square kilometers. That’s roughly the area of Lebanon or three times the area of Mallorca. “In Australian terms, that’s about half the size of our largest cattle farm,” explains Dr. Alan Finkel, the Australian government’s lead advisor on low-emission technologies. Australia is used to thinking in outsized terms, he says. The imposing iron ore mines in the remote Pilbara region and the world’s largest floating offshore LNG plant off the west coast are just two examples of the dimensions on which the huge continent can operate.

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“As the cost of solar and wind energy has dropped globally by 82 percent and 39 percent, respectively, over the last decade, the cost of producing clean hydrogen is now only a factor of three or four below what it would take to compete with fossil fuels,” Finkel says. He expects the gap to close quickly, he says. The Corporation for Scientific and Industrial Research (CSIRO) also predicts that technological advances will reduce the cost of electrolysis equipment by 83 percent by 2040. “This is where German hydrogen technology can come in and help reduce production costs quickly,” explains Rose of AHK Sydney.

So far, German energy company E.ON and its Australian partner Fortescue Future Industries (FFI) want to bring green hydrogen to Germany on a large scale, and utilities RWE and Uniper are also pushing the pace on the issue. ThyssenKrupp is driving the development of electrolysis plants worldwide, while Siemens Energy and MAN are involved in projects in Australia. “In the hydrogen sector, German-Australian cooperation is a real win-win situation,” Rose says. “Australia is a reliable democratic partner with decades of experience as an energy exporting country, and there is an opportunity to establish trade with Europe right from the start of the hydrogen economy.” Add in the logistics available through the mining industry, and Australia is well positioned with its ports to export fossil fuels such as coal and liquefied natural gas (LNG).

Germany and Australia as energy partners: shipping logistics under pressure

However, Germany and Australia are separated by several oceans. “We can’t just build a long pipeline under the sea. We need ships,” says Finkel. The challenge: Because of its extremely low density, hydrogen takes up a large volume in its gaseous state. To transport it by ship, therefore, you have to put it under high pressure or cool it down considerably because of its boiling point of -252.9 °C. This is not without risks. “When hydrogen reacts with the right amount of oxygen, a huge amount of energy is released, causing an explosion. In addition, hydrogen has a relatively low combustion temperature, making it highly flammable. Also, because hydrogen is colorless and odorless, it is difficult to detect a leak in a system. Even a hydrogen flame is almost invisible and therefore difficult to extinguish,” explains cryogenic company Demaco.

Earlier this year, Australia sent a ship loaded with liquid hydrogen toward Japan for the first time. It was a milestone for the transport of the promising energy carrier, even though the “Suiso Frontier” was powered by diesel and the hydrogen was produced with Australian lignite. “The race to produce and transport green hydrogen on a large scale has picked up speed,” Economics Minister Robert Habeck (Greens) also attested in March. Another three months later, the South Korean shipyard Daewoo Shipbuilding & Marine Engineering (DSME) already has orders for 18 hydrogen carriers. According to estimates by the world’s largest shipbuilding industry, the number could rise to 200 larger-capacity ships from 2040.

Hydrogen as an alternative? Agreement with Australia to reduce dependence on Russia

The stage is set for Australia to become a “green powerhouse” for Germany. Experts believe that building a completely new hydrogen industry will take much longer than many of the project proponents expect. It is also likely to prove far more complex than the massive expansion of Australia’s LNG sector over the past decade, which catapulted Australia to the top of the world’s larger LNG producers. So for hydrogen to become a real alternative to Australia’s coal or LNG exports, the bigger picture, the “big picture,” must not be lost sight of. But Australians are used to thinking on a different scale. (Katharina Loesche)