Australia plans to build up large hydrogen capacities for export. Both green and blue hydrogen will be produced.
With the National Hydrogen Strategy presented in November 2019, Australia aims to become a major global player in hydrogen by 2030. The focus is particularly on the development of a large export industry. In this way, the country wants to continue its long tradition as one of the world's largest suppliers of energy.
In 2019, for example, Australia was the world's largest exporter of liquefied natural gas (LNG). In terms of coal, Down Under came in second place behind Indonesia in 2019. In the medium term, Australia is expected to acquire a solid position among the top three exporters into promising Asian markets.
A core element of the hydrogen strategy is the establishment of large hydrogen hubs, which offer the possibility of sector coupling. Thus, capacities for export will be combined with local applications (feed-in to gas grids, power generation, chemical production).
The first large-scale plants are to be built from 2025
However, Australia is refraining from formulating clear targets, for example for the development of electrolysis capacities. Instead, the aim of the hydrogen strategy is to develop across two phases.
In the first phase, which will run until 2025, mainly pilot and test plants as well as demonstration projects for hydrogen hubs will be established. In the second phase, starting in 2025, the first commercially oriented large-scale plants are to be built to open up national and international markets. In this context, the Minister for Energy and Emissions Reduction formulated the ambitious target "H2 under 2", according to which the cost of one kilogram of hydrogen should fall below A$2 in the long term.
Government launches funding programs
To support projects under the first phase of the National Hydrogen Strategy, the government is providing approximately A$370 million in funding.
The Renewable Hydrogen Deployment Fund accounts for A$70 million of this funding. This is operated by the Australian Renewable Energy Agency (ARENA) and is intended for green hydrogen production projects with an electrolysis capacity of at least 5 megawatts.
The funding program is attracting a lot of interest. In an initial expression-of-interest procedure, proposals for a total of 36 projects were submitted in June 2020. They represent an electrolysis capacity of around 500 megawatts all together. The first funds are to be awarded in November 2020.
Includes the promotion of blue hydrogen as well
A further A$300 million will be provided by the Advancing Hydrogen Fund of the government-owned Clean Energy Finance Corporation (CEFC). The program is technically broader and also includes the production of blue hydrogen from natural gas or coal in combination with carbon capture and storage (CCS).
According to the federal government in Canberra, the production of hydrogen from fossil fuels in combination with CCS is to play an important role in the country's future energy and climate policy. Through the Paris Climate Agreement, Australia has committed itself to reducing its CO2 emissions by 26 to 28 percent by 2030, compared to 2005 levels.
To this end, the government is developing a Technology Investment Roadmap, under which investment in more climate-friendly technologies is to be made. CCS is intended to be a central component in reducing emissions.
A pilot project for blue hydrogen is called the Hydrogen Energy Supply Chain Project (HESC). Hydrogen is produced from lignite in the La Trobe Valley in Victoria and then shipped to Japan in a liquefied form.
Hydrogen Energy Supply Chain Project (HESC)
In May 2020, the Australian Government approved the legal framework for CarbonNet, which will store CO2 from future commercial phases of HESC under the seabed of the Bass Strait. The capacity could encompass up to 5 million tonnes of CO2 per year and could include other emitting plants in the La Trobe Valley in addition to HESC.
Other Australian states also support hydrogen projects
Due to the strong network between the states and the federal government in Australia, the former also have extensive competences in energy policy. Five of the eight states and territories have already established their own hydrogen strategies and funding programs. New South Wales (NSW) and the Northern Territory intend to follow suit in the coming years. What is being discussed in NSW, among other things, is a hydrogen share of 10 percent in the local gas networks by 2030.
State Hydrogen programs
Source: Research by Germany Trade & Invest
Western Australia
Renewable Hydrogen Strategy
Up until 2022: Approval of a first project for export
Up until 2040: Exports of green hydrogen should reach the same world market share as today's LNG exports (recently just above 10%)
Western Australia
Renewable Hydrogen Fund
Funding program for green hydrogen, to which US$7 million has been allocated; funding includes, among other things, feasibility studies for seven projects
South Australia
Hydrogen Action Plan
Funding of four projects for green hydrogen; development of a regulatory framework as well as national and international supply chains
Tasmania
Renewable Hydrogen Action Plan
Export of green hydrogen from 2025 to 2027; establishment of a hydrogen hub in the Bell Bay Advanced Manufacturing Zone with up to 1,000 MW electrolysis capacity; total funding of US$35 million for projects
Queensland
Hydrogen Industry Strategy
Grants of US$10 million for hydrogen projects
Victoria
Hydrogen Investment Program
Development of a funding program for hydrogen projects
Export potential still uncertain
With regard to the possible volume of Australian hydrogen exports, the forecasts are still subject to a number of uncertainties. According to the intermediate scenario of a study commissioned by the Australian Renewable Energy Agency, exports could already reach 500,000 tonnes in 2030 and increase to 1.4 million tonnes by 2040. Australia is working in particular on building up supply chains in promising Asian markets such as Japan, South Korea, Singapore, China or Taiwan. In addition, the Australian government will try to develop an international certification system for CO2-neutral hydrogen.
Initial plans for the envisaged hydrogen hubs are also commencing. The Australian Hydrogen Hubs Study has already identified over 30 potential sites for large export facilities. In addition, the government is working on the National Hydrogen Infrastructure Assessment up to 2022, which is intended to determine the investment needs for accompanying infrastructure such as electricity, water, pipelines, and transport.