You may recall hearing a lot last year about green hydrogen, as the world pressured Australia to take stronger action against climate change in advance of the COP26 Glasgow summit last October.
According to the government, green hydrogen domestic and exports could be worth as much as $2.5 billion. A$50 Billion in 30 YearsHelping the world achieve deep decarbonisation
But how close can we get to a green-hydrogen industry? Which states are best suited to host it? My research has shown that, as of next year, and based upon where the cheapest renewables can be found, the best places for green hydrogen production are Tasmania and North Queensland.
This picture will change as we get more renewable energy into our grid. The north Queensland coast could be the hydrogen powerhouse by the end of this decade. In 2040, dirt-cheap Solar will make inland areas of New South Wales, Queensland and Victoria the lowest-cost producers.
You can store and transport renewable energy
Why is green hydrogen so popular? It is a zero-emission way to transport energy. You can take cheap renewable energy and convert it into hydrogen and oxygen by using an electrolyser. You can store the hydrogen on trucks or ship it via pipeline. The hydrogen can then be used for transport, manufacturing, or electricity production.
All the technology exists – it’s the cost holding the industry back at present. That’s where Australia and its wealth of cheap renewable energy comes in.
Making hydrogen is nothing new – it has a long history of use in fertiliser production and oil refining. However, hydrogen was previously derived primarily from gas, a fossil-fuel fuel.
However, green hydrogen has seen a surge in investment and interest over the past few years. New technology avenues have been created to make cheap green hydrogen. As global decarbonisation accelerates, Japan, South Korea, and other parts of Europe look for clean alternatives to replace the fossil fuels that have dominated their economies.
Australia is uniquely positioned to provide these alternatives. It has world-beating renewable resources, ports that can handle our existing fossil fuel exports like coal and LNG, and is a highly competitive country.
In 2019, we sold nearly $64 billion worth of black coal. Most of this went to India, South Korea, China, and India. These countries will decarbonise the coal industry, which will lead to a shrinking of the coal industry. Green hydrogen could be a great replacement.
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How competitive can Australian hydrogen be?
Australia is far from being able to produce green hydrogen at a price that is competitive with fossil fuels. This is because we don’t seem to want to tax carbon pollution.
Does that mean it’s a non-starter? Hardly. Only a decade ago, sceptics dismissed solar and wind as too costly. They’ve gone awfully quiet as renewable prices fell, and fell, and fell – as tracked by the International Renewable Energy Agency. Renewables are now available Cheaper than coal. The cost of battery storage has also fallen dramatically. The same forces are at work on the key technology we need – cheaper electrolysers.
According to the CSIRO’s forecasts, electrolyser costs will fall 83% by 2040 according to its projections. Gencost 2021-22 Report. Gas-derived hydrogen with carbon captured is expected to be slightly more expensive. This means that green hydrogen will likely capture a large portion of the hydrogen market starting in 2030.
Which states could reap the benefits?
My research with Victorian Hydrogen Hub)Due to the high renewable resources, Far North Queensland ($4.1/kg), and Tasmania ($4.4/kg) are the best places for green hydrogen.
This is changing. By 2030, northern Queensland’s coastal regions could be the Australian hydrogen powerhouse due to a combination of cheap solar and access to ports. The Northern Territory and Western Australia could also have similar advantages. However, modeling has not been done for these areas.
New states could be able to enter the green hydrogen economy as electrolyser and solar energy costs fall. In CSIRO’s cost predictions, electricity from solar is predicted to become much cheaper than wind by 2040. This means that the best areas for green hydrogen production are likely to be in sunny regions like central and northern Queensland ($1.7/kg), and inland NSW and Victoria ($1.8/kg).
These estimates do not include the supply chain and storage infrastructure needed to deliver hydrogen. Transport costs could range from $0.05/kg up to $0.75/kg, depending on the distance.
Comparing my modeling to the price thresholds as set out in National Hydrogen StrategyThis indicates that we can produce green hydrogen for trucks at a cost comparable to diesel within four year. Fertilizer would take longer and will be competitive by 2040.
Does our dry country have the water resources to produce green hydrogen?
How much water would it need to achieve the $50 billion green-hybrid industry the government is striving for? Surprisingly, it would consume very little water. It would require only 4% of water to water our pastures and crops. 2019-20 to generate an export industry that size – 225,000 megalitres.
As coal-fired power plants retire from the grid, much more water will be available. These power stations use around 158,000 megalitres per year in Queensland and NSW, according to a report by a 2020 reportPrepared for Australian Conservation Foundation. These two states also have coal mining operations that require 224,000 megalitres.
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As the cost of renewable energy drops, we will be able to desalinate our seawater coasts to make hydrogen. Based on Australian Water Association estimates, this would only make up 1% of hydrogen production costs. desalination cost estimates.
How can we get there quicker?
Our new hydrogen economy must be planned for in the coming decade. Both government and industry will need support for new hydrogen infrastructure projects that can produce, distribute, use, and export hydrogen at large scale.
We’re already seeing promising signs of progress, as major mining companies Move stronglyIn green hydrogen
We now need the Australian government to quickly put in place the right policy and regulations to allow this industry to thrive.