Renewable hydrogen has the potential to transform how we power our homes, our heavy industries, our transport and ultimately, the health of our economy. That's why we're calling for a renewable hydrogen strategy.
Renewable hydrogen will play an important role in the zero-carbon economy, and global demand is set to boom. The Northern Territory is well-placed to establish an industry producing renewable hydrogen, supplying domestic and Asian markets. The NT could capture two-thirds of the national expansion of the renewable hydrogen industry by 2030.
What is renewable hydrogen?
Conventional hydrogen production involves significant carbon emissions but with the falling cost of renewable energy it is becoming economical to make renewable hydrogen with zero emissions. Renewable hydrogen has an important role to play in the transition away from fossil fuels and demand is set to boom.
(Video source: Australian Government)
The Hydrogen Council foresees a global hydrogen market worth US$1.25 trillion by 2050, which would make it one of the world’s largest industries. Much of the demand for hydrogen will come from countries such as Japan and South Korea that see imported
renewable hydrogen as central to their low-carbon futures. Both countries are planning “hydrogen economies” with Japan targeting 31,500 hydrogen fuelling stations and 5.3 million homes run on hydrogen by 2030.
Japan and South Korea have only modest ability to generate energy from renewable sources, so will rely partly on imports from countries like Australia that can make renewable hydrogen cheaply. A report for the Australian Renewable Energy Agency (ARENA) estimates Australia could supply at least 20% and 11% of future hydrogen demand in Japan and South Korea respectively.
Australia’s hydrogen export industry has enthusiastic cross-party support. Some proponents of the hydrogen export industry see it as a way of extending the future market for Australia’s fossil fuels. This ignores the fact that Japan and South Korea want zero-carbon hydrogen as part of their decarbonisation strategies. If they had long-term interest in hydrogen from fossil fuels, they could make it themselves from gas they already import.
How the NT can create jobs by decarbonising the globe
By 2030, Australia could be exporting a million tonnes of hydrogen every year, and up to three times that amount by 2040. This would create a new national export market worth up to $4.4 billion by 2030. A hydrogen industry of this size could employ 1,400 people across Australia, with additional indirect employment of around 4,300. Most of these jobs would be in regional locations with high solar irradiance and access to land.
The Territory is well-placed to capitalise on the hydrogen export market thanks to:
- Exceptional renewable energy resources enabling zero-emissions hydrogen at low cost
- Existing infrastructure and experience in LNG exports, transferable to a hydrogen industry
- Existing trading relationships with customers in East Asia.
These advantages mean the Territory will be able to export hydrogen to East Asia at a lower cost than most competitors. It is an ambitious and achievable aim for the Territory to capture two-thirds of Australia’s hydrogen export industry. Based on the above projections, by 2030 this would lead to:
- 960 direct jobs in the hydrogen production and export industry
- 2,830 new jobs created indirectly
- $590 million direct economic contribution
- Over $2.9 billion FOB (Free on Board, or the value of goods at purchase).
Producing this amount of hydrogen would require around 5.5 gigawatts of renewable energy capacity.
The Chief Scientist, Dr Alan Finkel, has identified the NT - as Australia’s sunniest jurisdiction - as having "enormous potential" to produce hydrogen, and supply Japan and South Korea.
This information was taken from the 10 Gigawatt Vision.
Renewable hydrogen: costs, uses and transport
Today most hydrogen is made from a fossil fuel feedstock, principally natural gas. This method of hydrogen production accounts for about 2% of global greenhouse gas emissions. Hydrogen can also be made by passing an electric current through water, causing it to split into oxygen and hydrogen. If the electricity comes from renewable sources, this produces renewable hydrogen with no emissions. The Hydrogen Council envisages that globally by 2030, 250– 300 TWh of surplus solar and wind energy could be converted to hydrogen.
Cost of renewable hydrogen: CSIRO estimates that by 2025 the cost of producing hydrogen with electrolysis in Australia will fall to $2.29-2.79/kg. At this rate it will be competitive with hydrogen from fossil fuels. This cost is dependent on the low cost of renewable energy in Australia, which CSIRO assumes will fall to 4 cents/kWh by 2025.
Market for renewable hydrogen: The global market for renewable hydrogen will be driven by three areas of demand:
- Replacing existing hydrogen feedstock in ammonia and other products – a market worth US$140 billion in 2018.
- Hydrogen is a versatile fuel that can be used in electricity generation, heating and transport. ARENA estimated the future market for hydrogen as an energy source could be worth up to A$80 billion by 2030, and over A$300 billion by 2040.
- Renewable hydrogen can displace fossil fuels in the manufacture of products like steel, methanol and a wide range of organic chemicals. Producing today’s global steel output with hydrogen-based methods would require 112 million tonnes of hydrogen – worth about US$280 billion.
Transporting hydrogen: The success of a renewable hydrogen export industry is dependent on the commercialisation of a means of transporting hydrogen over long distances. Either liquefication or ammonia synthesis are likely to be the most cost-effective.