In a previous article (1) some of the challenges Australia faces in moving to zero carbon were introduced. Australia will almost inevitably lose all economic activity associated with thermal coal and natural gas extraction and delivery. It will also see industries associated with raising cattle and sheep for food, leather and wool sharply constrained. This is a big deal for Australia – arguably not many other countries face losing so many important elements of their economic base.
If Australia loses these drivers of economic growth, prosperity and employment, what can they be replaced with? Alan Finkel, Australia’s Chief Scientist, thinks hydrogen is a potential answer (2). Hydrogen is a “clean” burning fuel, reacting with oxygen to produce lots of energy and no environmentally damaging emissions. Just like natural gas it can be compressed to produce a liquid fuel that can power planes, ocean – going vessels as well as trucks and other heavy vehicles that need a greater range than is currently possible with lithium batteries. Hydrogen fuel cells can also be used to produce electricity allowing it to be incorporated into the grid providing flexibility and storage. Hydrogen produced by splitting water using electricity can be stored during periods of strong power generation and converted back into electricity when other generation sources are not available – effectively acting as a battery. As outlined in more detail in the “Hydrogen for Australia’s Future” report (2), in a low carbon environment, hydrogen is attractive for both domestic energy applications as well as a potential emerging export into Asia.
If this seems too good to be true, then in part it is. There are two ways to produce hydrogen – one is the electrolysis route which uses electricity to split water into oxygen and hydrogen. The other is by extracting hydrogen from fossil fuels such as coal or natural gas. The electrolysis route is currently expensive and while proven technology it is not widely used at a commercial scale. In addition a lot of electricity is needed to produce hydrogen from water and the energy released when hydrogen is converted back into water is inevitably less than that required to produce it in the first place. The fossil fuel production route, on the other hand, is a common process in petrochemical plants but without carbon capture and sequestration (CCS) it produces lots of CO2, making hydrogen from this route far from a “green fuel”. Hydrogen is also highly flammable and if not handled improperly it is explosive (the same of course applies to natural gas). Widespread use of hydrogen beyond the confines of the petrochemical industry would require an extensive review and modification of safety practices and regulations.
Finkel’s vision is that as fossil fuels disappear, clean burning hydrogen will be one of the energy sources (along with wind, solar and batteries) used as replacements. In this model “green” hydrogen, produced from either renewable energy or fossil fuels combined with CCS, will be important, not just for Australia’s own energy needs, but as a product which can be exported to nations such as Japan and South Korea, effectively replacing lost markets for Australian thermal coal and natural gas. It is also noted that hydrogen is the obvious future replacement for metallurgical coal used in the production of steel from iron ore.
Promoters of an emerging hydrogen export industry highlight Australia’s significant wind and solar resources and hence our potential to produce more low carbon electricity than we need. Hydrogen can be a storage medium that allows our renewable energy to be exported. Similar claims are made about our potential to use CCS (3) to produce hydrogen with a very low carbon footprint from our vast fossil fuel resources. Many of these fans of hydrogen warn that other countries are looking to tap into emerging demand in Japan and South Korea and are urging government support for research and investment in downstream infrastructures such as pipelines, liquefaction and ship loading capacity.
This all sounds pretty positive, so why is there a battle over hydrogen? A recent report by the Australian Institute (4) entitled “Hy-trojan – Is hydrogen the new clean coal?” summarises the some of opposing views with the following warning:
The rush to develop Australia’s hydrogen industry is based on export opportunities, especially to Japan and Korea, which have been vastly overstated by comparison with Japanese and Korean targets. Developing hydrogen with coal and gas risks locking in increased emissions, given the track record of carbon capture and storage. Australia should focus on hydrogen produced with renewable energy.
The first part of this warning highlights the risk of overpromoting a new business opportunity particularly when the customer demand for the product is based on forecasts rather than reality. To overcome this opposition supporters will need to do more to show that hydrogen has competitive advantages over low carbon alternatives in specific applications and furthermore that Australia is as well placed as other nations to exploit this market when it inevitably materialises.
The second element of pushback captured by this quote is more ideological. There is clearly opposition to the Finkel strategy because it is perceived to offer support to the fossil fuel industry. By not explicitly excluding the option of producing hydrogen from coal or natural gas and holding out the promise that CCS can be used to decarbonise fossil fuels, Finkel has failed a key litmus test for many environmental progressives.
This position rejects any argument or initiative that implicitly or explicitly is seen to extend the life of fossil fuels. This excludes the use of gas as a bridge fuel (encouraging gas as a replacement for coal while renewable generation ramps up), refuses to countenance CCS until coal and gas generation ceases to exist and rejects support of hydrogen until there is no scope for fossil fuel based production.
Some more quotes from the Australia Institute report flesh out these lines of opposition:
Australian pro-hydrogen rhetoric ……vastly overstates Japanese and South Korean hydrogen import demand over the next decade. This has created a false sense of urgency, used to justify the fast-tracking of Australia’s hydrogen economy.
While Japan and South Korea have spoken about their potential need for hydrogen the volumes they are currently projecting are well below the projections in the Finkel report it reality may mean the hype in the Finkel report is not justified. Perhaps demand will ramp up but both Japan and Korea are well practised at encouraging excess supply from importers as a method of keeping prices down and ensuring an overcapitalised global supply chain.
” Once hydrogen production plants are built, their capital is sunk and production from these plants may continue at below prices than would justify their construction, in turn undermining the market for green hydrogen. This is especially the case if infrastructure or production is subsidised.”
” Problems of carbon “lock in” through new fossil fuel infrastructure are well understood. Establishing a high emitting fossil hydrogen industry in areas not suitable for transition to green hydrogen increases the economic and political costs of following through on Australia’s commitments to reduce emissions in the future. “
The two quotes above capture some of the concerns about extending the economic and political influence of the fossil fuel industry – once fossil fuel based hydrogen production facilities have been built they will prove hard to close based on capital expended and a workforce reliant on the facility remaining open. A potential Finkelesque counter that a pilot fossil facility can be converted to a larger renewable based production to take advantage of downstream infrastructure is argued away in the second paragraph. Citing emerging hydrogen production facilities at a fossil friendly location creates too great a risk that future conversion to “green” production becomes an unnecessary and avoidable political battle that might not even be won.
Hydrogen is currently being used to redress Australia’s fossil fuel industries, much in the same way as the promise of “clean coal” using CCS technology.
This captures the logic behind the trojan horse analogy, holding out the potential for clean, fossil fuel derived hydrogen (just as with the potential of CCS itself) is an attempt to “redress”, rebadge and legitimise fossil fuels allowing them to survive and even flourish inside the political mainstream when they should be totally and completely rejected. Proponents of the Finkel hydrogen plan, as currently configured, will face a tough, ideological opposition who will work hard to stop hydrogen produced from fossil fuels with CCS becoming a reality. Talking about all the benefits of hydrogen won’t be enough – clear messages addressing criticism about “locking in” carbon emissions, reliance on CCS which will be used to prolong the life of coal fired power plants and providing fossil fuel CEO’s and lobbyists with a national forum to promote the continued use of their product will be needed.
At the extreme the battle over hydrogen will be between those who see it as a wonderful national opportunity and those who portray it as a desperate last gasp effort to keep fossil fuels relevant.
From a personal perspective, I am guided by the UNIPCC endorsement of CCS as an important tool in the decarbonisation process. On this basis I have no issue with Finkel’s willingness to consider fossil fuel based hydrogen production with CCS – perhaps this will prove overly optimistic but there is no need to rule it out at this stage. Indeed this may be the sort of large scale pilot project that is needed to drive further development of CCS. Given the advances in wind and solar, thermal coal is as good as dead so waiting until the last ton of coal has been mined before we allow CCS seems far too doctrinaire and inflexible to me.
The battle for hydrogen production in Australia has obviously just started. Hopefully the protagonists focus on the big prize – establishing an industry that allows Australia to maintain its position as a major global energy exporter, providing economic value and employment to regional Australia.
(1) https://journeytozerocarbon.com/?p=375
(2)https://www.chiefscientist.gov.au/sites/default/files/HydrogenCOAGWhitePaper_WEB.pdf
(3) https://earthresources.vic.gov.au/projects/carbonnet-project
(4)https://www.tai.org.au/sites/default/files/P725%20Japan%20Aus%20hydrogen%20report%20%5BFINAL%5D.pdf
