20 August 2019

Hydrogen – energy of the future?

This article was written by Louis ChiamAnnabel Griffin and Lachlan Fahey.

With the global search for reliable, clean and affordable energy becoming more and more intense, one of the most intriguing questions is whether hydrogen could emerge as a major part of the future energy mix.

Energy from hydrogen

As an energy source, hydrogen has a lot going for it.  It has a high energy density – with more than double the content of natural gas.  It burns ‘clean’, with only water as a by-product.  And, as the most abundant element in the universe, there is plenty of it.

But we are long way from hydrogen being a staple part of the energy diet, with concerns about safety and currently prohibitive cost levels both proving very challenging. 

The main hurdle is that, despite its abundance, freely-available pure hydrogen as a gas is extremely rare.  Instead, hydrogen needs to be produced before it can be used, traditionally either by:

  • extracting hydrogen from fossil fuels, which is both expensive and results in substantial quantities of greenhouse gas by-product; or
  • using electricity to split hydrogen from water molecules, which requires significant amounts of electricity (renewably or conventionally sourced) and is not yet entirely price competitive.

So, rather than a being a source of energy, hydrogen’s better promise is as an energy storage solution, with potential uses in electricity generation, as a ‘firming’ product (much like batteries) and even as an additive to (or ultimately a replacement of) domestic natural gas.  As a complement to current battery technologies which are helpful for relatively small quantities of energy storage for shorter periods, hydrogen may provide a useful means of largescale energy storage over much longer periods. 

Exporting renewable energy: Australia’s biggest hydrogen opportunity

From an Australian perspective, the most compelling use for hydrogen is to develop a largescale, ship-borne export industry that would allow Australia to exploit its massive renewable energy potential.  By producing hydrogen using our rapidly-expanding renewable energy sector, Australia can effectively ship its sunshine around the world.

In the long term, a global hydrogen market will be driven by:

  • Demand from energy-intensive economies that lack local energy supplies such as natural gas or the combination of climate and available land to develop largescale renewable energy projects.  In the Asian region, countries like Japan and South Korea have already made national commitments to increase their hydrogen imports in place of fossil fuels to power their economies.
  • Long term, high volume hydrogen supply from economies that have the climate and available land to develop largescale renewable energy projects, the capability to deliver major export technologies and access to economic shipping lanes.  In the Asian region, Australia stands out as a prime candidate to fulfil this role.

Of course, developing this market will not be easy, with a host of political, technological and economic issues to resolve.  But as the waves of new energy technologies developed over the last 50 years have shown, change can come remarkably quickly.

Hydrogen is already in use

While many of these uses may seem a long way off, hydrogen is already used in many industrial processes such as chemical production and refining, where it is used principally as a reactant.  As a result there is an existing – albeit bespoke – hydrogen supply chain.

At the same time, a couple of Australian pilot projects are already exploring the potential for local hydrogen manufacture.  In Victoria, the ‘Hydrogen Energy Supply Chain’ pilot project involves taking brown coal from AGL’s Loy Yang mine and producing hydrogen-rich syngas which will subsequently be purified, transported to the Port of Hastings to be liquefied and then loaded for shipment to Japan.  In its pilot phase, the greenhouse gas by-products are most likely to be offset, whereas full-scale production would require carbon mitigation in the form of capture and storage.

Meanwhile, in South Australia, the State government announced in 2018 Australia’s first ‘clean’ hydrogen plant at Port Lincoln which will consist of a 15MW grid-connected electrolyser to produce the hydrogen, together with a 10MW hydrogen turbine and a 5MW fuel cell which will produce electricity and provide balancing services to the grid.

Governments are looking at it seriously

Perhaps the strongest signal of hydrogen’s potential is the level of government interest in developing hydrogen markets.

In Australia, the COAG Energy Council is in the process of developing a National Hydrogen Strategy for release at the end of 2019.  As part of this project, the COAG Energy Council released 9 issues papers in July 2019 covering topics from developing a hydrogen export industry to hydrogen in the gas network.

Meanwhile, countries likely to be high-volume consumers of hydrogen have been exploring the sector in detail, with USA, Japan, Singapore and South Korea each having developed national hydrogen strategies or roadmaps.

Legal challenges

From a legal perspective, hydrogen presents a number of issues, including:

  • developing a new regulatory regime for the production of hydrogen;
  • designing and implementing conventions and documentation to facilitate a smooth global trade; and
  • reaching a consensus on the appropriate role for government in the hydrogen supply chain.

In future alerts, we will examine these legal issues in more detail. Submit your details so that we can keep you up-to-date with insights and developments as they unfold.



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