Asia may surprise with early start of hydrogen trade flows: summit

Singapore — Asia could see its first hydrogen trade flows much earlier than expected as Australia speeds up export infrastructure development while potential importers in North Asia accelerate policy formulation to embrace the carbon-free fuel, delegates at the maiden Asia-Pacific Hydrogen Summit said Nov 24.

As Asian energy producers allocate relatively more funds to green projects in an effort to speed up recovery from the COVID-19 crisis, hydrogen will see a fair share of the allocations coming its way, which could expedite development and see some of the first cargo flows in around five years, several delegates said.

But having transparent price discovery, scaling up production to cut costs, creating competitive transportation methods and implementing safety regulations will be crucial for countries to make hydrogen part of their energy mix in a region that is largely dependent on oil imports and is struggling to give up its addiction to coal, they said.

"The acceleration in the Asia-Pacific region's energy transition is the key driver for governments and corporates to include hydrogen in their roadmap towards a sustainable economy," said Edgare Kerkwijk, board member of the Asia-Pacific Hydrogen Association.

Delegates reiterated that some of the initial hydrogen trade flows in the Asia-Pacific would take place from Australia to Japan and South Korea, two countries that have already rolled out long-term plans for the clean fuel, which analysts and market participants expect would have to be largely met through imports.

Australia's ambition to be a key hydrogen export hub would mean Japan and South Korea would be aiming to source a substantial portion of their needs from the Asia-Pacific and Australia-Japan and Australia-South Korea could thus potentially emerge as two main routes in the region.

AS EARLY AS 2025

"We believe that we can have green hydrogen export demonstration in operation by 2025 -- only five years from now. And South Australia has a first mover advantage in this regard," Dan van Holst Pellekaan, the state of South Australia's Minister for Energy and Mining, told the conference.

He said that leading Asian economies, such as Japan and South Korea, had clearly signaled their intention to import clean hydrogen from nations that can produce competitively and reliably.

"We firmly believe that South Australia can become a clean hydrogen supplier of choice to our trading partners in the Asia-Pacific region looking to decarbonize their economies," he added.

Australia has crafted a national strategy for hydrogen with an aim to be a major global player by 2030. This would involve areas such as advancing hydrogen production, developing export and domestic supply chains, establishing hydrogen hubs, and backing projects that build domestic demand for hydrogen.

van Holst Pellekaan said Australia is focused on developing its first major hydrogen export hub through a $70 million competitive program as it would be crucial in scaling up production and driving down costs.

"I can report that South Australia is on the way to become a world class producer of clean hydrogen and supporting the Australian government's goal of producing hydrogen at under $2/kg," he said.

"Whether its green hydrogen or in the form of ammonia or liquid hydrogen, South Australia is ideally placed to leverage its rich renewable energy resources, availability of land, proximity to Asia and well-established trade relationships. We can be the trusted supplier of competitively-priced clean hydrogen," van Holst Pellekaan added.

'A MUST, NOT A CHOICE'

South Korea unveiled its "roadmap for hydrogen economy" in 2019, with a vision to sharply increase production of hydrogen-powered vehicles and electricity generation by hydrogen.

Chun Soo Kim, executive vice president in the new growth division at Korea Gas Corporation, told the summit that developing new technologies would be crucial to boost the price competitiveness of hydrogen, which in turn can help hydrogen energy to start replacing fossil fuels at a rapid pace.

"Hydrogen energy will become essential, not optional. Transition to hydrogen society a must, not a choice," Chun said.

He added that Kogas was planning to boost hydrogen production by building 25 production bases nationwide, while constructing supply chains and distribution channels though new investments. It is also planning to invest in liquefied hydrogen space. "Liquid hydrogen is not that costly and relatively easier to transport and store," he noted.

Chun said that Kogas was preparing for importing clean hydrogen in the future to meet South Korea's anticipated rise in hydrogen demand. "We are currently conducting feasibility studies with domestic and international companies," Chun said, adding that the high cost of building infrastructure posed one of the key challenges.

S&P Global Platts launched hydrogen assessments in December 2019 based on the value of hydrogen produced in the US and Europe. On April 1, Platts increased its market coverage to produce daily hydrogen price assessments for Japan. These assessments include three different production pathways: SMR without Carbon Capture and Storage, PEM Electrolysis, and Alkaline Electrolysis.

Platts assessed the price of Japan's hydrogen alkaline electrolysis at $4.50/kg, hydrogen PEM electrolysis at $5.60/kg, and hydrogen SMR without CCS at $2.75/kg on Nov. 20, with capital expenditures included for all three production pathways.