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Australia’s hydrogen sector poised for export moment of truth

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Australia’s hydrogen sector poised for export moment of truth

  • Featuring
  • Ruchira Singh
  • Commodity
  • Electric Power Energy Transition
  • Topic
  • Energy Transition Environment and Sustainability Hydrogen: Beyond the Hype

Australia is on course to hit a notable century – but not on the cricket field. Around 98 hydrogen projects have been chalked up in recent months, a substantial number aimed at a future export market. And in February one of them, Victoria's Hydrogen Energy Supply Chain (HESC), created a minor sensation with the first trial cargo of liquid hydrogen to Japan.

Australia is anxious to get a foothold in the nascent hydrogen market to counter its established, climate-compromised position as a major exporter of coal, LNG and crude oil.

The opportunity is certainly worth pursuing. Demand for Australian hydrogen could exceed 3 million mt/year by 2040, potentially worth A$10 billion/yr, according to the Australian Renewable Energy Agency.

Hydrogen projects started emerging in Australia about a decade ago while HESC was announced in 2018. On Feb. 25 the Suiso Frontier carried liquid hydrogen from the Port of Hastings in Australia to Kobe in Japan, demonstrating the possibility of transporting the fuel long distances at minus 253 degrees Celsius.

The cargo received ironic remarks from hydrogen cynics for carrying just 2.6 mt of liquid hydrogen versus the vessel's capacity of 75 mt. The fact the hydrogen on board was produced via coal gasification also drew criticism.

Yet HESC remains confident it can reduce costs via economies of scale so that by 2030, when the project is due to reach commercial status, production of 225,000 mt/year will be competitively priced and low-carbon, thanks to carbon capture and storage.

There are other projects that exemplify Australia's ambition as well as its penchant for technology.

For instance, the Tiwi Hydrogen project plans to export compressed hydrogen in specially built carriers from 2026.

This project plans to produce 100,000 mt/yr of renewable hydrogen as it seeks to benefit from a shorter route to market from Australia's northern tip.

SunHQ Hydrogen Hub in Queensland meanwhile aims to produce renewable hydrogen by end-2022 for fuel cell-powered trucks. In subsequent phases, project participant Ark Energy plans to export the energy carrier and so help decarbonize its parent, Korea Zinc.

Mega projects

Current and planned renewable and low carbon hydrogen capacities in Australia sum to around 8 million mt/year assuming normalized capacity factors, S&P Global Commodity Insights' Hydrogen Production Assets database shows.

Interactive report: Atlas of Energy Transition

Australia hydrogen map

Seven hydrogen hubs are in the concept stage while mega projects such as those being developed by InterContinental Energy range up to the 50 GW Western Green Energy Hub, sprawling across 15,000 sq km and aimed at producing 3.5 million mt of renewable hydrogen or 20 million mt of renewable ammonia.

"Australia is well-placed to make hydrogen its next big export," according to the country's National Hydrogen Strategy. "We have all the natural resources needed to produce it, a track record in building large-scale energy industries and a reputation as a proven partner to Asia's biggest energy importers."

Building bridges

With its plans for hydrogen-fired power generation, fuel cell vehicles and fuel cell ships, Japan is the key target market for Australia.

Mitsui & Co., Japan Oil, Gas and Metals National Corporation, Marubeni, IHI Corporation, Itochu and Sumitomo – all are participants in various hydrogen projects.

Other relationships are being nurtured too. A June 2021 Declaration of Intent with Germany saw the joint funding of the Hydrogen Innovation and Technology Incubator, or HyGATE.

Meanwhile Australia and Singapore announced an A$30 million partnership in 2021 to accelerate deployment of low emissions fuels and clean hydrogen in maritime and port operations.

And the Port of Rotterdam and Western Australia signed a memorandum of understanding in November 2021 to develop a renewable hydrogen export supply chain.

To take flight

The next big step will be when the first hydrogen purchase agreements are signed.

Australia's Port Anthony Renewables in Victoria invited expressions of interest Feb. 14 for offtake of renewable hydrogen to be produced at the port and shipped overseas or sold domestically from 2025.

HESC and InterContinental Energy say they are actively in talks with potential offtakers.

Australia targets a sub-A$2.00/kg ($1.43/kg) price for renewable hydrogen under its Technology Investment Roadmap, lower than current levels of over A$5/kg.

Finally, Fortescue and Airbus have signed a memorandum of understanding to cooperate on developing hydrogen as an aviation fuel, striving for a first zero-emission aircraft in service by 2035.

For the Australian hydrogen trade that would be a big win worthy of a standing ovation.