Hydrogen’s dawn brings huge opportunities

The fuel has many potential applications across broad sectors of the economy due to its unique properties. For business, the hydrogen opportunity is immense.

"Australia’s abundant wind and solar energy resources, as well as land mass, put the country in pole position to play a key role in developing a hydrogen export market to key customers in Asia.”

As ANZ outlines in its new report, “The ANZ Hydrogen Handbook – AH2”, hydrogen emits no carbon emissions when burned - a standout feature compared with other liquid and gaseous fuels. At a global level, replacing fossil fuel use with carbon-free hydrogen will significantly reduce greenhouse gas emissions.

Hydrogen is an excellent carrier of energy with each kilogram containing nearly two and a half times as much energy as natural gas. This can be released as heat through combustion or as electricity using a fuel cell. In both cases, only oxygen is needed in the process and the only by-product is water.

Made with renewable energy, green hydrogen is a clean and flexible solution to higher-emitting fuel sources. Renewable energy costs are falling, with lower-cost electrolyser technology expected to produce green hydrogen at prices that could be competitive with fossil fuel-based hydrogen by 2030, ANZ estimates.

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Australia’s abundant wind and solar energy resources, as well as land mass, put the country in pole position to play a key role in developing a hydrogen export market to key customers in Asia.

Export economy

The potential to develop a hydrogen economy is real and offers immense commercial opportunities to Australia as the closest potential hydrogen exporter to our trading partners in the Asia-Pacific region.

Energy-intensive Asian countries such as Japan and South Korea have already pledged to reach carbon neutrality by 2050. China has publicly announced an ambition to reach net zero carbon by 206, by reducing its reliance on fossil fuels with renewable energy sources and low-emission alternate fuels such as green hydrogen.

Neighbouring Singapore’s Green Plan includes developing a sustainable hydrogen supply chain from Australia to the island nation.

The commercialisation of hydrogen is a key initiative under ANZ’s Environmental Sustainability Strategy. ANZ has a target to fund and facilitate $A50 billion by 2025 to support customers’ transition to a net zero carbon economy including renewable energy, green buildings and emerging technologies such as hydrogen.

H₂ industrial uses

Hydrogen has wide commercial applications in transportation and manufacturing, such as heavy haulage trucking, hydrogen fuel cell-powered vehicles and steel manufacturing.

Hydrogen mobility could be part of the solution to phase out thermal internal combustion engines (ICE) with 113 million fuel-cell electric vehicles on the road by 2050. Heavy haulage trucking is likely to see the first application of hydrogen mobility. While there are a few manufacturers looking at deployment in passenger cars, trucking fleets would be the main use for hydrogen as a fuel.

The switch to hydrogen would save up to 68 million tonnes of fuel and almost 200 million tonnes of carbon emissions, significantly reducing energy consumption and greenhouse gas emissions within the transport sector.

Hydrogen also can be used in fuel cells to efficiently generate electricity for an electric vehicle or can be converted into a denser form, such as ammonia, methanol and synthetic fuel, for use in ICEs.

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Green hydrogen-based steel manufacturing is another potential alternative to traditional coal-fired blast furnace/basic oxygen furnaces. Steelmaking using coal accounts for around 8 per cent of global greenhouse gas emissions.

The main ways hydrogen can reduce the carbon intensity of steel are by lowering the use of metallurgical coal by replacing it with green hydrogen and the use of renewable energy to power the steelmaking process.

Europe is examining the potential for green steel however thin margins in the steel industry make the decision to adopt green steel a difficult economic one.

While cost-competitive green hydrogen is some years away, global interest is increasing significantly and ANZ estimates green hydrogen could become commercial within the decade.

Challenges

It is currently very expensive to safely produce, store and transport green hydrogen, particularly when compared with other alternative fuel sources. Electrolysis - the main method of renewable hydrogen production at scale – adds considerable expense.

Hydrogen is also highly flammable and volatile. It has a lower density than gasoline and must be stored at cooler temperatures to maintain its liquid form and effectiveness as a fuel source. The liquefaction and transportation of hydrogen under high pressure also requires significant and expensive storage infrastructure.

However, it remains unclear if renewable power prices will fall fast enough in the near term to produce competitive green hydrogen before 2025.

John Hirjee is Executive Director Resources, Energy and Infrastructure and Jessica Paterson is Graduate at ANZ Institutional

Click here to download The ANZ Hydrogen Handbook – AH2

This article was originally published on ANZ’s Institutional Insights website