Australia and Germany have agreed to invest in the development of a clean hydrogen supply chain between the two countries, which could see Australia eventually exporting renewable hydrogen fuel to Germany.
Hydrogen can be used as a fuel to generate energy when combusted as a gas, like methane. While it can be made using carbon-emitting fossil fuels, this newly signed accord focuses exclusively on hydrogen generated from renewable sources, or “green” hydrogen. This is generally done by using renewable energy to electrolyse water, separating it into oxygen and hydrogen.
The agreement includes the establishment of a research and development initiative called the German-Australian Hydrogen Innovation and Technology Incubator, or HyGATE. Australia has committed up to $50 million for this incubator, while Germany has committed up to €50 million (around $79 million).
The agreement also aims to encourage industry-to-industry cooperation on green hydrogen projects in Australia, and look at ways to export hydrogen from Australia to Germany at a large scale.
“Our ambition is to produce the cheapest clean hydrogen in the world, which will transform transport, mining, resources and manufacturing at home and overseas,” said Prime Minister Scott Morrison in a statement.
“We have set the goal of producing hydrogen at less than $2 a kilogram – ‘H2 under 2’, the price at which hydrogen becomes competitive with higher emitting alternatives,” added Angus Taylor, Minister for Energy and Emissions Reduction.
Alan Finkel, former Chief Scientist of Australia and author of a recent Quarterly Essay on reducing emissions, says that Germany has invested heavily in solar and wind power, but its geography makes it much harder to generate renewable energy. It has thus turned to Australia (among other countries) as a potential source of renewable hydrogen. Australia’s large area, as well as its geological and political stability, boosts its potential as a reliable renewable energy generator.
“Germany has done the numbers and will be unable to make the hydrogen they need. They’ll be importing from multiple sources and want to diversify,” says Finkel.
“We are the country that will have abundant excess energy for hydrogen,” he adds. “Australia’s reputation as a supplier is probably the best in the world.”
The agreement builds on a current feasibility study on the export of green hydrogen to Germany. Finkel says this study is “a two-year project that will inform the work that comes with this new agreement”.
Green hydrogen is still in its nascency as an energy source. The largest producer in Australia is Hydrogen Park South Australia (HyP SA), based at Tonsley and run by the Australian Gas Infrastructure Group (AGIG). It currently produces 20 kilograms of hydrogen per hour via electrolysis, mostly for local network usage. According to a spokesperson for AGIG, the plant is also “supplying renewable hydrogen to BOC tube trailers for supply to industry,” and aims to scale up to produce hydrogen for “increased customer reach with blended renewable gas and even vehicle refuelling in the future.”
Opened in May 2021, the 1.25MW electrolyser adds the hydrogen to the local methane gas supply, with 700 homes receiving a blended gas that contains a maximum of 5% hydrogen. AGIG aims to increase hydrogen production slowly, with a goal of 100% net renewable energy by 2050.
The South Australian government has also invested in a $240 million green hydrogen plant, being developed at Port Bonython on the Eyre Peninsula. This plant will be 60 times the size of the Tonsley electrolyser, and produce hydrogen ready for export in the form of ammonia (a compound of nitrogen and hydrogen). Run by the Hydrogen Utility, the plant is due to be completed in late 2022.
Other states are also investing – for instance, Queensland announced a $2 billion investment in renewable hydrogen development last week.
“South Australia has been leading the thinking around hydrogen,” says Finkel, but he adds that Queensland’s announcement is a healthy sign. “Competition is good.”
But he says that commercial hydrogen exports are still a few years off.
“Hydrogen is going to be big, but it takes time to develop demand and the transport to carry it safely.”