The potential for hydrogen to become an industrial-scale fuel is being touted as an essential state election issue for South Australia. Business SA CEO Martin Haese says the time has come to be decisive in establishing clean, green, circular economies. And hydrogen, he says, is bursting with potential.
China, Japan, South Korea and Singapore are expected to need 3.8 million tonnes of hydrogen by 2030. That’s a market worth about $10 billion – an export industry ready to be tapped.
State of play
“The state government can provide public sector leadership through having a 100 per cent hydrogen-powered bus fleet for a city that already leads the world in renewable energy uptake,” says Haese. “It would be a little bit of an anomaly if we were running a diesel bus fleet for much longer.”
Business SA has put forward a proposal for a circular hydrogen economy procurement system. And the state government is the biggest procurer in town at $11 billion each year.
“Government doesn’t need to do everything,” Haese says. “But it does need to lead by example.”
But Macquarie University energy economics lecturer Dr Lurion De Mello says he is not convinced of the role of hydrogen in future energy markets: “I think there are too many countries trying to produce hydrogen at the moment, and there are not enough countries who are planning to utilise it.”
Japan, he says, has little choice but to choose nuclear or hydrogen energy if they are to move away from coal and LNG. But other nations are weighing up the benefits versus the expense of the infrastructure networks needed.
“There are so many technical problems with hydrogen – how you transport it, how you store it, how you supply it,” says De Mello. “Zero emissions from vehicle exhausts give hydrogen a clean and green image in the eyes of shareholders. But making green hydrogen and distributing it is so problematic and expensive that it’s probably better to just turn all the renewable energy involved into electricity.
“We should be using H2 for things that cannot be electrified, and not for transportation.”
Hydrogen has its advantages. At the heart of the matter is energy density: how much power can be stored within a comparable weight and space. It’s what makes fossil fuels so hard to surrender. The petrol that goes into a car is 100 times more space-and-weight efficient than the best lithium-ion batteries.
The efficiency of hydrogen fuel cells is much harder to quantify. Only 55 per cent of the energy needed to make hydrogen ends up in the hydrogen itself. And the fuel-cell process of converting hydrogen to electricity also loses about half its potential.
But, once in a vehicle, it’s quick and easy to refuel and offers space and weight efficiencies that are more comparable to petrol than battery packs.
Energy density is also a serious issue when it comes to heavy industries, such as steel production. Sweden, De Mello says, is experimenting with hydrogen in that arena.
It’s because of these properties that the Australian Gas Infrastructure Group’s (AGIG) plant at Tonsley, SA, began operations in May. But only about 10 per cent of AGIG’s hydrogen will enter the gas grid. It’s highly corrosive, which means concentrations cannot replace more than 20 per cent of the natural gas within the existing infrastructure.
Building the future
“Hydrogen is a good example of building a domestic industry through domestic consumption,” Haese says. “If the public transport fleet has to run on hydrogen, it’s quieter and cleaner. But it’s also a great way to seed a domestic industry that can expand to provide clean, cost-effective energy to local businesses and industries.”
State government refuelling and transportation infrastructure could give the hydrogen market a kick start, he adds, with industry and businesses picking up the baton.
“We think the state government should provide relatively strong incentives to stimulate consumer demand, not dissimilar to what they did with solar panels,” adds Haese. “That established an industry, if not a new sector.”
De Mello says he can’t see a rapid take-up of hydrogen power. “To be green, hydrogen has to be produced from green energy sources. But something like 95 per cent of hydrogen is produced with natural gas at the moment.”
Dramatically expanding hydrogen production would need massive investment in renewable or nuclear power. And then there’s the need for fresh water to break into its component oxygen and hydrogen molecules.
“I don’t see this happening on any great scale in the next 10 or 15 years,” De Mello says. “But hydrogen might become a force in maybe 30 or 40 years.”
Long road ahead
“South Australia’s Electric Vehicle Action Plan outlines the state government’s shift from the use of fossil fuels to greener electric and hydrogen driven vehicles,” the Business SA Pre-Election Charter22 document reads. “While a welcome policy, the recent State Budget was silent on further advancements on this front.”
Haese says a domestic market is crucial to develop the skills and expertise required before the state can begin exporting. The public bus system is just one potential target, along with replacing diesel-fuelled trains.
And that’s before the broader community is considered.
There, Business SA wants stamp-duty waivers introduced for hydrogen and electric vehicles. So far, no such incentives to promote the uptake of zero-emission vehicles have been introduced.
“We’re pleased to see the gas-hydrogen blended outcome in some of the suburbs near Tonsley as a result of the work of AGIG and others are doing,” he says. “But the government’s role is to back that lead by example. We’re a jurisdiction of the world that’s got one of the highest subtypes of renewable energy. Are we walking that walk and talking that talk at the same time?”
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