The Australian Renewable Energy Agency (ARENA) has shortlisted seven companies in the first stage of its $70 million hydrogen funding round.
The scheme aims to fast track projects that use renewable energy, either directly or through a contracting approach, to split water into hydrogen and oxygen. ARENA expects that it will award funding to two of the seven now shortlisted companies, all of which have a capacity of ten megawatt or more.
Hydrogen is emerging as a potential solution to efficiently store and even export Australia’s vast renewable energy resource.
Key to this is a new technology developed by the CSIRO that efficiently recovers hydrogen from ammonia. It opens up a way to safely store and transport the volatile gas, as it can be conveniently converted to ammonia, which then is shipped as a liquid to overseas markets.
Hydrogen provides a potentially ‘clean’ fuel that if used to generate electricity and heat produces no greenhouse gases, only water.
According to projections by the International Energy Agency and the International Renewable Energy Agency, this is set to drive growing global demand. It presents Australia with a major opportuniy to become a major global exporter of renewable energy.
As technology further improves and production volumes increase, making hydrogen will become cheaper, and this will underpin a viable hydrogen industry in Australia, the government’s 2019 National Hydrogen Strategy found.
Earlier this year, the government announced its H2 under 2’ target, which aims for hydrogen production costs to drop to $2 or less per kg. According to Energy Minister Angus Taylor, this would be the point at which hydrogen presents “a viable alternative to other sources of energy”.
ARENA’s funding for commercial scale projects that electrolyse water with renewable energy aims to support this target.
However, at present most hydrogen is made with fossil fuels in ways that release considerable amounts of carbon into the atmosphere. The most common feedstock is natural gas, but coal can also be used.
Potentially this use would link hydrogen production to Australia’s more contentious energy exports.
In fact, the Australian and Victorian governments have jointly put $100 million towards the Victorian Hydrogen Energy Supply Chain project to pilot the use of brown coal from the La Trobe Valley for the production of hydrogenm which is then shipped in its liquid form to Japan. To make this environmentally sustainable, the project aims to combine a commercial production with carbon capture and storage.
It feeds into the government’s broader vision to also explore non-renewable energy sources as feedstocks for Australia’s emerging hydrogen industry.
Accordingly, a $300 million Advancing Hydrogen fund administered by the Clean Energy Finance Corporation will also support hydrogen projects based on coal or gas if they fulfil certain environmental criteria.
It’s about going “beyond simply reducing our own emissions”, as Energy Minister Angus Taylor put it in the government’s recent discussion paper for a new technology investment roadmap.
Ultimately, the government is protecting Australia’s resources industry, while pursuing economic value in reducing emissions.
In other words, every crisis produces winners and losers, and for Australia a looming climate crisis could potentially also mean profitable new business.