How does hydrogen fit into Australia's energy transition?

Investment in hydrogen is growing

Much is being said about Australia’s potential to be a significant green hydrogen producer. The Australian Government is investing $4 billion in the new Hydrogen Headstart program to support large-scale renewable hydrogen projects, and its National Hydrogen Strategy speaks to creating hydrogen hubs, which will help meet large-scale demand.

The states and territories are also developing strategies and announcing hydrogen projects. In Victoria, the government’s plans include a multi-million dollar hydrogen hub, while the New South Wales government has  awarded $109.3 million in funding to three hub projects in the Hunter, Port Kembla and Moree and South Australia is investing in hydrogen initiatives at Whyalla and Port Bonython.

So, what is hydrogen’s role in our energy system? And what part could it play in accelerating transition?

Hydrogen’s appeal for clean energy transition

Hydrogen is a flexible energy source, carrier, and storage option. It needs to be extracted from another source - which could be from fossil fuels, biomass or water - and it can be stored as a gas or liquid. Green hydrogen’s appeal is that it’s a clean version of fossil fuels. For instance, when you burn natural gas, a waste product is carbon dioxide – aka greenhouse gas. But there is no CO₂ emitted when you burn hydrogen or use it in a fuel cell. The only time carbon dioxide is linked to hydrogen is through production (when natural gas is used to extract hydrogen, for example).

The ‘green’ prefix to hydrogen is the part gaining so much attention. 

Green hydrogen is produced by using renewable electricity from wind or solar sources to power an electrolyser that splits water molecules (H₂O) into hydrogen and oxygen. This produces pure hydrogen, with no harmful by-products. The added appeal is that when green hydrogen is part of an integrated energy system, it also captures excess electricity from wind and solar for future use, helping to address intermittency challenges.

A solution for hard-to-abate industries

Hydrogen is a flexible energy source with multiple uses. It can be used in industrial processes, for energy storage, as fuel cells to produce electricity, and for electricity generation and heating. Green hydrogen can also be exported as a liquified gas. It is an attractive option for hard-to-abate industries and sectors, where electrification powered by renewable energy is either too costly or faces technical barries. These sectors include iron and steel production, chemical manufacturing, long-haul transport, shipping, aviation, and agriculture. Green hydrogen is also a clean fuel option for road, air, and shipping transport. It’s already being used in cars, with China, Japan, South Korea, Germany, and the US leading the way with providing fuelling stations for road vehicles.

Hydrogen for Australia? Not without its challenges

One of the biggest challenges for hydrogen is scale – producing hydrogen in large enough quantities to offer a viable alternative to natural gas (or methane). Another is building the infrastructure required to produce and distribute it in a timely manner that will support us to meet net zero targets. These projects are expensive, will require planning and environmental approvals (which take time) and rely on supporting infrastructure which may need to be developed or adapted – like hydrogen refuelling networks on Australian roads.

Perhaps the biggest challenge in an Australian context is ensuring there is enough water to support green hydrogen production. Water is already in high demand for agriculture, communities, cities, and industries – not to mention the increased pressure climate change and population growth will place on this resource. Having said that, there is much work being done to better manage water, including efficient storage and reuse, as well as desalination of sea water for hydrogen production.

One to watch on the road to net zero

Notwithstanding the challenges, hydrogen could play a critical role in the development of our net-zero economy. An effective renewable energy system needs a variety of generation sources, adequate storage, alternative fuels, and networks to connect everything. Hydrogen could help us to strike the right balance. It not only offers a viable alternative for hard-to-abate sectors but can also capture surplus energy from intermittent renewable sources to ensure there’s enough energy to meet demand.

The projects happening right now will demonstrate exactly where hydrogen will fit into our energy system over the long-term. But when it comes to accelerating energy transition and making our systems more resilient and diverse, green hydrogen is an exciting conversation for our nation to be having.