Renewable Hydrogen – Now and the Future

Green Hydrogen ? Now and the Future

Hydrogen, the first element and from whence all other elements came from is the simplest (one proton, one electron, no neutrons) and most abundant element in the Universe. Hydrogen though, has had a bad rap over the years like the Hindenburg airship disaster in 1937 and hydrogen bomb testing in the 1950s. Now hydrogen is being viewed in a much more positive light. Unlike fossil fuels, when hydrogen is burned there are no CO2 emissions, just water vapour and heat emissions.

The concept of a hydrogen economy ? one where hydrogen replaced fossil fuels ? first started to get legs in the 1970s. Of course, it is not an easy task to knock fossil fuels off their perch. The hydrogen economy is now making a comeback as the world contemplates how to limit global warming but still keep our vehicles, trains and ships running, still keep our buildings warm in winter, and how to complement and store wind, solar and hydro electricity generation.

Launched at the World Economic Forum in January 2017, the Hydrogen Council is a global, industry led effort to develop the hydrogen economy. The Hydrogen Council vision sees fuel-cell electric vehicles?(FCEVs)?playing a big role in both private vehicles and long-distance commercial transport. Renewable hydrogen can replace ?dirty? hydrogen (i.e. using fossil fuels for extraction) currently applied in industrial processes and can supplement gas for heating.

Surplus renewable energy can be stored in the form of hydrogen for later use. The vision is that, by 2050, hydrogen will account for almost one-fifth of total final energy consumed globally. Realising the vision does not come cheap, an estimated investment of US$20-25 billion a year to 2030 is required.

In Australia, Hydrogen Mobility Australia?(HMA)?was formed at the beginning of 2018 to pursue a vision of a hydrogen society built upon clean and renewable energy technology, including hydrogen powered transport. HMA?s members are a collection of vehicle manufacturers, energy companies, infrastructure providers, research organisations and governments with a mission to make this hydrogen vision a reality in Australia.

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Japan ? the game changer

From an Australian perspective, the breakthrough moment came when Japan published its Basic Hydrogen Strategy in December 2017. Japan was dealing with the aftermath of the Great East Japan Earthquake of 2011, its impact on the availability of nuclear power and the demands of having to meet its emission reduction commitments under the 2016 Paris Agreement. Overlay then Japan?s almost total dependence on imported fossil fuels for almost all of its primary energy supply.

The Basic Hydrogen Strategy report stated that hydrogen is attractive to Japan because ?it can be used as an energy carrier to store, carry and use renewable energy, due to its storability, portability and flexibility?. Instead of importing fossil fuels, Japan sees itself instead importing hydrogen produced in two forms:

  • Renewable hydrogen, where electrolysis is used to split water molecules into hydrogen and oxygen, powered by wind, solar and hydro power.
  • Carbon capture and storage?(CCS)?hydrogen, where coal and gas can be processed in countries like Australia to produce hydrogen, with the unwanted CO2 emissions captured and sequestered. There is a current Japanese-led demonstration project in the Latrobe Valley in Victoria using brown coal, involving Kawasaki Heavy Industries.

Japan?s strategy sets out a roadmap to become a hydrogen-based society by the middle of this century. They propose to use the forthcoming Tokyo Olympic Games as a showcase, using hydrogen fuel-FCEV buses and hydrogen for the athletes? villages.

Japan has a three-phase plan:

  • Phase one: dramatic expansion of fixed fuel cells and FCEVs to capture the global market for hydrogen and fuel cells ? Japan aims to have 40,000 FCEVs on the road by 2020.
  • Phase two: by second half of 2020s, a fully-fledged introduction of hydrogen power generation and establishment of a large-scale hydrogen supply system; and
  • Phase three: by 2040 combine hydrogen production with CCS and renewable hydrogen to establish a totally CO2-free hydrogen supply system.

What is Australia doing?

With strong market signals being sent from Japan, the COAG Energy Council commissioned a report from the Hydrogen Strategy Group, chaired by Dr Alan Finkel. Their report was delivered in August 2018. In his covering letter, Dr Finkel said this: ??why now, given the idea of a hydrogen economy has been seriously and frequently proposed since 1972. The answer is Japan?s commitment to be a large-scale enduring customer, and the hundredfold reduction in the price of solar electricity in the past four decades.? Dr Finkel points out that South Korea has also expressed strong commitment to hydrogen.

Dr Finkel?s report found that the key opportunity is to capture the hydrogen export market, with associated benefits in the domestic economy. Consultants ACIL Tasman put value of export opportunity (in their medium scenario) at $2.225 billion in 2030 and $5.7 billion in 2040.

In addition to the export of renewable and CCS hydrogen, the report outlines domestic uses: additive to or replacement of natural gas for domestic cooking, heating and in industrial processes; stored then used to generate electricity; FCEVs as an alternative to battery-powered EVs?(BEVs)?? with a particular advantage for long haul transport due to the weight of batteries needed.

Most states have hydrogen initiatives of their own. Western Australia for example has established a Renewable Hydrogen Council with membership including LNG major, Woodside, which sees hydrogen production, initially from gas and later from renewable energy, as an adjunct to their core LNG business.

Also, very active in the hydrogen space is Western Australia iron ore major, Fortescue Metals Group?(FMG). In November 2018 FMG and CSIRO entered into a five-year agreement whereby FMG will fund and support select CSIRO technologies in the hydrogen space. The first of the agreements will focus on CSIRO?s metal membrane technology, which will make the transportation of hydrogen economically viable. FMG has made it clear that they want to be involved in the large-scale production and export of hydrogen. FMG has recruited a CSIRO expert, Michael Dolan, as their first Hydrogen Innovation and Development Lead.

In September 2018, the Queensland Government issued its own discussion paper (Advancing Queensland?s Hydrogen Industry) and provided funding into some research and demonstration projects. Queensland has followed up quickly with a five-year Hydrogen Industry Strategy with a view to placing Queensland at the forefront of renewable hydrogen production in Australia for both use domestically and for export. The Queensland strategy is backed up by $19 million in budget funding including $15 million for a Hydrogen Industry Development Fund to facilitate private sector investment and leverage third party funding. Queensland?s focus is to commercialise this emerging market as soon as possible, through the development and deployment of new technologies and public private partnerships.

Western Australia and Queensland hold a notable competitive advantage over other jurisdictions in the race towards a hydrogen production and export industry. Both states are internationally recognised as being natural resource export hubs with a friendly investment climate. In addition, both states have a well-developed LNG production and export market, providing access to existing infrastructure and expertise that will be vital in the development of a hydrogen industry.

In December 2018, the COAG Energy Council accepted Finkel?s proposal to develop a national hydrogen strategy. A public discussion paper was released for public comment in March 2019. At?the 22nd Energy Council?meeting?on 22 November 2019, the Council agreed to the strategy.

The?National Hydrogen Strategy?aims to establish Australia?s hydrogen industry as a major global player by 2030. The strategy looks at our clean hydrogen potential and how we can make the most of this opportunity. It includes a set of nationally coordinated actions involving governments, industry and the community.

On last Monday, the Clean Energy Finance Corporation welcomed the launch of the Federal Government?s $300 million Advancing Hydrogen Fund, reflected in the Australian Government?Clean Energy Finance Corporation?Investment Mandate Direction 2020. The Mandate directs the CEFC to make available up to $300 million in CEFC finance to support the growth of a clean, innovative, safe and competitive Australian hydrogen industry.

A key element of Australia?s approach will be to create hydrogen hubs ? clusters of large-scale demand. These may be at ports, in cities, or in regional or remote areas, and will provide the industry with its springboard to scale. Hubs will make the development of infrastructure more cost-effective, promote efficiencies from economies of scale, foster innovation, and promote synergies from sector coupling. These will be complemented and enhanced by other early steps to use hydrogen in transport, industry and gas distribution networks, and integrate hydrogen technologies into our electricity systems in a way that enhances reliability.

An early priority will see the CEFC seek to invest in projects included in the ARENA Renewable Hydrogen Deployment Funding Round. The ARENA Round is a $70 million grant program aiming to demonstrate the technical and commercial viability of hydrogen production at a large-scale using electrolysis.

The National Hydrogen Strategy can be found at: https://www.industry.gov.au/sites/default/files/2019-11/australias-national-hydrogen-strategy.pdf

Grants/Subsidies/Funding – JobKeeper

LCR 2020/1?has now been published, setting out the Tax Commissioner?s view of the decline in turnover test as part of the JobKeeper rules. ?The reason for this ruling is that we are continuing to receive questions about some aspects of the turnover test that require further explanation in a product of this type,? the ATO said.

The ruling aims to provide clarity to practitioners and clients by working through a three-step process?? namely determining what supplies are relevant when calculating projected GST turnover and current GST turnover; how supplies are allocated to relevant periods; and how to determine the value of each supply that has been allocated to a relevant period.

Of note the Ruling states: ?If you are registered for GST and account for GST on a cash basis, you can use either the cash or accruals (non-cash) basis to calculate your GST turnover. If you are registered for GST and currently use an accrual (non-cash) basis to account for GST, we expect in most cases you would continue to use this method. However, if you choose to use the cash basis, we may want to understand why the different approach is an appropriate reflection of turnover.

For more information go to (https://www.ato.gov.au/general/jobkeeper-payment/).

Eco-tip for the day ? Cooling tips

If your home is not designed for cross-flow ventilation or passive cooling, the option is to choose a cooling system for your application.

Options may include:

  • Fans, cheapest option and often sufficient
  • Evaporative coolers, good in low-humidity areas (not Sydney)
  • Inverter air conditioners (single, multi system or whole house type)

If an air conditioner is inappropriately sized, not installed correctly and maintained properly; it will cost you more in electricity. Always clean the filters on the system at the beginning of each season to ensure reliability and efficiency.

Corporate watch ? Infinite Blue Energy ? Green Hydrogen strategy in action

WA based, Infinite Blue Energy (IBE) has just secured funding to build Australia?s first, large scale 100 per cent Green Hydrogen plant. Located 320km north of Perth, the landmark $300 million Arrowsmith Hydrogen Project will produce 25 tonnes of Green Hydrogen a day using solar and wind energy.

The project, which will commence in June this year, is expected to drive significant growth in regional jobs, energy security and a considerable reduction in Western Australia?s carbon

emissions. IBE CEO Stephen Gauld said IBE?s vision was to create a sustainable Green Hydrogen future using water, solar and wind energy with no carbon debt. IBE has been able to progress the Arrowsmith Hydrogen Project by establishing partnerships with leading Australian and international companies, technology suppliers and green hydrogen buyers around the world to spearhead its expansion plans.

The initial IBE Green Hydrogen plant is expected to reduce CO2 emissions by approximately 78,000 tonnes per year, with the first Green Hydrogen production planned for Q4 2022. Rather than a single large plant, the IBE concept is designed around a series of installations distributed throughout regional Australia. The regional locations are expected to enhance local jobs and Australian energy security.

?Our vision at IBE is to show the world first and foremost that Australia has the technology, skills and entrepreneurial mindset to be a true leader in the development of Green Hydrogen plants,? Stephen Gauld said. ?Through the completion of the Arrowsmith project and IBE?s innovative business model, Australia can advance its interests on the global stage as a leader in the development of ground-breaking Green Hydrogen energy solutions and accelerate the creation of a major employment strategy and industry for Australia in the immediate future.?

In WA only, the beginning IBE Green Hydrogen plants can also provide baseload 24/7 power plants that are self-reliant and not disrupted or affected by weather and seasonal conditions. Future expansion plans are under development to replace coal fired power stations in NSW, by combining Green Hydrogen, renewable energy and fuel cell technologies. ?IBE is are already in discussions with several parties to build and develop Green Hydrogen power plants and we are pleased by the strong interest we?ve already secured to date,? IBE CEO Stephen Gauld said. The company is also seeking to export Liquified Green Hydrogen to high growth markets across Asia Pacific as a key area of focus for business expansion.

He added that the IBE team brings a wealth of experience in the screening and development of renewable energy sources to deliver a project that could become a significant export stream for Australia?s national economy. ?Many of our customers have been seeking commercial quantities of 100% clean and Green Hydrogen energy to enable progression to low/nil carbon business models. The lack of sufficient quantities of Green Hydrogen has been a major barrier for businesses, and IBE is seen as the key to breaking this barrier,? IBE CEO Stephen Gauld said. ?We?re really excited by the possibilities for this project and see Green Hydrogen as a fantastic growth industry for regional Australia that stands to benefit all Australians in the years to come.?

In following Everlution issues we will outline opportunities for our readers to invest in IBE.

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Financial indicators

The VIX fear gauge down 4.53 points since Tuesday EST to 31.44.

The Dow Jones Industrial Average has had a net rise since last Tuesday EST of 126.13 points or 0.53% to 23,749.76, the STOXX 600 up 9.54 points or 2.90% to 337.94 and the Shanghai Composite index up 11.44 points or 0.40% to 2,871.52.

Gold up to 1,727.30. US 10-year Treasury Bonds on 0.639 and oil up to 23.49. Cryptos climbing again, with Bitcoin up 884.36 since Tuesday or 9.89% to 9,825.31.

ASX 200 down 158.20 points or 2.86% from Tuesday to 5,364.20. The Aussie dollar up slightly to 64.93 US cents.

Eco Market Spot Prices

LGC $32.40

STC $39.15

ESC $27.50

VEEC $34.00

Sources:?RenewEconomy, demandmanager,? Reuters, Market Watch, McCulloughRobertson

2020-05-12T11:55:29+11:00