Australian Government announces $500m hydrogen hub and carbon capture package to support greenhouse targets

The Australian Federal Government plans to invest half a billion dollars into establishing world-class hydrogen and carbon storage projects over the next decade to support local industry and cut greenhouse emissions.

Prime Minister Scott Morrison announced on Wednesday his government would pledge $275.5 million to accelerate the development of four clean hydrogen hubs in regional Australia over the next five years and $263.7 million for carbon capture and storage (CCS) projects over the next decade.

The funding will be confirmed in next month’s federal budget and builds on investments promised last year of $70.2 million over five years for one hydrogen hub and $50 million for CCS.

Mr Morrison’s strategy comes ahead of this week’s virtual summit on climate change. US President Joe Biden is hosting the summit, which includes 40 world leaders and a livestream to the general public.

Mr Biden is asking participant nations to make greater commitments to reducing greenhouse gas emissions this decade, providing the best chance for the world to meet goals set in the Paris Agreement.

The US and Japan are expected to announce targets to roughly halve their emissions by 2030, while the UK earlier this week committed to a 78% cut below 1990 emissions levels by 2035.

Hydrogen production costs

It is expected Mr Morrison will tell summit delegates of plans to build practical, project-based international partnerships to accelerate new energy technologies and drive hydrogen production costs down to around $2 per kilogram.

In 2019, the International Energy Agency put the average production cost of clean hydrogen at around four times that figure.

Priority partnership technologies include hydrogen and CCS, low or zero-emissions steel production, low carbon alumina and aluminium production, and zero carbon liquefied natural gas production and shipping to Asian countries.

The CCS process involves capturing emissions from power stations and factories – such as cement or steel – transporting the emissions and then storing them in the ground.

Combustible gas

Hydrogen is a combustible gas which, unlike fossil fuels, does not generate carbon dioxide when burnt and does not contribute to global warming.

However, unlike hydrocarbons such as coal, oil and natural gas, it does not occur pure in nature and therefore needs to be artificially made by extracting it from methane gas.

This process gives off carbon dioxide – the main contributor to global warming.

The alternative is to extract hydrogen from water using renewably-generated electricity where the only by-product is environmentally-safe oxygen.

This option would require an electricity grid powered entirely by renewables.

Hydrogen hubs

The Australian Government is promoting the set-up of nationwide hydrogen industry hubs to capitalise on the emerging business opportunity.

The hubs will allow users, producers and exporters to be located in the same region, working together to maximise the use of and investment in the energy source.

Potential hub sites include Bell Bay (Tasmania), the Pilbara region (Western Australia), Gladstone (Queensland), the Latrobe (Victoria) and Hunter Valley (New South Wales), the Eyre Peninsula (South Australia) and Darwin (Northern Territory).

Technology, not taxes

Mr Morrison said advancing the government’s hydrogen and CSS goals would rely on technology, not taxes.

“We are not going to tax our way into the new energy economy … we are going to ensure that we achieve it through smart investments in the energy technology, which will power up Australian industry well into the future,” he said.

“It is not about imposing taxes [or] eliminating industries – it is about creating jobs and harnessing the smarts, the capability, and the skills of Australians right across this great country.”

He said Australia could become a world leader in the production of low-cost, clean energy.

“Hydrogen has enormous potential in bringing down emissions and delivering affordable reliable energy for the production of electricity and heat, and as an industrial feedstock for critical products like fertiliser,” he said.

“Low-cost, clean hydrogen is where Australia has the potential to be a world leader, just as we continue to be in LNG (liquefied natural gas), coal, and other crucial resource industries… that is where our [hydrogen] future lies, alongside those industries that we have built over such a long period of time.”

A hydrogen future

Perth-based compressed hydrogen shipping solutions company Global Energy Ventures (ASX: GEV) has welcomed the prospect of a hydrogen future.

Speaking with Small Caps, executive director Martin Carolan said the government’s announcement would be the beginning of a number of initiatives across the full hydrogen value chain, including export.

“We believe this will be part of a broader set of initiatives to develop a hydrogen economy for which the [Australian] Government has publicly stated includes a priority to export to our major trading partners in Asia and beyond,” he said.

“Australia will be a in a net-export position for many years, with our trading partners already announcing their intention to be a net-importer [and] this supports our program of developing an export emission free or hydrogen shipping solution and supply chain.”

Global Energy Ventures is developing an energy-efficient, zero emissions solution primarily  for the compressed transport of green hydrogen.

Its proprietary C-H2 ship is designed to store 2,000 tonnes of hydrogen at an operating pressure of 250 bar.

A recent scoping study demonstrated the ship would serve as a competitive large-scale marine hydrogen transport solution up to 4,500 nautical miles.