Frank Jotzo, Fiona J Beck and Thomas Longden from the Australian National University write about the complicated realities of hydrogen fuel.
Using hydrogen as a clean fuel is an idea that may be gaining traction. For Australia, producing hydrogen is alluring – it could create a lucrative new domestic industry and help the world achieve a carbon-free future.
The national hydrogen strategy released last year argues Australia should be at the forefront of the global hydrogen race. Led by chief scientist Alan Finkel, the strategy takes a technology-neutral approach by not favouring any one way of making ‘clean’ hydrogen.
But it matters whether hydrogen is produced from renewable electricity or fossil fuels. While the fossil fuel route is currently cheaper, it could end up emitting substantial amounts of carbon dioxide.
Not all ‘clean’ hydrogen is the same
Hydrogen can be produced using electricity through electrolysis, which splits water into hydrogen and oxygen. When renewable electricity is used, this does not produce any CO2 and is known as green hydrogen.
Hydrogen can also be produced from coal or gas. This process releases CO2. Most hydrogen produced today is made this way.
Some – but critically, not all – CO2 from this process can be trapped and stored in underground reservoirs – a process known as carbon capture and storage (CCS).
But CCS is technically complex and expensive. Only two plants producing hydrogen from fossil fuels currently use it: one in Canada with a CO2 capture rate of 80pc, and one in the US with a lower retention rate.
In Australia, the only operating large-scale CCS project is Chevron’s Gorgon gas (not hydrogen) project in Western Australia. After a significant delay, and three years since the project started supplying gas, carbon capture and storage began this year.
High carbon-capture rates are not assured
The hydrogen strategy uses the term ‘clean hydrogen’ for hydrogen produced from renewable electricity, and from coal or gas with carbon capture. And it assumes a ‘best-case’ scenario where 90pc to 95pc of CO2 is captured from fossil fuels.
Such rates are technically possible but have not been achieved to date. Lower capture rates are not examined in the strategy.
At 90pc to 95pc capture rates, coal- and gas-based hydrogen is much less carbon-intensive than traditional fossil fuel uses. But a capture rate of 60pc means hydrogen from coal has a similar emissions intensity to burning natural gas directly.
The Australian national strategy does not describe a mechanism to ensure best-case capture rates are met. Production of hydrogen might ramp up much faster than the facilities required to capture emissions, allowing large amounts of greenhouse gas to enter the atmosphere – similar to the Gorgon case.
Another risk is that carbon capture will not be able to achieve the best-case rates for technical or cost reasons.
Towards zero-emissions exports
Countries including Japan, South Korea and Germany are exploring the possibility of using hydrogen in a range of ways, including in power generation, transportation, heating and industrial processes.
Some future importers may not care how cleanly our hydrogen is produced, but others might.
To illustrate why carbon-free exports matter, we calculated emissions if Australia produced 12m tonnes of hydrogen for export per year – equivalent to about 30pc of our current liquified natural gas exports and in line with production estimates in the national strategy.
It would require roughly 37m tonnes of natural gas or 88m tonnes of coal. If 90pc of CO2 was captured, emissions from gas would total 1.9pc of Australia’s 2018 annual greenhouse gas emissions, or 4.4pc using coal.
If only 60pc of the CO2 was captured, hydrogen from gas and coal would account for an additional 7.8pc and 17.9pc of current national emissions, respectively – making it much harder for Australia to achieve existing and future emissions targets.
Where to invest
Right now, producing hydrogen from fossil fuels is cheaper than from renewables, even with carbon capture and storage.
Australia also has large and ready reserves of brown coal in Victoria’s Latrobe Valley that will not be used by the declining coal-fired power industry. Captured carbon could be stored under Bass Strait. And the nation’s plentiful gas reserves could be turned into hydrogen, in addition to or partly replacing liquefied natural gas exports. So, it is unsurprising that the national strategy left all options on the table.
However, establishing hydrogen production facilities with carbon capture would mean huge spending on equipment with very long lifetimes. This is risky, as the capital would be wasted if the market for emissions-intensive hydrogen collapsed, either through public attitudes or a global imperative to move to zero-emissions energy systems.
The world is already far off the pace needed to meet its emissions reduction targets, and must ultimately get to net-zero to prevent the worst climate change impacts.
Australia should invest in research and development to make green hydrogen cheaper. This requires driving reductions in the cost of electrolysis and further reductions in large-scale renewable energy production. It could lead to big benefits for the climate, and Australia’s future export economy.
Frank Jotzo is the director for the Centre for Climate and Energy Policy at the Australian National University. Fiona J Beck is a senior research fellow at the university, and Thomas Longden is a research fellow.