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    Interview: Alan Finkel, Australia’s Chief Scientist on the prospects of hydrogen [GasTransitions]


Australia has huge renewable energy sources that will allow it to produce large amounts of hydrogen – up to 30 times the energy equivalent of the country’s LNG exports, says Australia’s Chief Scientist Dr Alan Finkel in an exclusive interview with Gas Transitions. Yet Finkel believes natural gas will also have an important long-term role to play in Australia’s unfolding hydrogen revolution. [GasTransitions Volume 1, Issue 3]

by: Karel Beckman

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Interview: Alan Finkel, Australia’s Chief Scientist on the prospects of hydrogen [GasTransitions]

In a powerful speech to the National Press Club in Canberra, on 12 February, Dr Alan Finkel, chief scientist of the Australian government, made a very personal statement about the critical need for the global community to reduce greenhouse gas emissions. He argued that the way forward for Australia is through a massive expansion of solar and wind power, backed up in the short to medium term by natural gas, and in the long term by hydrogen.

Finkel last year coordinated the National Hydrogen Strategy, which was presented to the Council of Australian Governments (COAG) Energy Council in Perth on 22 November 2019 and adopted unanimously. The COAG Energy Council is comprised of the energy ministers from the Commonwealth and the State and Territory Governments. The National Hydrogen Strategy sets out “a vision for a clean, innovative, safe and competitive hydrogen industry that benefits all Australians.” It aims to position Australian industry as “a major player” in hydrogen by 2030.

In his speech to the National Press Club, Finkel explained why he believes hydrogen is essential to the world’s low-carbon future, and why Australia is in an ideal to position to become one of the world’s largest hydrogen exporters. Since in Australia nuclear power and new hydropower projects face “significant public opposition”, he said, the country, if it is to reduce carbon dioxide emissions to zero, is “theoretically limited” to meet all its future energy needs with just solar and wind.

However, although solar and wind power are already cheap and becoming cheaper, and can meet a lot of Australia’s energy needs, “there is a limit”, said Finkel “to how much solar and wind we can use and still retain a reliable system.”

In the short term, he said, solar and wind will need to be backed up by natural gas. He observed that “natural gas is already making it possible for nations to transition to a reliable, and relatively low emissions, electricity supply”, as demonstrated for example by the UK and South Australia.

In the UK, he noted, “coal-fired electricity generation has plummeted from 75% in 1990 to just 2% in 2019. Driving this has been an increase in solar, wind, and hydro-electricity, up from 2% to 27%. At the same time, and this is key to the delivery of a reliable electricity supply, electricity from natural gas increased from virtually zero in 1990 to more than 38% in 2019.”

Closer to home, he added, “look at South Australia’s success in increasing solar and wind electricity to 51% in the last fiscal year. Again, natural gas is key to the stability of the electricity supply, accounting for 47%.”

However, natural gas is of course a fossil fuel, so “unabated” it cannot stay in the energy mix permanently. In theory it could be gradually replaced entirely by solar and wind in combination with “high levels of storage” and “long-distance transmission”, said Finkel. But, he added, there are a number of energy uses where this would not suffice: “We still need a high-density source of transportable fuel for long distance, heavy duty trucks. We still need an alternative chemical feedstock to make the ammonia used to produce fertilisers. We still need a means to carry clean energy from one continent to another.”

Enter “the hero” of the story: hydrogen.

Finkel, noting that there are two ways of making clean hydrogen, with renewable energy and electrolysis (the green version) and with natural gas through steam methane reforming and CCS (the blue version), stressed that Australia in his view should pursue both avenues. The reason he gave for this, however, is not that solar and wind could not deliver the required quantities of green hydrogen. They can.

The reason is related to security of supply. “Think of the vast amounts of steel, aluminium and concrete needed to support, build and service solar and wind structures,” said Finkel. “And the copper and rare earth metals needed for the wires and motors. And the lithium, nickel, cobalt, manganese and other battery materials needed to stabilise the system. What if there was a resources shortage? It would be prudent, therefore, to safeguard against any potential resource limitations with another energy source.”

By producing hydrogen from natural gas or coal, using carbon capture and permanent storage, we “have four primary energy sources to meet the needs of the future – solar, wind, hydrogen from natural gas, and hydrogen from coal,” said Finkel.

To those who object that CCS so far has turned out to be not commercially viable in the electricity generation sector, Finkel replied that “the process for hydrogen production is significantly more cost-effective for two crucial reasons. First, since carbon dioxide is left behind as a residual part of the hydrogen production process, there is no additional step, and little added cost, for its extraction. And second, because the process operates at much higher pressure, the extraction of the carbon dioxide is more energy efficient and it is easier to store.”

According to Finkel, once Australia has a clean hydrogen industry in place, it has “unique solutions to the remaining challenges we face in our future Electric Planet.” Firstly, in the transport sector, since “hydrogen fuel carries much more energy than the equivalent weight of batteries, it provides a viable, longer range, alternative for powering long-haul buses, B-double trucks, trains that travel from mines in central Australia to coastal ports, and ships that carry passengers and goods around the world.”

Secondly, in heavy industry, for example in steel making, “clean hydrogen can not only provide the energy that is needed to heat the blast furnaces, it can also replace the carbon in coal used to reduce iron oxide to the pure iron from which steel is made. … This would have a revolutionary impact on cutting global emissions.”

Third, “hydrogen can store energy, not only for a rainy day, but also to ship sunshine from our shores, where it is abundant, to countries where it is needed.” And fourth, “because hydrogen operates in a similar way to natural gas, our natural gas generators can be re-configured in the future to run on hydrogen — neatly turning a potential legacy into an added bonus.”

Finkel concluded that “We truly are at the dawn of a new, thriving industry.” (Full speech see here: “The orderly transition to the electric planet”.)

In an interview with Gas Transitions, Finkel elaborated on his vision for hydrogen and what role he believes natural gas will play in this development.

What has the response been to the National Hydrogen Strategy and also to your speech at the National Press Club – from the public, policymakers, NGO, business? Is there concrete interest from heavy industry in Australia to switch to hydrogen?

“I’m happy to say that the response to the National Hydrogen Strategy has been overwhelmingly positive. It’s unusual in Australia to publish a strategy at the dawn of an industry, but I think companies, governments, NGOs and ordinary Australians recognise what a tremendous opportunity this is and that everyone needs to work together to make it happen. We are seeing announcements almost every week of projects happening around the country. You asked about the response to my speech at the Press Club. It has been heartening, from near and far. For many of those who contacted me it was the first time that they were able to appreciate that there is a pathway to a low emissions future that will not necessarily break the bank and will be able to provide reliable electricity, transport fuel and chemical feedstocks for our industries .”

Do you think it would be possible to meet Australia’s hydrogen needs with green hydrogen alone, apart from the security of supply issue? In other words, is blue hydrogen only or primarily needed for security of supply reasons? Or do you also see other reasons?

“In the analysis we undertook for the National Hydrogen Strategy, we determined that, once water availability and infrastructure access are taken into account, the most prospective renewable energy zones in Australia would be sufficient to produce around 691 million tonnes of hydrogen every year – the energy equivalent of 25,500 tankers of LNG. This is more than 30 times the energy equivalent of our annual LNG exports. But as you point out, energy security and energy reliability are also part of the equation.” (Editor’s Note: Current global hydrogen production is around 120 million tonnes, according to the IEA.)

If, as you seem to suggest, blue hydrogen is to be a permanent part of the energy mix, what sort of CO2 storage needs are you envisioning? Can they be met? How?

“Analysis prepared for the National Hydrogen Strategy showed there are prospective sites for hydrogen production near permanent CO2 storage sites around the country. These are all geological storage sites – so it would require compression of CO2 after capture, and then pumping it underground where it remains trapped in the rock, essentially forever. Australia has significant CO2 storage availability.”

Can you indicate how you see the costs of blue and green hydrogen developing? What cost level is needed to make hydrogen competitive (you suggest A$2 per kg) and when could that be attained for blue and green hydrogen?

“How quickly costs come down depends on many factors: technology development, government policy, consumer sentiment, and competing technologies. Australia has set an ambitious aspirational target for producing clean hydrogen at less than $2/kg. At this price, hydrogen becomes competitive with petrol and diesel vehicles, and as a clean feedstock for ammonia. From there, the pathway becomes more prospective for other applications such as steel-making and natural gas substitution. None of this will happen overnight, but I’m confident it will happen.”

According to McKinsey and other sources, scale-up is the most important way to reduce costs of hydrogen production. Do you agree? How quickly do you see hydrogen production scale up in Australia? In Europe the first electrolysers are being built, with capacities of 10 or 20 MW, and perhaps 100 MW on the horizon. Experts agree that tens of gigawatts of capacity are necessary. Are large projects in the pipeline in Australia?

“Certainly we are starting to see talk of projects making the leap from 1 MW electrolysers to 10 MW. There are lots of larger projects in the concept stage involving tens of GW of solar and wind electricity per project, but they are waiting for the technology to move through the 10 MW stage of development, and for large scale demand to emerge overseas. Australia is certainly the place to be if you want to build a very large production facility, but there are no markets without customers – such projects won’t go ahead without customers who will sign contracts for large quantities of hydrogen.”

Are there also technological innovations that might reduce costs or otherwise transform the way hydrogen is produced? I am thinking for example of the paper recently published in Nature Communications by researchers from University of New South Wales (UNSW), Griffith University and the Swinburne University of Technology, which describes the invention of a new method of coating electrodes used in the electrolysis process to produce hydrogen.

“As you noted above, cost reductions will come from scale. But at large scale, every small gain that is made – whether that’s coating electrodes or better membranes or more efficient stacks – will add up to huge savings. Let me give you an example. If McKinsey’s vision for hydrogen to take an 18% share of global energy demand were realised, there would be a US$2.5 trillion global market by 2050, with half of this revenue coming from hydrogen sales and the other half from equipment. In a market on that scale, every increment of progress is worth tens of billions to investors. If just half the hydrogen was used in fuel cells, then a 1% efficiency gain in fuel cells would save over US$6 billion per year. If all the hydrogen came from electrolysis, a 1% efficiency gain in electrolysis would save US$12.5 billion per year.”

Some critics of hydrogen point out that it is inefficient to convert renewable power to hydrogen when it can also be used directly. This would apply for example in the transport sector and in power generation. Long-distance transport could also be powered by biofuels, which you ignore altogether in your speech. How would you respond to this criticism?

“I used to work in the battery electric car industry and uttered the same criticisms. I have since come to realise that round-trip energy efficiency is only one, albeit important, consideration. There is no doubt that a battery electric vehicle can drive further from the same quantity of generated electricity than a hydrogen electric vehicle. But what if you live in the old part of town, without your own garage to charge your car? Or in a high rise building that does not have the capacity to install charging in the car spots? And then there are large trucks, trains and cargo ships that need better energy density than that found in batteries for the near to medium future. In countries like Korea and Japan, they simply do not have the land area for solar and wind generation to make hydrogen, and where they install offshore wind electricity generation it is more cost effective for them to use it as electricity in the first instance. So their strategy is to import hydrogen. It makes sense for Japan and Korea to use hydrogen for transport and electricity generation because hydrogen can be purchased from places like Australia (where sunshine and land are plentiful). I like to call this export opportunity “shipping sunshine”.

I did not mention biofuels because I was focussed on very large scale energy sources. Biofuels have a role in some countries, but in general their use is driven by government policy more than by low emissions or sustainability.”

Some (e.g. Professor Frank Jotzo of the Director of the Centre for Climate and Energy Policy at the Australian National University) have pointed out that blue hydrogen is not zero-emission, as there always be some leakage of CO2. Is this correct? Could you comment?

“At carbon capture and permanent storage (CCPS) rates of 90% or better there is a significant advantage using hydrogen from fossil fuels versus the fossil fuels themselves. High capture rates are technically feasible for hydrogen production but are yet to be proven. Achieving this high capture rate is a necessary condition for a sustainable industry producing hydrogen from fossil fuels. We need to be careful about “making the perfect the enemy of the good”. For every year that we put off using hydrogen, more CO2 goes into the atmosphere from our current energy sources. I’d rather be using hydrogen now with 90% capture, then have a discussion about that last 10% and how we deal with it. We don’t have time to waste.”

Have you discussed the idea of an international Guarantee of Origin scheme for hydrogen with international partners yet?

“An international guarantee of origin is being discussed in many international forums. From the Australian side we’ve been engaging in these forums, and we want to work with willing partners to create a single international scheme. We don’t want to see international disagreement delaying investment. In our view, this could be avoided by quickly establishing a basic certification scheme that verifies and tracks where hydrogen is made, which technology was used, and the scope 1 and scope 2 emissions impacts. With these three pieces of information, everyone from consumers to governments can make their own decisions.”

What changes should be made to the regulatory framework to make large-scale hydrogen production and use possible in Australia?

“Like many other countries, Australia already makes and uses hydrogen safely in industrial settings. But moving out into the community is a different story. We have a national review of legislation, regulations and standards underway this year, to decide whether, where and how we need to change the regulatory framework to accommodate growing production and use of hydrogen. This will be a long-term process – regulatory reform is never finished! We are starting with a review of our laws around national gas to make sure that broad-scale hydrogen blending can be accommodated.”