Momentum is building for a local hydrogen industry, but much work remains to bring it to reality.
Last month, the Chamber of Minerals and Energy of Western Australia released its position paper ‘Towards Clean Hydrogen’.
It comes at the end of a big year for hydrogen and one during which it has gone from the annals of science journals to breakfast television coverage.
Hydrogen was front-and-centre of the COP26 summit in Glasgow; it is a centrepiece of future emissions reduction technologies for governments across the globe, and here in Australia has been the recipient of a step-up in state and federal funding.
The CME position paper comes as a reflection of hydrogen’s entry into the mainstream, and follows the state government’s announcement of land reform, in large part to facilitate construction and operation of large-scale renewables.
The CME’s focus on hydrogen makes sense given its members comprise would-be producers, transporters and users of clean hydrogen.
The broad church of members range from proponents of large green hydrogen projects such as Fortescue Future Industries (led by Andrew Forrest), those considering phased technological pathways such as Woodside Petroleum, and companies actively investigating how to reduce their scope-one industrial process emissions, including Alcoa of Australia and Yara Pilbara.
Of course, this cohort also includes miners, who are considering hydrogen in the mix of options to reduce emissions, particularly in heavy mobility cases.
The membership base also includes companies that have their primary activity in Australia, and companies that will need to compete internally for the allocation of capital.
Therefore, there is a sound underlying base of representation to advocate for a competitive reform agenda.
The CME paper strikes the balance of maintaining a coalition with different interests and perspectives of the hydrogen value chain, and presenting clear recommendations for industry and stakeholders that will progress the hydrogen opportunity.
The public discourse on hydrogen and the policy making process stands to benefit from the involvement of such an industry association: one that can navigate individual perspectives and big ambitions into aligned positions of support, and which, critically, has hydrogen as part of rather than the reason for its being.
During its 120-year history, CME has shown itself to be a constructive voice for industry development, invariably in partnership with government.
Such a constructive perspective will become increasingly important as hydrogen moves closer to reality.
If 2021 was the arrival of hydrogen in the mainstream, 2022 will be the year where we learn more about our local capability.
Project execution needs to take greater shape next year.
We should begin to see green hydrogen fleets, final investment decisions on hydrogen in industrial processes, and the beginning of Australia’s hydrogen hub network.
The first tranche of WA’s hydrogen goals are also due, which are largely on track.
The risk, of course, is that we don’t meet the expectations created for government, customers, and industry partners.
No one wants another ‘lithium valley’, or for hydrogen to be dismissed as underperforming. Ultimately this is about establishing a long-term pathway to competitiveness.
Further action may be required to support or demonstrate capability, such as interim measures to support hydrogen blending in local gas networks, which is reliant on reform managed through the Energy National Cabinet Reform Committee.
It will also be the year where we should turn more attention to understanding the contribution hydrogen will make to the state.
Its potential in decarbonisation is clear and the market opportunity for proponents is emerging, but what about the value to WA?
After all, it’s not suggested that a royalty is put on sun and wind.
Does the state government expect a revenue stream beyond payroll tax stimulated by job creation as hydrogen’s broader economic contribution?
This needs to be framed now to set the boundaries for future growth, but it will be tricky, given proponents are focused on driving down costs to get to a production cost of $2 per kilogram.
There will inevitably be a discussion about value-added processing with clean hydrogen and hydrogen products at its core.
Further urgent engagement also needs to be continued with traditional owners.
Renewable hydrogen production utilises a resource that is perpetual.
Unlike mining, for example, there is not a clear timeline for exploration, construction, operation, closure and rehabilitation.
The impact on land is also very different: renewable hydrogen production doesn’t require access to resources underground, but its footprint will cover hundreds of thousands of hectares and in some cases over 1 million hectares.
How this impacts traditional owner relationship with country will be fundamentally different.
Hydrogen is pushing on an open door, but much is still to be done.
Joe Doleschal-Ridnell is director at JDR Advisers, where he works with clients in mining, energy and industry (JDR Advisers is engaged as a consultant to CME and supports its strategic industries portfolio)