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Australia plans to be a big
green hydrogen exporter to Asian markets – but they don’t need it
Published: April 3, 2022
In its
latest budget, the
federal government has promised hundreds of millions of dollars to
expand Australia’s green hydrogen capabilities.
Green hydrogen is made by electrolysis of
water, powered by solar and wind electricity, and it’s key to the
government’s “technology not taxes” approach to meeting its climate
target of net-zero emissions by 2050.
The government aims to create a major
green hydrogen export industry, particularly to
Japan, for which Australia signed an export deal in January. But
as
our latest research suggests, the likely scale may well be
overstated.
We show Japan has more than enough solar
and wind energy to be self-sufficient in energy, and does not need to
import either fossil fuels or Australian green hydrogen. Indeed,
Australia as a “renewable energy superpower” is far from a sure thing.
Japan has plenty of sun and
wind
“Green” hydrogen could be used to
generate electricity and also to form chemicals such as
ammonia and synthetic jet fuel.
In the federal budget, hydrogen fuel is
among the low-emissions technologies
that will share over A$1 billion.
This includes $300 million for producing clean hydrogen, along
with liquefied natural gas, in Darwin.
Read more:
Poor policy and short-sightedness: how the budget treats climate
change and energy in the wake of disasters
Australia plans to be a
top-three exporter of hydrogen to Asian markets by 2030. The idea
is that green hydrogen will help replace Australia’s declining coal
and gas exports as countries make good on their promises to bring
national greenhouse gas emissions down to zero.
Underlying much of this discussion is the
notion that crowded jurisdictions such as Japan and Europe have
insufficient solar and wind resources of their own, which is wrong.
In its latest budget,
the federal government has promised hundreds of millions of dollars
to expand Australia’s green hydrogen capabilities.
Green hydrogen is made by electrolysis of water, powered by solar
and wind electricity, and it’s key to the government’s “technology
not taxes” approach to meeting its climate target of net-zero
emissions by 2050.
The government aims to create a major green hydrogen export
industry, particularly to
Japan, for which Australia signed an export deal in January. But
as
our latest research suggests, the likely scale may well be
overstated.
We show Japan has more than enough solar and wind energy to be
self-sufficient in energy, and does not need to import either fossil
fuels or Australian green hydrogen. Indeed, Australia as a
“renewable energy superpower” is far from a sure thing.
Japan has plenty of sun and wind
“Green” hydrogen could be used to generate electricity and also to
form chemicals such as
ammonia and synthetic jet fuel.
In the federal budget, hydrogen fuel is among the low-emissions
technologies
that will share over A$1 billion.
This includes $300 million for producing clean hydrogen, along
with liquefied natural gas, in Darwin.
Read more:
Poor policy and short-sightedness: how the budget treats climate
change and energy in the wake of disasters
Australia plans to be a
top-three exporter of hydrogen to Asian markets by 2030. The idea
is that green hydrogen will help replace Australia’s declining coal
and gas exports as countries make good on their promises to bring
national greenhouse gas emissions down to zero.
Underlying much of this discussion is the notion that crowded
jurisdictions such as Japan and Europe have insufficient solar and
wind resources of their own, which is wrong.
Our recent study investigated the future role of renewable energy
in Japan, and we modelled a hypothetical scenario where Japan had a
100% renewable electricity system.
We found Japan has 14 times more solar and offshore wind energy
potential than needed to supply all its current electricity demand.
Electrifying nearly everything – transport, heating, industry and
aviation –
doubles or triples demand for electricity, but this still leaves
Japan with five to seven times more solar and offshore wind energy
potential than it needs.
After building enough solar and wind farms, Japan can get rid of
fossil fuel imports without increasing energy costs. This removes
three quarters of its greenhouse gas emissions and eliminates the
security risks of depending on foreign energy suppliers.
Japanese energy is cheaper, too
Our study comprised an hourly energy balance model, using
representative demand data and 40 years of historical hourly solar and
wind meteorological data.
We found that the levelized cost of electricity from an energy
system in Japan dominated by solar and wind is US$86-110 (A$115-147)
per megawatt hour. Levelized cost is the standard method of costing
electricity generation over a generator’s lifetime.
This is similar to Japan’s 2020 average spot market prices (US$102
per megawatt hour) – and it’s about half the cost of electricity
generated in Japan using imported green hydrogen from Australia.
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So why is it much more expensive to
produce electricity from imported Australian hydrogen, compared to
local solar and wind?
Essentially, it’s because
70% of the energy is lost by converting Australian solar and wind
energy into hydrogen compounds, shipping it to Japan, and converting
the hydrogen back into electricity or into motive power in cars.
Thus, hydrogen as an energy source is
unlikely to develop into a major export industry.
What about exporting sustainable
chemicals? Hydrogen atoms are required to produce synthetic aviation
fuel, ammonia, plastics and other chemicals.
The main elements needed for such
products are hydrogen, carbon, oxygen and nitrogen, all of which are
available everywhere in unlimited quantities from water and air. Japan
can readily make its own sustainable chemicals rather than importing
hydrogen or finished chemicals.
However, the Japanese cost advantage is
smaller for sustainable chemicals than energy, and so there may be
export opportunities here.
What about other countries?
While large-scale fossil fuel deposits
are found in only a few countries, most countries have plenty of solar
and/or wind. The future decarbonised world will have far less trade in
energy, because most countries can harvest it from their own
resources.
Solar and wind comprise
three quarters
of the new power stations installed around the world each year because
they produce cheaper energy than fossil fuels. About 250 gigawatts per
annum of solar and wind is being installed globally,
doubling every three to four years
Densely populated coastal areas –
including Japan, Korea, Taiwan, the Philippines, Vietnam and northern
Europe – have vast offshore
wind resources to complement onshore
solar and wind.
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What’s more, densely populated
Indonesia has
sufficient calm tropical seas to power the entire world using
floating solar panels.
Will international markets need
Australian energy for when the sun isn’t shining, nor the wind
blowing? Probably not. Most countries have the resources to reliably
and continuously meet energy demand without importing Australian
products.
This is because
most countries, including Japan (and, for that matter, Australia)
have vast capacity for
off-river pumped hydro, which can store energy to balance out
solar and wind at times when they’re not available. Batteries and
stronger internal transmission networks also help.
Read more:
Indonesia could harvest solar energy from 10 billion panels. So where
do we put them?
Australia’s prospects
Getting rid of fossil fuels and
electrifying nearly everything with renewables
reduces
greenhouse emissions by three quarters, and lowers the threat of
extreme climate change. It eliminates security risks from relying on
other countries for energy, as illustrated by Europe’s dependence on
Russian gas.
It will also bring down energy costs, and
eliminates oil-related warfare, oil spills, cooling water use, open
cut coal mines, ash dumps, coal mine fires, gas fracking and urban air
pollution.
Australia’s coal and gas exports must
decline to zero before mid-century to meet the global climate target,
and solar and wind are doing most of the heavy lifting through
renewable electrification of nearly everything.
But as our research makes clear, while
Australian solar and wind is better than most, it may not be enough to
overcome the extra costs and losses from exporting hydrogen for energy
supply or chemical production.
Read more:
Red dirt, yellow sun, green steel: how Australia could benefit from a
global shift to emissions-free steel
One really large prospect for export of
Australian renewable energy is
export of iron, in which hydrogen produced from solar and wind
might replace coking coal.
This allows Australia to export iron
rather than iron ore. In this case the raw material (iron ore), solar
and wind are all found in the same place: in the Pilbara.
While hydrogen will certainly be
important in the future global clean economy, it will primarily be for
chemicals rather than energy production. It’s important to keep
perspective: electricity from solar and wind will continue to be far
more important.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
exactrix@exactrix.com
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