Australia has the potential to export up to $90 billion worth of low-carbon hydrogen by 2050 up from just $50 billion in 2020, according to research firm Wood Mackenzie.
According to the report, this is due to the growing capacity of hydrogen projects and electrolyser development in the country. As of 2020, Australia had a growing hydrogen project pipeline of 2.94GW, making the country the second largest hydrogen market after the Netherlands.
Between 2020 and 2021, Australia expanded its green hydrogen capacity by 45% to 4.25GW. The trend is expected to continue owing to supporting regulation and the availability of funding, said Wood Mackenzie. It is due to funding and regulatory frameworks that market growth has been experienced in solar energy, large-scale carbon capture and storage, and stationary battery storage flexibility as well.
Other factors that are expected to help Australia expand its green hydrogen market include continued cost reductions, automated manufacturing of electrolysers and an increase in system size, as well as a decline in renewable electricity costs.
Wood Mackenzie predicts that Australia’s hydrogen costs can fall below US$2/kg longer-term, making it competitive in all end-use cases in key markets of northeast Asia.
By 2050, Australia is expected to export between 25-45 million tonnes of green hydrogen, finds the report.
Prakash Sharma, Wood Mackenzie Head of Markets and Transitions, said: “Australia’s key export markets – Japan, South Korea, China, India and Europe – are large carbon emitters and net importers of natural resources. Their import needs have steadily increased in the past two decades and now average at more than 70% of their total energy demand. As these countries raise climate ambitions, they will need to source clean energy to decarbonise steel, chemicals, cement, heavy-duty mobility, shipping and power generation.
“In a net-zero emissions world, a stable and reliable source of low-carbon hydrogen supply becomes essential because it is impossible to tell how a given molecule of hydrogen has been produced. A guarantee of origin is therefore crucial to allow for minimal environmental impact, i.e., carbon leakage. Standards also help with risk assessment and transparent market pricing. Australia stands to benefit as rules of hydrogen shipping, transport, storage and product quality are set and accepted internationally.”
Transport challenges are likely to hinder the country’s ability to export green hydrogen. All three forms of seaborne transportation under consideration, liquid hydrogen (LH2), liquid organic hydrogen carriers (LOHC) and ammonia (NH3) have advantages and also challenges.
Despite the challenge of transportation, Sharma adds: “We estimate ammonia would be the first hydrogen-carrier in the export market facilitated by Australia from mid-2020s. Low-carbon hydrogen demand in Japan and Korea reaches 30 Mt in 2050 with ammonia taking one-third market share on this route.
“We believe Australia can overcome hydrogen’s logistical challenge like it successfully did in coal steam gas to LNG projects, automated trucks and remote-control mining operations and large-scale CCS deployments. Leveraging experience from hydrogen pilot programmes and greater investment in research and development, consistent government support, partnerships and offtake agreements from Japanese and Korean firms would be crucial.”