WINNING THE GLOBAL HYDROGEN RACE
THE INAUGURAL AUSTRALIAN HYDROGEN ENERGY SUMMIT, MELBOURNE
TUESDAY, MARCH 26, 2019
Thank you for the kind invitation to address you today.
Can I acknowledge my Class of 2013 colleague, Alannah MacTiernan MLC, Minister for Regional Development; Agriculture and Food; Ports, Minister Assisting the Minister for State Development, Jobs and Trade.
This conference comes at a very important time. We are seeing nations throughout the world struggle with the challenge of decarbonising their economies. While renewable energy in many if not most parts of the world, is cheaper than new carbon intensive power generation, this is but one part of the emissions challenge.
If we are to engage in deep decarbonisation we need solutions to transport, industrial processes such as steelmaking and fertiliser production, heating and cooking. This conference is timely because carbon neutral hydrogen offers the potential to be part of the solution in the sectors I identified.
Beyond helping limit global warming, the rise of Hydrogen offers Australia a massive opportunity.
An opportunity akin to the one presented by the LNG industry last century. However we are in a global race. A race where only nations led by Governments with vision and commitment can hope to win.
That is why Labor has announced a $1.1 billion Hydrogen Strategy to help Australia win this race.
I intend to outline our policy, identify the next steps and hopefully refute some of the myths we are seeing.
The Opportunity
The Hydrogen industry is already significant in size. Global output of Hydrogen is already no less than half of total LNG output.
The global market for hydrogen is expected to reach $215 billion by 2022. Demand is forecast to grow exponentially from there. ACIL Allen project that global demand for Hydrogen will increase from 37.4 Petajoules in 2025 to up to 9,860 Petajoules in 2040.
A number of Australia’s most important trading partners such as Japan and the Republic of Korea are committed to transforming into hydrogen economies. These nations face significant decarbonisation challenges and generally do not have the climate or available land to invest deeply in domestic renewable energy production.
ACIL Allen’s analysis found that if Australia can be competitive we can secure a significant share of the global market. This industry could employ 16,000 Australians in 2040 and contribute over $10 billion to the economy each year through exports alone.
Thousands of additional jobs will be created by domestic demand for Hydrogen as well.
Experts have compared the potential and stage of development of the hydrogen economy to that of the LNG market in the 1970s. A demand arose in the major North Asian economies who were seeking to diversify their energy supplies following the oil shocks. Successive Australian governments identified the North West Shelf as the ideal project to supply this demand and provided significant support to develop the industry.
We have a particular opportunity around using our well established ammonia industry as a stepping stone to scale in Hydrogen. This is consistent with how other renewable industries developed off the back of established industries; for example solar PV off silicon production for computing and lithium batteries for energy storage off lithium batteries for consumer electronics.
This is a competitive advantage that Australia has that is not shared by all our competitor nations.
Labor’s Policy
Labor’s $1.1 billion plan will support the Hydrogen economy through research and development, commercialisation, deployment, infrastructure and regulatory reform.
Beyond the crucial funding support, Labor’s National Hydrogen Strategy is a clear signal to industry both here and overseas, and to potential international customers such as Japan, the Republic of Korea and Germany that Australia is serious about Hydrogen.
We have a strategy that supports Hydrogen from infancy to full blown maturity. Wherever along the product life cycle a particular hydrogen technology is, Labor will have a policy that could support it.
Early stage research could be funded through Australian Research Council research grants.
Late state research, we have ARENA.
Need early stage seed or growth capital to help progress to the next stage of development, then the CEFC Innovation Fund is there.
Looking at first of type commercial deployment, then the CEFC can provide concessional loans to help de-risk a project and attract support from commercial banks.
Looking at exporting Hydrogen? We will have the Guarantees of Origin scheme to certify that your Hydrogen is clean. This will help export the Hydrogen to nations with whom we have signed a Government to Government Hydrogen agreement.
Interested in selling Hydrogen or related technologies domestically? We will have made sure that our regulatory environment allows the use of hydrogen technologies while maintaining safety and consumer protection.
In the history of Australia, I cannot think of a comparable commitment to a single industrial opportunity, perhaps only Ben Chifley’s determination to develop an automotive industry that matches Labor’s commitment to developing the Hydrogen industry.
Such is the enormous potential we see in Hydrogen to help decarbonise our planet, employ tens of thousands of Australians and produce billions of dollars of export revenue.
COAG
Various State Governments have also recognised this opportunity. I acknowledge the efforts of the McGowan WA Government, Andrews Victorian Government, the Palaszczuk Queensland Government and the former Weatherill SA Government for the Hydrogen strategies they have developed.
These states have also driven a COAG process, this is despite a Federal Government that has had to be dragged kicking and screaming to the table.
A Federal Government who says that Hydrogen is “decades away”, ignoring the fact that the global market is already up half the size of the LNG market.
The Federal Budget is next week and I challenge the Federal Coalition Government to actually back the Hydrogen industry.
So far they are all talk. Once you exclude ARENA funding for Hydrogen which is only fair since the Coalition Government wants to abolish it, the current Government is offering the Hydrogen industry only 4.2 per cent of the funding committed by the Labor opposition.
The test for Ministers Taylor and Canavan is to deliver real funding to develop the Hydrogen industry.
I fear they will fail the test.
In a Shorten Labor Government, the Hydrogen industry and the State Governments will find an enthusiastic partner.
Myths
In the time remaining I’d like dispel a couple of myths that have arisen around Hydrogen.
Water Use
The first is that Australia cannot develop a Hydrogen industry because of the great amounts of water needed.
This is wrong.
Using an electrolyser, for every 1kg of hydrogen produced, 9 litres of water is required. Most electrolysis cells require high purity water in order to limit side reactions caused salts, therefore most electrolysers have an integrated deioniser allowing them to use fairly low grade potable water as an input
CSIRO predict that the total water required for electrolysis in 2030 is 4.5 gigalitres. This demand will increase if we succeed in developing an industry exporting $10 billion of Hydrogen per year, in that scenario ACIL Allen predict we will need 28.6 gigalitres per annum.
To put that in context, total consumption of water in Australia in 2015-16 was 16,000 gigalitres, of which 9,604 gigalitres was used by agriculture, forestry and fishery industries and nearly 2,000 was used by households.
In other words, the Hydrogen will only account for 0.18 per cent of total water consumption in Australia. Another way to look at it is for every litre of water consumed in Australia 1.7 millilitres would be allocated to Hydrogen production.
If you’d like to think of it in terms of export income and water intensity. For every million dollars of export income from agriculture, forestry and fishery we use 4.8 gigalitres. By contrast, for every million dollars of export income from Hydrogen we will need 0.003 gigalitres.
Water consumption should not be a serious obstacle to Hydrogen production.
The Electric Vehicle Race
The other myth out there is that battery electric vehicles have already won the race to decarbonise transport and any attempt to develop a hydrogen industry for transport is a waste of money.
I often encounter this argument in that domain of reasoned debate, otherwise known as Twitter.
It is wrong and very short-sighted.
We do not have to choose.
They complement each other. For example the CSIRO has found that fuel cell electric vehicles may be:
more suitable for consumers who travel longer distances (i.e. 400-600km without refuelling), expect shorter refuelling times and are without easy access to BEV recharging infrastructure (e.g. apartment dwellers without off street parking).
Additionally, for heavy on road transport such as trucks and buses, Hydrogen vehicles may be best. And in fact Hydrogen trucks are being produced right now and for example the Republic of Korea is set to require all commercial transport to be Hydrogen fuelled by 2035.
Hydrogen powered rail or Hydrail offers great opportunities. Hydrails are already operating in Europe. Recent international studies have found that fuel cell trains are already cost competitive with electrifying rail networks. Given only 10 per cent of Australia’s railway tracks are electrified, Hydrail is a no brainer for Australia.
In the end we don’t have to choose, the reason Hydrogen is so attractive is that it has demand in so many sectors.
It will play a role in transport, remote area power systems, industrial feedstocks, export, electricity grid firming both through storage and power production, heat and synthetic fuels. Hydrogen will not live or die because of one application. Its diverse use justifies our commitment.
Conclusion
Labor is committed to seizing the opportunities offered by Hydrogen.
An Australian Hydrogen industry that is a world leader will help Australia and the entire world decarbonise.
It can be an industry that can employ tens of thousands of Australians.
It can be an industry that offers significant economic opportunities to regions that have traditionally relied on carbon intensive activities such as LNG production and coal mining.
Labor’s historic dedication of $1.1 billion accompanied by a commitment to drive the development of this industry is but one part of our broader commitment to seize the opportunities implicit in the Clean Energy Industrial Revolution.
Thank you again for the opportunity to address you and I wish you good luck for the rest of the conference.