氫：炒作、希望還是努力？-Hydrogen Hype,hope,or hard work

Hydrogen:hype,hope,orhardwork?

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GrattanInstituteReportNo.2023-13,December2023

ThisreportwaswrittenbyTonyWood,AlisonReeve,andRichard

Yan.TarunChowdhary,BronwynSee,andChristinaGrantcontributedearlyresearch.

WewouldliketothankthemembersofGrattanInstitute’sEnergyand

ClimateChangeProgramReferenceGroupfortheirhelpfulcomments,aswellasnumerousgovernmentandindustryparticipantsandofficialsfortheirinput.

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Hydrogen:hype,hope,orhardwork?

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Overview

HydrogencanhelpmeetAustralia’semissionsreductiontargetsandunderpineconomicgrowthopportunities.Buttodate,governmentshaveseemedmoreconcernedwithhypingAustralia’shydrogen

prospectsandhopingforthebest,ratherthandoingthehardwork

toestablishintegratedindustrypolicyforproportionate,targeted,andtimelysupport.

ThebestwaytoseizethehydrogenopportunityistomakestrategicchoicesaboutitsindustrialapplicationsthatcanleverageAustralia’scomparativeadvantageinrenewableenergyresourcesandminerals,andbuildonexistingexportindustries.

Themostpromisingusesofhydrogenareintheproductionof

ammonia,alumina,andiron.Theseapplicationscouldusehydrogenefficientlyandcost-effectivelyatascalethatcouldsupportaviable,long-termhydrogenindustrythatwon’trequiresubsidies.

Butineachofthesecases,hydrogenstillfacesa‘greenpremium’–thegapbetweenthecostofusinghydrogenforzero-emissionsproduction,andthecostofconventionalproduction.

Threethingscanclosethatgap.Firstischeaperelectricity.Hydrogencostsaredrivenbyelectricitycosts,andeachhydrogenproducer

willneedtounderstanditsspecificelectricitysupplychain,includingpotentiallinkstodevelopmentofAustralia’srenewableelectricity

transmissiongrid.

Secondishighercarbonprices.Heavyindustryiscoveredbythe

SafeguardMechanism,whichimposesacarbonpricetodrivedown

emissions.ButundertheSafeguard’scurrentsettings,thispriceisn’tlikelytobehighenoughtoclosethecostgapbefore2040.

Thirdissupportfor‘green’versionsofthesecommodities.Thebestsupportwouldbeanindustrypolicythatevolvesfromthefederalgovernment’sHydrogenHeadstartprogramanduses

contracts-for-difference–contractsdesignedtosupportinvestmentbyunderwritingpartoftheadditionalcostofproduction–tohelpindustrygrow.

Thisprogramshouldbebroadenedtoformpartofacomprehensive

Australiangreenindustrypolicy.Itshouldalsosupportgreencommodityproductionusingtechnologybeyondhydrogen.

Thecosttothegovernmentwouldprobablybebetween$600millionand$2billionperyear.Theprizewouldbereducedemissionsfrom

domesticproductionofgreenammonia,alumina,andiron,andexportindustrieswitharobustfutureforallthreecommodities.

Otherusesofhydrogen,wheretheopportunitiesarelesscertain,tendtohavecomplexsupplychainlogisticsorfacecompetingtechnologies,orboth.Theseusesshouldbesupportedthroughpoliciesthatremovebarrierstobothhydrogenandcompetitortechnologies.

It’stimetogetseriousabouthydrogen.ThereformsrecommendedinthisreportwouldgiveAustraliathebestchancetobuildaviablehydrogenindustrythatleveragesourcomparativeadvantages,isproportionatetoourfiscalcapacity,andwon’tleadtoinefficient

subsidiesandtradedistortions.

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Recommendations

Bestrategicaboutthehydrogenopportunity

.Setaclearobjectivetodevelopahydrogenindustrycapableofsupplyingreliablelow-costhydrogenfortheAustralianindustrieswhereitwouldaddgreatesteconomicvalue.

.Focusfirstonproducinggreenammonia,greenalumina,and

greenironasthemostpromisinghydrogenuses.

Useneutralcontracts-for-differencetoclosethegreenpremiumgap

.TransformtheHydrogenHeadstartprogramintoacontract-for-differenceprogram,tosupportthegrowthofgreencommodityproductioninAustralia.Conductreverseauctionseveryyearfor10years.

Delivercheap,green,reliableelectricity

.Embedgreenhydrogenproductionandusemorefullyin

electricity-systemplanning,includingtheroleofhydrogenasfuelforback-uppowerintheelectricitygrid.

.ContinuetoreducethecostofrenewableelectricityinAustralia,throughnewrenewableenergygeneration,storage,and

transmission.

Unblockconstructionconstraints

.Stategovernmentsshouldco-ordinateandsequencemajorconstructionprojectstoavoidlabour,material,andequipmentconstraints.

Usecarbonpricingappropriately

.The2026-27reviewoftheSafeguardMechanismshouldconsiderhowsteeperbaselinedeclines,higherpricecaps,andalower

thresholdcouldreducegreenpremiums.

.TheCarbonLeakageReviewshouldconsidertheroleaCarbonBorderAdjustmentMechanism(CBAM)couldplayindevelopingviablegreencommodityproduction.

Removebarrierstohydrogenuseinothersectors

.Usesector-widepolicytoencouragedecarbonisationofindustrialheat,sustainableaviationfuel,methanol,back-upelectricity

generation,andlong-distanceroadfreight.

Ruleoutfurthergovernmentinvestmentinusesthatappearlesslikelytoproveviable

.Donotinvestfurtherinhydrogenforhomesandcommercialbuildings,lightvehicles,andoilrefining.

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Tableofcontents

Overview

3

Recommendations

4

1Whyhydrogenmatters

6

2Hydrogenneedspolicysupporttosucceed

10

3Assessingtheopportunities

15

4Startwithammonia,alumina,andiron

21

5Whatgovernmentsshoulddo

33

6Otherpotentialusesofhydrogen

46

AUsesofhydrogen

54

BScenarioassumptions

59

Hydrogen:hype,hope,orhardwork?

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1Whyhydrogenmatters

Hydrogenisamoleculethatcanhelptheworldtodecarbonise.Itis

alight-weight,andenergy-dense(byweight)moleculethatcanbe

producedandburnedwithzeroemissions.Liketraditionalfuels,itcanbestoredandtransportedforuseatadifferenttimeandlocation.It

isalsoanirreplaceablecomponentofimportantchemicals,includingnitrogenfertilisersthathelpfeedtheworld.

Theseadvantagesmustbesetagainstthecurrenthighcostof

hydrogenproductionandsupply.Hydrogenshouldbeusedwhereitmakesthemostsensetechnicallyandeconomically.Thoseusesarelikelytobefewerthanhadbeenhoped.

Wherehydrogenwillplayaroleinglobaldecarbonisation,itislikely

Australianhydrogenwillplayanoutsizedrole.Australiaisendowed

withasignificant,butuntapped,clean-energycomparativeadvantage–thatis,wehavealargerendowmentofrenewableenergyresourcesbutsmallerdomesticdemandthanmanyothercountries.Oursignificant

mineralreservesandproximitytolargeAsianmarketsarealso

importantfactors.Inafuturedecarbonisedworldeconomy,some

energy-intensiveprocessescouldshifttoAustralia,andhydrogenwillbekeytosomeoftheseopportunities.

Theinitialhypearoundhydrogenissettlingintorealism.Since

Australia’sfirstNationalHydrogenStrategywaspublishedin

2019,understandingoftherolethathydrogenislikelytoplayin

decarbonisationhasimproved.

1.1Hydrogenisonetoolinthedecarbonisationtoolkit

Theinteractionbetweenthetechnicalandeconomiccharacteristicsofhydrogenanditsderivativeswilldeterminetheroleitplaysinthefuturedecarbonisedeconomy(seeBox

1

onthefollowingpage).

Often,thismeansthatdecarbonisingthroughelectrificationischeaperthanusinghydrogen,forseveralreasons:

.Hydrogen-basedprocessesofteninvolvemultipleenergy

conversionstepsalongthechain.Energylossesatconversionmeanthathydrogen-basedprocesseswillbelessefficientandhencemorecostly.

.Greenhydrogenproductionrequiresrenewableelectricityas

aninput.Inmanycases,itmaymakemoresensetousethe

renewableelectricitydirectly,givenenergyconversionpenalties.

.Electricitycantakeadvantageofsignificantexistinginfrastructureintheformofthegrid,whichcanbemadebiggertomeet

futuredemands.Hydrogenoftenrequiresanentirelynewandspecialisedinfrastructure.

.Renewableelectricitytechnologieshavebecomecheaperthroughresearch,development,anddeployment,whereaslow-emissionshydrogenproductiontechnologieshavebarelystartedonthis

journey.

Giventheserealities,thebestdecarbonisationdecisionwillusuallybe‘electrifyeverythingwecanandusehydrogenwherewecan’t’.

Butitislikelythathydrogenwillplayapartindecarbonisingsomeactivities,because:

.Hydrogenisneededasamoleculeorfeedstockinsomeindustrialprocesses.Inthesecases,thereisnoalternative.

.Hydrogenmaybeabletoreplacefossilfuelsinsomeapplicationstoachievehigh-temperatureindustrialheatatlowercostthan

electricity.

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Box1:Whatishydrogen?

Hydrogenisthelightestelementintheperiodictable.Compared

withfossilfuelssuchasnaturalgas,petrol,anddiesel,itismore

energy-densebyweight,butlesssobyvolume.Burninghydrogen

releasesenergyintheformofheat,whileleavingnothingbutwaterasabyproduct.

Theworldproducedabout95milliontonnes(Mt)ofhydrogenin2022–overwhelminglyusingcarbon-emittingproductionprocesseswith

naturalgasandcoalasthefeedstock–leadingtomorethan900MtCO2

-e(carbondioxide-equivalent)inemissions.a

Australiaproducesabout0.5Mtofhydrogenayearusingnaturalgas,creatingabout5MtCO2-einemissions

.b

Hydrogeniscurrentlyusedfortheproductionofammonia(usedin

fertiliserandcommercialexplosives),methanol,andotherchemicals;andtorefinecrudeoilfortransportfuels.

Hydrogencancontributetodecarbonisationintwoways:

.Decarbonisingtheproductionofhydrogenintendedforitscurrentuses.

.Usingzero-emissionshydrogentoreplacefossilfuelsinotherenergy-intensiveprocesses.Hydrogencanbe:

–burnedtocreateheatformanufacturing

–burnedtogenerateelectricityusingasteamturbine;

–usedinhydrogenfuelcellstogenerateelectricity;

–combinedwithotherelementstoproducechemicalssuchasammoniaandmethanol.Thesecanthenbeburnedasfuels;

–synthesisedwithcarbontocreatesynthetichydrocarbons(suchaskerosene,whichisusedasjetfuel).

Formoreinformationontheseusecasesofhydrogen,seeAppendix

A.

Currently,themostcommonmethodforproducinghydrogenuses

naturalgasasafeedstock,aprocesswhichcreatesCO2emissions–thisisoftencalled‘greyhydrogen’.Low-emissionshydrogencan

beproducedbycapturingandstoringCO2(CCS)–thisisoften

called‘bluehydrogen’–butthisprocessisnotinwidespreaduse.

Zero-emissionshydrogencanbeproducedthroughelectrolysis,usingwaterand100percentrenewableelectricity–thisiscommonlycalled‘greenhydrogen’.

a.

b.

IEA(2023a,p.13)

.

DCCEEW(2023a).

Hydrogen:hype,hope,orhardwork?

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.Hydrogenmaybeabletocost-effectivelyreplacefossilfuelsinsometransportapplications,andasawaytostoreenergytobalanceagridthathasahighproportionofvariablerenewableenergygeneration.

.Hydrogenanditsderivativesareawaytotransportenergy.Wheretherearesevereimbalancesinenergyavailability,itcouldmake

economicsenseforcountriestotradeenergyusinghydrogenasthevector.

1.2HydrogencanhelpAustraliadecarbonise

Australia’scommitmentunderthe2015ParisAgreementtoreachnet-zerocarbonemissionsby2050willrequiresawiderangeofactions

acrossallofthesectorsthatcontributetoourdomesticemissions.

Zero-emissionsprocessesusinghydrogenwillplayaroleinAustralia’sdecarbonisation.Weestimatethathydrogencouldhelpreduce

Australia’semissionsbyupto8.6percent(seeFigure

1.1)

.

1.3Hydrogenwillhelptheworlddecarbonise,andAustraliacanplayanoutsizedrole

Australiaiswell-placedtoprosperinadecarbonisedworld.Infuture,Australiacouldhostmoreenergy-intensiveeconomicactivity,becausewehavesignificant,butlatent,clean-energycomparativeadvantages.Theyinclude:

.ahigherratioofrenewableenergyresourcestodomesticdemand

thanmanyothercountries;1

1.

Woodetal(2020,p.15).Ourrenewableenergyresourcesincludelargeamounts

oflandthatarehighinsolarphotovoltaicandwindpotential.Ourdomestic

demandisafunctionofpopulationandenergy-intensiveexports,notingthatbothmayincreaseinthefuture.

Figure1.1:Hydrogen-basedprocessescouldhelptoabatesomecarbon-intensiveprocessesinAustralia

Emissionsduetoprocessesthatcouldbereplacedwithhydrogen-based

processes,%ofAustralianemissions

Ammoniamanufacturing

Oilrefining

Ironmaking

Aviation

Aluminarefining

Marinetransport

Long-distanceroadfreight

Electricitygeneration

Cementmanufacturing

0%1%2%

Unavoidableuses

Likelyuses

Possibleuses

3%

Notes:Allnumbersarefor2020or2019-20exceptoilrefining,whichisfor2022.Thisisascenarioanalysisofthemaximumscope1domesticemissionsabatementthatcanbeachievedifallcarbon-emittingprocessesthatcouldtechnicallybereplacedbyzero-emissionshydrogen-basedprocessesarereplaced(seeAppendix

A).Marinetransport

andaviationusetotaldomesticmarineandaviationemissions.Thecategorisation

ofprocessesisbywhethertheyarelikelytorequiregreenhydrogentodecarbonise.Someminorusesareomittedforspace.Thisisnotapredictionoftheabatementthatwillbeachievedbytheadoptionofzero-emissionshydrogen-basedprocesses.

Source:Grattananalysisof

ABS(2020),

CementIndustryFederation(2023),

DCCEEW(2023a),

DCCEEW(2023b),

DCCEEW(2023c),

DCCEEW(2023d),

Deloitte

andARENA(2022),

InternationalAluminiumInstitute(2023),

Kildahletal(2023),

McConnelletal(2023),

RockyMountainInstitute(2020),

PardoandMoya(2013),

USGS(2022),VDZ

(2021,p.11),and

WorldSteelAssociation(2023).

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.anendowmentofmineralresourcesthatwillremainindemand(includingsomethatarecrucialtotheenergytransition),and

existingexpertiseinminingthem;and

.proximitytogrowingAsianmarkets.

ButAustraliaalsohascompetitivedisadvantages,suchashigher

labourandconstructioncosts,aswellaschallengesinfirmingthe

electricitygridatlowcost

.2

ThebalanceofthesefactorsmeansAustraliacanplayanoutsizedroleintheworld’sdecarbonisation,especiallywhereenergy-andcapital-intensiveprocessesareinvolved.

Hydrogenislikelytobethemoleculeatthecentreoftwokey

opportunities:exportingcleanenergyembeddedinenergy-intensiveproducts,andreplacingsomehigh-carbonimportswithdomestic

productionofgreenalternativesfordomesticuse.Itmayalsobring

employmentopportunities,sometimesintheplacesthatarefacingthelossofcarbon-intensiveindustriessuchascoalminingandproductionofliquefiednaturalgas(LNG).

Thiswouldbeasignificanteconomicprize.

Chapter

3

surveysthepotentialusesofhydrogenandexplainswhy

governmentsshouldfocustheirindustrydevelopmenteffortsonsomeusesandnotothers.

Chapter

4

presentsinformationontheusesgovernmentshouldfocusonfirst:ammonia,alumina,andiron.

Chapter

5

recommendsindustrypolicytotargetinitialsupporttothesepriorityuses.

Chapter

6

suggestspolicyapproachesforotheruseswhererelevanttechnologiesandcase-specificbarriersmeanthecaseforhydrogenappearslesscompellingfornow.

1.4Thestructureofthisreport

Chapter

2

showsthatsupplyinghydrogenisexpensiveandcomplex,

andthatthegovernmentneedstoengageinindustrydevelopmentfor

hydrogentosucceed.

2.

HerdandHatfieldDodds(2023,p.40).Firmingreferstomaintainingasteady

supplyofelectricity,whenitislargelysuppliedbyavariablesource,suchassolar

orwind.Zero-emissionsfirmingcanbeachievedthroughthestorageandrelease

ofenergyinbatteries,traditionalhydropower,orpumpedhydrosystems.Costs

forthesedependonaccesstolow-costtechnologiesandinstallationand–inthe

caseofhydro–suitablegeography.

Hydrogen:hype,hope,orhardwork?

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10

$5.86

$5.57$5.56$5.66

$2.70

2Hydrogenneedspolicysupporttosucceed

Supplyinggreenhydrogenincreasinglyappearstobemoreexpensiveandcomplexthanpreviouslyhoped.

Thecostofelectricitydrivesthecostofhydrogenatthepointof

production,sothekeytolow-costhydrogenproductionisreducingwholesalepricesforelectricity.

Thefullcostofthehydrogensupplychainalsoincludesthecost

ofgettingthehydrogentowhereitisneededforuse.Thisinvolvesachoicebetween‘movingmolecules’or‘movingelectrons’,with

eachpathwayhavingdifferentcosts.Thelowestcostsolutionwillbeproject-specific,butthesupplychainaddssignificantlytothecostofdeliveredhydrogen.

AthrivinghydrogenindustryinAustraliawillneedpolicysupport

tosucceed.Thefederalgovernment’sNationalHydrogenStrategy

shouldcontinuetofocusonthethingsthatstandinthewayofAustraliarealisingitsgreenenergypotential.Thegovernmentshouldalsomakethehardchoiceofrulingoutsomepotentialusesforhydrogenand

focusingattentiononothers.

Butitalsomakessenseforthefederalgovernmenttodevelopamorecomprehensivegreenindustrypolicy,tosupportindustrytodevelop

intotheformsuggestedbyAustralia’scompetitiveadvantagesincleanenergy,regardlessofthetechnologyused.

2.1Supplyinghydrogenisexpensiveandcomplex

Thecostofhydrogenproductioncouldfalloverthenexttwodecades.Thiswouldinpartbedrivenbythedeclineinthecostofelectrolysers,includingtheirinstallationcosts.

Figure2.1:Hydrogencostswillonlyfallifelectricitycostsatthepointofproductionfalltoo

AU$/kgofhydrogen

Usinggridelectricity

Operations&maintenance

Electricity

Installation

Electrolyser

Water

$7

$6

$5

$4

$3

$2

$1

$0

2025203020352040

Usingbehind-the-meterelectricity

$5.03

$3.86

$3.16

$7

$6

$5

$4

$3

$2

$1

$0

2025203020352040

Notes:Hydrogencostsareinreal2023dollars,levelisedover20yearprojectlife.

Source:Grattananalysis.AfulllistofassumptionsanddatasourcesisinAppendix

B.

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11

Butthelargestpartofthecostofgreenhydrogenproductionisthe

costofelectricitytoruntheelectrolyser(seeFigure

2.1

ontheprevious

page).3

Whileusinggridelectricitymayallowthehydrogenproductiontobeco-locatedwiththehydrogenuser,thecostofsuchhydrogenisnotexpectedtofall(seethetopchart),becausethedeliveredcostofelectricitytakenfromthegridisexpectedtoremainhigher.

Whereanelectrolyseruseselectricitysuppliedbyco-located,dedicatedrenewablegenerationandfirming,the‘farmgate’costofhydrogen

productionisexpectedtofallinthefuture(seethebottomchart

inFigure

2.1

ontheprecedingpage).4

Thisisdrivenbyaforecast

reductioninthecostofdedicatedgenerationandfirming.

2.1.1Gettinghydrogentowhereitisneeded

Hydrogenischeaperifproducedwithdedicatedrenewableenergy.

Butthisdoesn’ttakeaccountofthefullcostsofthehydrogensupply

chain.Dedicatedrenewablescanonlybeeconomicallybuiltin

areasthathavealowopportunitycostforlanduse,andwhichhave

significantsolarandwindpotential.Accountingfortheadditionalcostofgettingthehydrogentowhereitisneededhasasignificanteffectonthetotalcost.

Whereco-locationofhydrogenproductionwiththehydrogenuseris

possible,itisoftenagoodchoice,sinceitcanbecheapertotransporttheresultingcommodity(suchasiron,steel,oralumina)ontrucks,

trains,andshipsthantomovethehydrogenortheelectricitytoproducethehydrogen.Butwheretheendusecan’teasilybeco-locatedwiththe

3.Throughoutthisreport,unlessotherwisenoted,hydrogencostsaregivenas

levelisedcosts.Levelisedcostsarecalculatedbytakingallofthecostsoverthelifetimeofaplant,discountingthembytheyearinwhichtheyoccur,anddividingthetotalbythediscountedtotalamountofhydrogenproducedoverthesame

period.AfulllistofassumptionsanddatainputscanbefoundinAppendix

B.

4.Farmgatecostreferstoproductioncostatthepointofproduction.

renewables,thechoiceisbetweenmovingmoleculesorelectrons(seeFigure

2.2

onthenextpage).

‘Movingmolecules’involvesproducingthehydrogenclosetothe

renewablegeneration,andthentransportingittoitsultimateuser.Thismeanspayinglessforelectricitytransmission,butmoreforpipelines,trucks,andstorage.

‘Movingelectrons’involvesproducingthehydrogenclosertoitsultimateuser,withrenewableelectricitytransportedviapowerlinesfromwheretherenewablegenerationislocated.Thismeanspayingmorefor

electricitytransmission,butlessforpipelines,trucks,andstorage.

Usinggrid-suppliedelectricitywithanelectrolyserclosetoanaluminarefineryisonewaytodothis.

Supplychainchoicesarealsoinfluencedbythehydrogenuser.Somehydrogenuserswillneedacontinuoussupplytofeedacontinuous

process.Otherswillwantbatchesofhydrogenatintervals.Ifhydrogenproductionisintermittent–forexample,becauseitusesdedicated

renewableenergywithnostorageorback-uppower–storageandtransporthavetosupplythebuffertoallowcontinuoususe.The

amountusersrequirealsoplaysapart:smallusersofhydrogencanusetankstorageandtrucktransport;largeuserswillwantlarger

storagecapacity.Locationalsomatters:saltcavernsdon’texist

everywhere,andtherearelikelytobesafetyconcernssurroundinglarge-scalehydrogenstoragenearbuilt-upareas.

Thebestcombinationofinfrastructurewillbeproject-specificand

requireanassessmentof:operationalflexibilityatboththeproductionandusestage;thecostofgridelectricitycomparedwithdedicated(or‘behind-the-meter’)generation;constructioncosts;location;andthelogisticalchallengesofotherinputs,suchaswater(Box

2

onpage

13)

and,possibly,anorebody.

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