Paul Rodden • Season: 2024 • Episode: 281
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Welcome to The Hydrogen Podcast!
In episode 281, The Australian government looks to invest big in hydrogen development. But is their scope too narrow for their global ambitions? And Mitsubishi announces an absolutely monster of a project in the Netherlands. I’ll go over this and give my thoughts on today’s hydrogen podcast.
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Transcript:
The Australian government looks to invest big in hydrogen development. But is their scope too narrow for their global ambitions? And Mitsubishi announces an absolutely monster of a project in the Netherlands. I’ll go over this and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the question that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden, and welcome to hydrogen podcast.
In an article in the chemical engineer Adam Duckett writes Australia selects six projects to kickstart green hydrogen industry, Australia has shortlisted six large-scale electrolysis projects under a A$2bn (US$1.34bn) scheme to decarbonise heavy industry and become a leader in green hydrogen production and exports. The selected projects include the 1,625 MW Murchison project that would produce hydrogen for ammonia in Western Australia and the 750 MW Kepco Australia facility that again would be used for ammonia production at the Port of Newcastle in New South Wales.
The shortlisted applicants have until 27 June to submit a full application with the government expected to announce its final decision on who gets funding from the Hydrogen Headstart programme by the end of the year. Dan Miller, CEO of the Australian Renewable Energy Agency (ARENA), which is running the scheme, said: “Hydrogen Headstart is a crucial step towards keeping Australia on the path to become a global hydrogen leader, creating new export opportunities, while helping to decarbonise our economy.”
The government set tight limitations on who could apply, ruling out any hydrogen production from fossil fuels, which drew the ire of the country’s powerful coal sector. All applicant projects had to produce hydrogen entirely from electrolysis and be 100% powered by renewable energy. And they had to be at least 50 MW in capacity and located at a single site. Governments around the world are pushing to use clean-burning hydrogen to decarbonise existing industry and take a leading position in new green technologies that can be sold globally. It can be burned to produce industrial heat or as a fuel for heavy transport, and as greener feedstock for the chemicals sector.
All but one of the shortlisted projects plan to use hydrogen to produce ammonia which can be shipped around the world and transformed back into hydrogen at point of use. This would open the door to Australia using its vast potential for solar and wind energy to create a hydrogen export industry. The other four shortlisted projects are BP’s 105 MW H2Kwinana project in Western Australia; Origin Energy’s 200 MW Hunter Valley project in New South Wales; Stanwell’s 720 MW Central Queensland project; and the 144 MW HIF Tasmania facility which would produce hydrogen and react with CO2 from plant biomass to produce carbon neutral vehicle fuel. The government has not confirmed how many projects will win support – only that a “small number” will receive funding.
Under the rules of the funding programme, the Australian government will cover the additional cost of producing green hydrogen compared to market price for hydrogen. The winning projects must also publicly share knowledge from their projects to help accelerate the country’s hydrogen industry. Separately, Australia has also committed half a billion dollars to develop regional hydrogen hubs. Okay, so Australia is taking a different approach to subsidizing hydrogen development, the US is taking a clean hydrogen approach to allocating federal funds to hydrogen projects.
So depending on the carbon intensity score of the project, any technology could theoretically get funding. Now, in reality, that probably won’t happen, at least not anything outside of the hub developments that already include provisions for SMR applications. Australia on the other hand, is only going to subsidize fully renewable powered electrolytic hydrogen. Now regardless of the reasoning behind this decision, I really wonder what the economics are gonna look like as there are many other large scale hydrogen projects around the world, creating clean ammonia from hydrocarbon feedstock for global shipments that Australian hydrogen will need to contend with.
Or even from a green hydrogen global market. There are monster projects getting kicked off in and around Europe, with much shorter distances to transport hydrogen or hydrogen derivatives, such as ammonia, with greater shipping distance comes greater landing costs. And one of those European projects is this next bit of news. Next in an article in Nikkei Asia TOMOYA ONISHI writes Japan’s Mitsubishi eyes massive green hydrogen plant and the Netherlands. Japanese trading house Mitsubishi Corp looks to invest over 100 billion yen or $690 million to build one of the world’s largest green hydrogen production plants and the Netherlands. Green hydrogen is produced by electrolysis of water using electricity derived from renewable energy, meaning carbon dioxide is not emitted during the process.
It carries great potential as a next generation carbon free fuel source. Mitsubishi plans to refined the know how for commercialization in areas like production and supply in Europe, which leads the way in green hydrogen development and use it to expand globally, production will be handled by Eneco Diamond Hydrogen, a joint venture between Mitsubishi and the trading houses subsidiary Eneco , a major Dutch renewable energy company. Construction of an electrolysis plant will begin in 2026, with plans to start producing hydrogen in 2029. The plants envisioned capacity of 80,000 tonnes annually will be nearly 30 times greater than that of the world’s largest facility now in operation.
Eneco has a large offshore wind farm in the Netherlands electricity from which will be used to produce the hydrogen. The company plans to sell the hydrogen through its retail electricity sales network and supply it to manufacturing and power businesses in Europe using pipelines. Most current hydrogen production uses electricity derived from hydrocarbons, like natural gas. Cost has been a major hurdle to widespread adoption of green hydrogen. producing green hydrogen costs three euros to eight euros or $3.28 to $8.74 per kilogram higher than the one to two euros per hydrocarbon derived hydrogen. Consulting firm PwC reports. Mitsubishi aims to reduce costs through mass production, the European Union looks to increase its annual capacity for green hydrogen to 10 million tonnes by 2030.
Other Japanese companies like Asahi Kasei, are active in hydrogen development and have advanced technologies Mitsubishis development of production and supply know how may spark further activity among domestic businesses. Trading house Itochu and Osaka Gas will invest in Danish hydrogen developer EverFuel this spring and participate in a project to produce 3000 tons of green hydrogen per year and Denmark, oil company ENEOS and trading house Sumitomo Corp are working with Malaysian businesses to produce green hydrogen derived from hydropower in Malaysia by 2030. Okay, so I’ve mentioned Mitsubishi A few times on the show, but it’s usually been related to their hydrogen gas turbine technology, which is getting utilized in several projects around the world.
Now the company along with Dutch renewable company Eneco are getting involved in upstream operations with this project in the Netherlands, and what a project it is, the $690 million facility is set to break ground and 2026 with operations starting Three years later, and the initial goal of 80,000 tonnes of hydrogen production yearly is mind blowing. Now, the costs associated with green hydrogen development are well known for the claim that they can effectively reduce costs to economically acceptable rates through increased scale alone may be a bit of a stretch. And something to remember is this.
Europe also has the three pillars hurdles that could potentially affect this project since they’re looking to leverage existing wind farms. But they may get this project up and running soon enough to get grandfathered in without the need to invest in new wind and solar projects. It is also a guarantee that efficiencies and electrolyzers will continue to develop and at what rate that is is going to be anyone’s guess. But for a project of this magnitude, I wouldn’t be surprised if they weren’t leveraging the most efficient electrolyzer technology available. But with those assumptions aside, this project will certainly take a large chunk of the expected demand, which is estimated to be 10 million tons by 2030.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcast, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
