Australia will compete with the Middle East, Chile and north Africa to become the world’s biggest hydrogen exporter, with the global market forecast to be worth $US1 trillion ($1.4 trillion) by 2050 as major economies pivot to the energy source to meet net zero emission goals.

New analysis by Goldman Sachs found Australia had the potential to replicate its giant coal and liquefied natural gas export industries with hydrogen, given its vast resources of low-cost renewables and close trading links with Japan and South Korea, which are expected to become major international importers.

A huge array of projects are in the pipeline across Australia as companies and investors look to capitalise on ample renewable resources to develop an industry that has become a key plank of the Morrison government’s technology-led solution to reach net zero emissions.

We believe the regions that have potential to become key ­exporters of clean hydrogen, ­especially once the seaborne market is considered, would be those that have a vast availability of low-cost renewable power resource or natural gas and carbon capture storage and will likely be able to supply clean hydrogen quantities larger than what is required to support their domestic demand,” Goldman analysts said.

Up to 30 per cent of global hydrogen volumes have the potential to be involved in cross-border transport, higher than for natural gas, setting the scene for a major new commodity to be traded throughout the world.

Its affordability is also changing rapidly. “Clean hydrogen has emerged as a critical pillar to any aspiring global net zero path, aiding the decarbonisation of 15 per cent of global greenhouse gas emissions on our estimates,” Goldman Sachs said. “Green ­hydrogen is the ultimate de­carbonisation solution, in our view, benefiting from the growth and cost deflation in renewable power.

The total installed electrolyser capacity for green hydrogen production was only around 0.3 gigawatts by the end of 2020 but the industry is moving at a remarkable pace, with the current projects pipeline suggesting an installed electrolysis capacity of close to 80GW by the end of 2030.”

Green hydrogen – produced with renewable energy – is expected to be at cost parity with hydrogen produced from gas in some regions by 2025, at a cost of $US1.50 a kilogram.

Hydrogen cost parity with diesel in long-haul heavy road transport is likely as early as 2027. Canberra has a plan for the nation to become a top-three exporter of hydrogen to Asian markets by 2030 and has set a stretch goal of producing hydrogen for less than $2 a kilogram.

Andrew Forrest’s upstart green energy arm has long-term plans to produce 50 million ­tonnes of renewable clean hydrogen a year, equivalent to the output of some of the world’s largest oil and gas companies, while Origin and Woodside have multiple projects in the pipeline.

Australia’s biggest hydrogen developers have previously called on the Morrison government to create a $19bn Net Zero fund, aimed at slashing emissions and speeding up the fuel’s rollout to the steel and heavy transport industries and in the nation’s gas sector by 2030.

The Morrison government in September announced plans for nearly $500m in new grants to accelerate Australia’s clean hydrogen industry, with funding prioritised for regional areas shifting their economies away from fossil fuel jobs, taking total government spending to $1.2bn.

It first developed a national strategy to turbocharge the industry two years ago and plans to develop a new export industry responsible for 8000 jobs and $11bn of extra income by 2050.

It has prioritised seven hubs: Bell Bay in Tasmania, Darwin, South Australia’s Eyre Peninsula, Gladstone in Queensland, The Latrobe and Hunter Valleys and the Pilbara in Western Australia.

Extracted in full from: Australia in race for hydrogen supremacy: Goldman Sachs (theaustralian.com.au)

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