Labor's $1.14 billion National Hydrogen Plan

March 07, 2019





Six weeks ago Labor announced our $1.14 billion National Hydrogen Plan. Beyond the very significant funding embedded in this plan, is the signal to industry, both here and abroad, that a future Labor Government will ensure Australia is at the heart of the global Hydrogen industry.

This plan is one of many we have that is focused on Australia becoming a renewable energy exports superpower. We have outlined policies on Hydrogen, battery minerals and manufacturing, and Renewable Energy Zones that are all aimed at our nation maximising the opportunities as the world transitions to renewable energy.

As the world decarbonises, if we plan well, Australia can not only continue to be an energy exporting superpower, we should also enjoy a manufacturing boom.

Whether it’s direct export of electricity as the Pilbara to Indonesia projects propose, or the Hydrogen economy we can still be an energy export superpower, it just won’t be fossilised carbon, instead it will be wind and solar power.

The shift to renewables also offers Australia the opportunity to revitalise the manufacturing sector.

As the world decarbonises its electricity supply, the nations that can transform into manufacturing powerhouses are those with the cheapest energy, which will be the nations with the best renewable energy resources.

Australia has the highest average solar radiation per square metre of any continent in the world.

Under Labor’s vision, Australia can be the land of cheap and endless energy which could power generations of metal manufacturing and other energy intensive manufacturing industries.

Which brings me to our commitment on Hydrogen; a commitment driven by a determination not to allow history to repeat itself when it comes to seizing these opportunities.

For example, over 60 per cent of the world’s solar cells use technology developed by Australian researchers, most notably at the University of New South Wales. Yet we failed to create a sizable industry or jobs out of this. A significant factor was the ever present hostility the Howard Government adopted towards renewable energy.

Going further back, in 1945 we were the fifth largest manufacturer of aeroplanes in the world. We ceded that opportunity to nations such as Sweden and Brazil.

The development of clean Hydrogen is necessary if the world is going to decarbonise.

And decarbonise we must if we are to reduce global warming to well below 2 degrees as the Paris Agreement sets out.

There are very significant domestic opportunities in the development of a clean and low cost hydrogen industry.

Hydrogen could replace natural gas as a low emissions source of heat as well as a potentially cost competitive low emissions feedstock for a number of industrial processes. Many analysists argue that Hydrogen also offers the opportunity to replace coal in steel both for heat and as a chemical feedstock.

Studies also indicate that converting to hydrogen for heating and cooking will be less costly than electrifying those services in order to reduce emissions. For example, modelling by the Australian Gas Infrastructure Group demonstrates that decarbonising Victoria’s gas network through Hydrogen conversion would cost about 40 per cent less than full electrification.

This is borne out by international analysis. For example Bloomberg New Energy Finance looked at the task of decarbonising heating in the United Kingdom. This load reaches peaks six times as high as the country’s electricity load, and it can cycle up and down by a factor of three in just a few days. To decarbonise by electrification would cost $550 billion at current exchange rates. Hydrogen conversion will be much cheaper.

Hydrogen also will play a role in decarbonising the electricity sector. For example Hydrogen can help manage the transition to a higher proportion of variable renewable electricity (VRE) in the electricity network by overcoming challenges associated with energy intermittency. It is a good way of storing renewable energy for later use.

Transport and liquid fuels security is also a key justification for this policy. Australia has long been dependent on imported liquid fuels and at present, is not meeting domestic fuel reserve targets. Hydrogen can play a key role in protecting Australia from supply shocks by localising liquid fuel supplies through producing synthetic fuels or by displacing their use in both stationary and transport applications.

Furthermore, transport emissions are one of the most rapidly rising sources of carbon emissions. Hydrogen will help decarbonise our transport fleet, particularly road and rail freight and passenger rail. European nations have begun introducing hydrogen powered trains and trucks. Electric vehicles that use batteries do not offer the range and power of hydrogen fuel cell electric vehicles.

The market for Hydrogen will be massive. 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, principally in Japan and the Republic of Korea. This projected share is relatively conservative as Australia’s share of the market for imports of hydrogen is assumed to be below Australia’s share of LNG imports. Even with this conservative assumption, this industry could employ 16,000 Australians in 2040 and contribute over $10 billion to the economy each year through exports alone.

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.

The Hydrogen industry is already significant in size. Global output of Hydrogen is already no less than half of total LNG output.

And, make no mistake, our global competitors are making significant progress. Qatar is making investments in Hydrogen and has been intent on leveraging existing trading relationships.

Norway is another likely competitor. Kawasaki Heavy Industries has teamed up with Nel Hydrogen and Norway’s Statoil to demonstrate that liquefied hydrogen (LH2) can be produced using renewables and delivered to Japan on tankers. 

This is why the complacency and go slow attitude of the Federal Government is so dangerous.

The Minister for Resources, Matt Canavan, is quoted regarding Hydrogen:

“It’s an exciting opportunity in decades to come, but it’s decades, not in the next few years.”

And while we welcome the COAG Hydrogen process and intend to continue it if we win Government, it is not enough.

If we allow luddites like Canavan and Angus Taylor to control the speed of the development, we will rapidly get lapped by the likes of Qatar and Norway.

That is why Labor announced an unprecedented $1.14 billion investment in a National Hydrogen Strategy. Labor’s plan will support the hydrogen economy through research and development, commercialisation, deployment, infrastructure and regulatory reform.

While some areas of the Hydrogen industry are quite mature, others are not and that’s why Labor will require ARENA to direct up to $90 million of its investment budget to support the development and pre-commercial deployment of hydrogen technologies, as well as making hydrogen production, storage and transport a funding priority of the Australian Research Council.

We are also committed to assisting in the deployment of hydrogen based technologies and industry development. Labor will allocate $1 billion of CEFC funding to support clean hydrogen. This is only possible due to Labor’s commitment to double the CEFC’s capital by $10 billion.

We will also allocate $40 million from the CEFC Clean Energy Innovation Fund to the demonstration and development of hydrogen technologies and require ARENA to allocate $10 million of its funding to establish hydrogen refuelling infrastructure across Australia. Labor will invest $3 million to establish the National Hydrogen Innovation Hub in Gladstone.

Other aspects of our industry development strategy include:

  • Working with state governments to develop and harmonise regulations for hydrogen vehicles.
  • Tasking the Australian Energy Market Commission to examine a rule change to allow for compensation for grid firming services from electrolysers.
  • Developing a ‘Guarantees of Origin’ scheme that certify that hydrogen is either renewable hydrogen or carbon neutral (through Carbon Capture and Storage/Carbon Capture and Recycle).
  • Develop Government to Government agreements on Hydrogen targeting possible export destinations such as Japan, South Korea and European nations.

One of the most important parts of our strategy, but definitely less sexy, is around regulatory reforms. Possible reforms include:

  • Reviewing gas pipeline regulations to include gaseous hydrogen.
  • Engaging with the International Maritime Organisation to ensure appropriate regulatory frameworks for shipping of Hydrogen.
  • Developing a framework for securing long-term storage liability for CO2 storage related to Hydrogen production with Carbon Capture and Storage.
  • Developing appliance standards to enable use of standardised and easily convertible appliances.

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.

We in Labor, through the National Hydrogen Strategy, have made one of the most significant and visionary commitments to the development of a single industry in the history of the Commonwealth.

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.

If we get the transition to a clean energy economy right, Australia will see a massive jobs boom.

Independent modelling has found that Labor’s commitment to 50 per cent renewable energy by 2030 could generate up to 71,000 jobs in construction, installation, operation and maintenance.

In addition to this, ACIL Allen has found that we could see a Hydrogen export industry sustaining 16,000 jobs by 2040.

These are just two of Labor’s many commitments around clean energy and climate change, but alone could generate industries employing up to 87,000 Australians.

But we need the participants in this conference to play their role. To see the potential of Australian Hydrogen, to invest in an industry that could be our next great energy export industry.

In conclusion, in a future Labor Government you will have a partner in this endeavour.

Labor is committed to building an Australian Hydrogen industry that is globally competitive, that helps Australia and the entire world decarbonise.

An industry that can employ tens of thousands of Australians.

An industry that will ease the transition to a low pollution future for carbon intensive industries.