Session 4: Clean Hydrogen - Will Australia become a world leading exporter in the Hydrogen race? 

Discussing the Australian Federal Government's Technology Investment Roadmap.

The race has started. Hydrogen is set to become a transformative energy source – if it can be produced cleanly, cost effectively and at scale. With its tremendous solar and wind reserves - Australia has genuine competitive advantages in the production of hydrogen.  In this webinar recording, we consider:

• Why this is a priority low emission technology;
• What is needed to meet this stretch goal; and 
• Likely impediments and opportunities

RG: Welcome everybody.  I suspect that some people are still logging in to our webinar but we are quite short on time today so I think we might get started.

My name is Richard Guit and I head the Energy and Resources Group for Asia Pacific for Ashurst and today's webinar is on hydrogen and we'll set the scene on that in a little bit but I've got two important announcements to make first.  

The first is we will not mention the US election today, okay so this can be 30 – 45 minutes where you get a break!  The second point is that today's session will be recorded for record keeping and training purposes.  

It’s a session which is a continuation for us of a series that we kick started after the Australian Federal Government announced its technology investment roadmap back in September, 22 September and for us as a business, that gave rise to a number of talking points that we think the industry should be discussing and the topic today is hydrogen and its place in that. 

You do have the ability to ask questions and there is a chat function there.  If you pop your questions into the chat function, we will see those and if we can we'll try and see the discussion with those.  If you have any technology issues then there is a number there I think on the right hand side, give that a call, I can guarantee that neither Matt nor I will be able to solve those problems but somebody might be able to.

So, turning to Matt, look we are really lucky to have Matt with us today.  He used to be the Chief of Communications and Government Relations at an outfit called Star Scientific and Matt will tell you a bit more about that in a minute.  But he joined Star Scientific in early this year and he's a passionate advocate for the hydrogen economy and he will tell us a little bit about why his view is that Star Scientific can be a disrupter in the space and spark a bit of renaissance from the Aussie perspective.  

But before joining Star Scientific Matt has been a ministerial Chief of Staff for both federal and state levels of government and he was the CEO of Barton Deakin who many of you will have heard of, they're probably Australia's pre-eminent government relations consultancy, but I might hand to you Matt just to let us know why you're here.

MH: Thanks Richard I really appreciate that.  Coming to you from Berkeley Vale on the NSW central coast and we're deep in the heart of the Darkinjung country so I would like to pay respects to the elders, past, present and emerging.  

Hydrogen has just been an incredible almost at times over hyped phenomenon in the lives of anybody interested in energy policy.  You know it was only two or three years ago that I started hearing about this thing hydrogen from my then clients Star Scientific.  Now today, and I'm sure many of your viewers online would agree with me, somewhere in the world at any given moment there's a webinar or a conference or something going on about sustainable energy and in particular hydrogen.  I mean I could do these events non-stop.  There's a Australian Institute of Energy event tonight, Australian Hydrogen Conference next week, there's AFR there's a range of them happening all the time so we are in the middle of a huge, huge upswing in interest in hydrogen. 

My then client then asked me to come and work for them and I'll tell you a little bit about Star Scientific.  So we are a research, privately funded research and development company up here on the central coast.  We're not a start-up.  We've been around for about 20 to 30 years and about four years ago we made a very exciting and important discovery and that discovery is something that we call HERO, Hydrogen Energy Release Optimiser.  Now, I'm going to describe these things in laymen's terms.  It's a habit I developed as a lobbyist, when speaking to policy generalists you have to break these things down, so I'll try and explain what HERO is in very lay persons terms. 

In lay persons terms HERO is a paste.  It's a very great secret, so secret that I don't even know the constituent elements of it, but it’s a paste, it’s a catalyst when you introduce hydrogen and oxygen to it in an enclosed environment, it simply allows the reaction of the formulation of water to occur.  It generates enormous amounts of heat.  In test which you can look at on YouTube, on YouTube, 700 degrees plus within about three minutes and it produces only heat and water, pure water.  The key thing here is that there are no other emissions.  It's what is known a true catalyst so it doesn't get consumed in the process.  You take the gasses out and it immediately goes back to its inert form so it’s a very, very exciting development.  It's been signed off by the Head of [*] Chemistry at the University of Newcastle here, a guy called Scott Donne, and we patented it.  I mean we thought it would have competitors globally but it hasn't.  It's been patented worldwide and the key reason I think why I'm here and the key thing I'd like to discuss is, it is a demand slide generator for the hydrogen economy which is something that we desperately need.

RG: It's a great actual segway Matt I think into some of the high level things that I think we need to touch on today because I think some of those macro factors get sort of left behind in the discussion.  So for everyone's benefit today, we've got sort of 30 to 45 minutes, we'll try and finish within the sort of 30 so that we can leave some time for some questions.  We would like to set the scene, both what's happening around the world and the sort of push and pull factors for Australia in the role that the Australian industry can play, but the demand side is, you know, obviously something that we will absolutely have to talk about.  And Matt you've touched on I think the key ingredient is that, you know, why is there this fuss and why hydrogen and why now and if we just step through some basics very quickly.  You know, hydrogen you know, you can produce and use it without the emission of greenhouse gases.  That's not really how hydrogen is being used and produced at the moment, certainly not at scale, but over time, you know, the theory will be that this will slow and stabilise climate change and then I think it really does sort of set the scene and things are moving so fast.  Since we have set this seminar up, you know in the last two weeks the People's Republic of China have come out and Xi Jinping has announced carbon neutrality by 2060.  The end of October Japan announced carbon neutrality by 2050, the day after South Korea did and that is off the back of a really fast moving pace here in Europe as well.

But we might just quickly just touch on what we mean by … you've probably heard culets actually in the discussions and the papers that your, that people might be reading or the articles and probably good to start there I think.  

Grey hydrogen, blue hydrogen, green hydrogen.  What does this mean?  So the world produces hydrogen at the moment.  Most of it is produced through applying heat and steam and pressure to methane and to reforming that gas and hydrogen is used … many of you listening will know this, you know, it is used in industrial processes, its used to make ammonia, fertiliser, petrochemical processes so to make polymers and resins.  

So hydrogen is made at the moment, but it produces a significant amount of CO2 off the back of it.  So that's grey hydrogen.

Blue hydrogen is where there's a significant amount of investment capital sort of being deployed at the moment and blue hydrogen is taking that process I've just described, but actually doing something with the carbon that's produced and using carbon capture and storage to actually isolate out that carbon.  Now the longer term transition, and this is where we'll sort of focus today is to green hydrogen which is, you know, hydrogen that is produced in a way that Matt has just described, the HERO process works which is purely that the sort of, the ingredient being water and the electrolysis of that water to isolate out the hydrogen and that produces no greenhouse gases.  

Now it does require energy to do that and so when that process is applied using renewable energy then you're talking about green hydrogen and there's a lot for us to discuss I think as we navigate today.  But blue and green are separate and distinct and I think we will talk about what needs to happen to sort of get us on to that journey.  Because there's a significant infrastructure change that's needed and significant capital cost that's actually needed and the level of renewable energy will be a massive driver in producing low cost green hydrogen and Australia has a significant solar reserve and significant wind reserves so you can see where the discussion might go.

Now anything that, just having set that scene, anything that you think is worth commenting on from that policy side of things?

MH: Yeah, so I might go a bit into what I see that drives … in years that used … in terms of green hydrogen you use the term long term but I think it's going to be a lot, lot shorter than that so the key … and I should say we have an office in Europe in Zurich and a subsidiary finance vehicle called Planet Power Finance.  So we're watching … we're global and we're watching global demand very carefully.  

The pull factors for the export of Australian green hydrogen can be divided into two.  First, are those coming from the developed world and they are largely around politics and policy, you know the developed the world where everybody's well across the debate about climate change.  It's not even a debate.  I mean in the rest of the world it's a given.  Climate change is happening and we have to do something about it and policy makers are responding so we've seen particularly we've heavily focussed on Europe and Germany.  We've seen massive announcements about hydrogen policy flipping, now I'll come to this, flipping existing power generation over to sustainable energy and particularly by having a heavy bet on green hydrogen.  And I use green hydrogen specifically because they are saying to us "we don't want blue, we don't want brown, we want green".  

Now, it's really hard to map out the future demand of it.  I've been doing it this morning but two figures that stood out to me by 2050, this is Bloomberg, by 2050, Europe will require 100,000 terra watt hours to drive its energy demand, Germany by 2033 150,000 terra watt hours and I can tell you I've seen statements from German politicians saying "Australia we are looking at you".  Alright.  I don't think it's quite widely known how much we feature in their plans for their demand for green hydrogen.  And it is …

RG: And Matt, just to interrupt there, just so the viewers know.  You know Germany and Norway and the European Union earlier this year released formal strategic hydrogen plans.  So not the high level like Australia's technology investment roadmap which doesn't contain a lot, but instead, you know, they've stepped out up to 2025, 2030 to 2050 and what they would need to do by way if they installed generation capacity to create that green hydrogen?

MH: Well, they've apparently admitted that Europe, they're not going to be able to produce their own demand.  So they need to export it whether it's us or North Africa is probably our main competitor or elsewhere.  But they're looking at us and you would've seen the announcements recently, those of you in the hydrogen space, about formal co-operation between Germany and Australia going forward in this space.  We had the transition hub, Mathias Cormann who has now left parliament was a key driver in that and I think he will remain a key driver as well.  

The other key driver in the developed world, the markets themselves.  You know this is climate politics it is not a fringe, left wing thing anymore.  It has entered the board rooms of the globe when, you know, Black Rock and others are demanding that their clients into which they invest and produce their sustainable energy plans so … and behind that are billions and billions of dollars seeking a home to invest into this space and potentially into hydrogen as well.

RG: Actually Matt just on … I think Goldman Sachs a couple of weeks ago came out and said they estimate to 2030, so we're not talking to 2050, to 2030 … 

MH: No, that's right.

RG: … in the next 10 years.  It will be a $13 trillion industry.

MH: Yeah and this is the key thing.  Richard that's right.  This is the key thing and it's a mantra of ours at Star Scientific … we are going to have to produce a lot more hydrogen, green hydrogen, than anybody understands and the financial rewards are a lot higher than anybody understands.
The other key driver, and it's really important and this is where we are a disrupter, the other key driver is stranded assets, alright.  So in Australia you would've seen Matt Kean this morning talking about the potential closure or the planned closure of power stations here in New South Wales and they need a plan for that.

Germany, I will keep coming back to Germany, but it's really important.  In Germany in Hamburg there is a power station called Moorburg which I think is only about five years old.  A multibillion dollar asset but the local government has mandated for closure and of course their shareholders are panicking.  So we've got this paradigm at the moment which is either or.  It's either sustainable energy or its fossil fuel.  We believe that there is a pathway through the middle where a lot of the fossil fuel potential stranded assets which Cambridge Econometrics put at between one and four trillion US a lot of that can be salvaged and re … because those things are in place now and the grid's servicing are in place now and we believe that hydrogen and our technology HERO is the way to do that.  We are blueprinting, [Araf] is our preferred energy supplier.  We are blueprinting a power … I can't say were, but an existing power station now.  You think about it, you use green hydrogen for a power station and potentially steel mills and other areas, you take away the fossil fuel supply asset, particularly coal, and you take away the pollution control capital on that site and you're making massive savings from the start.

So that's a developed law, policy and politics, the markets and the potential for stranded assets are really driving the demand for innovation and for instruments that can accelerate hydrogen.  And again this is a mantra of ours that we hear … probably getting ahead of ourselves but, one of the great challenges … there's a lot of challenges and we even hear Ministers on a day to day basis talk about "Aww it's too expensive" "electrolysers are too slow" so on and so forth.  Our mantra is "you create the demand and those supply side issues around creation, storage and transport will look after themselves" and it's been very interesting that in the nine months that I've been doing this job I've read countless reports and projections global, Australian and otherwise and already they are looking stale.  The technology for innovation in the hydrogen supply chain is phenomenal.

RG: Matt – just to pick up on that, I mean in the last sort of week and a half, and these are small things but that is how, that innovation starts.  We've got, I mean the Port of Rotterdam has its first hydrogen powered tractor and the UK government's commissioned its first hydrogen powered train, you know.  So that is the sort of convergence of policy but also things need to change because I think it's not just on the production side it's the … to drag that demand side along it's the infrastructure and the deployment, because hydrogen, the discussion is going not just as a, you know, as a source for industrial energy which will be I think the primary application but ultimately as a heat carrier in the way the gas, you know, is used in the house as well and distribution systems etc you're right they will need augmentation and … so it's a very big dynamic thing but I think it starts at the cost of production piece.

MH: Yeah look, and there are some … and we are heavily involved in it because it's our space but the innovation in the supply chain is just, it's just phenomenal in electrolyser's.  You know we've got a pretty good handle on electrolyser technology around the world and some of the breakthroughs that are happening at the moment are phenomenal.  In terms of creating the electrons in the first place, you know, floating wind, offshore wind there has been some major technological advancements in floating wind platforms which are obviously more efficient because they can move with the wind.  They're lower so they're not as destructive to the environment and at the usage end, at the other end of the supply chain [GE], Siemens and others are developing what's known as super critical CO2 turbines which can power a small suburb from a unit the size of your kitchen table which is perfectly matched to our technology.  So we're really confident that some of these supply side issues can be easily overcome as long as we keep up demand.

I'll probably … the other, the other … sorry, the other pull factor I talk about is in the developing world which is a really exciting part for us.  When I say the developing world, from our perspective I'm looking at our region.  So where you've seen developing countries, countries like Indonesia and the Philippines they basically want to skip the industrial, fossil fuel industrial revolution engaged with the next revolution, industrial revolution which will be fuelled by sustainable energy and in particular hydrogen and it's their geography that is really driving some of the advancement innovation here.  So where Indonesia and the Philippines have got a lot of islands.  A lot of islands that are not on the grid that are powered by diesel generators.  Now Indonesia has its own coal assets the Philippines don't, but they want those islands to develop economically as well and sustainably but they need off the grid bespoke units and we think hydrogen and the HERO chain is the answer to that, so that's very exciting.

Africa I can't talk about because I don't really know but I'm assuming that, you know, the grid is not broadly dispersed so there is a lot of the same characteristics as well.  So politics in the developed world, necessity in the developing world which is an exciting space for it.

RG: Yeah, no, absolutely.  And I think a lot of the focus at the moment in the commentary is around the cost side of the equation particularly around the sort of transport and storage side of things and we've had a question about that and I think it's important to focus on that.  But the… I think from our perspective this is not happening [*] and the sort of, the advent of large scale battery and certainly the technology at the moment, and I don't know about the HERO technology, but the technology at the moment for green, the units are a bit like large scale battery.  They're modular so they're actually, you know, you want to build a bigger unit you just add more modules in.  You look at, you know, the large scale battery and storage systems there they operate on the same basis.  

I think distribution though is an issue and again in some parts of the developed world and certainly in places like the UK and some of those European countries we've mentioned there's a real focus on looking at the pipeline distribution infrastructure as well and its why the blue hydrogen, you know, currently the need for carbon storage, so we're largely talking about sort of gas voids through previously utilised fibre cut and gas wells that you're looking around the North Sea or areas where there's industrial hubs so that you're, you're reducing the distribution cost out of that sort of the supply chain.  

I think the important thing is that it's not just development at the sort of … the hydrogen production stage but there's a bigger piece there and, you know, we are … that we, on the production side of Western Australia, you know we've got huge renewable ability … but you haven't got any thoughts around the distribution side?  Have you looked into that at all Matt?

MH: Yeah.  We have and we continue to do so and this is the issue.  So a couple of things to say there.  The issue around export, yes.  Notwithstanding everything I said earlier about this incredible global demand for green hydrogen and our capacity to fill it.  There's also the chance that a lot of green hydrogen will be generated closer to the user market, particularly in the developed area so we've got to be careful.  We always say the hydrogen revolution in Australia is not just about export, it is also about us using it for domestic purposes and I mean industrial purposes.  We're not so much into the whole mobility area because we think we can green the grid so these are probably the safer bet but, you know I look at, we look for instance here … I'm on the edge of the Hunter Valley right.  And yes there's Gladstone and we saw the announcements in South Australia last week.  I think Victoria are about to enter into a big way.  In a big way.  There was an excellent paper release by one of the think tanks down there last week I think it was, it might have been two weeks ago, and I think you will see Victoria enter into industrial hydrogen in a big way probably centred in Geelong.  But if we can talk about New South Wales here, the Hunter Valley we have all the elements for a hydrogen hub there.  We have the demand.  We have region that is ready to flip to sustainable energy.

I saw Malcolm Turnbull give a speech about this at the University of Newcastle only last week.  The unions indeed came out on Melbourne Cup Day which is a little suss, but they came out and announced that they're up for transition as well, the sustainables.  You have the infrastructure.  So you've got the domestic demand, the infrastructure.  Of course you've got the port.  You've got the University of Newcastle with its skilled energy which is one of the leading schools of energy in Australia, if not the world, and you have capacity … all those mine sites for instance to put in generating capacity so it is all there.  Yes gas is going to play a transition role for us but you know the really interesting announcement was the federal government has threatened to intervene into the market and build a gas fired power station.

In my view it would've been fantastic for hydrogen if they had said "and by the way from the start this is going to be designed with the hydrogen".  You know 10% at first maybe 20% and over time … the investment and the interest and the excitement that would have created into investment in [RND] in hydrogen, green hydrogen in particular, would have been phenomenal.

You know it may still happen, I hope it does happen.  I might be involved in the background there a bit but you know that would've been a… that would've been an adrenalin shot for the whole hydrogen economy here in the Hunter and also in in Australia.

RG: Yeah, it's worth maybe just coming to the approach in Australia from a policy perspective because for a long time now, both of us in the renewable energy space have lamented I suppose a lack of a clear policy but what's happening around the world is that irrespective of policy conditions, the corporate world at institutional shareholder investor level is actually driving the change because the shareholders and shareholder banks are saying organisationally "you need to do something about climate".  So even with a policy void we're seeing things happen.  

The point I was just going to see if you had a view on is, is when I look at what's happened in … if we take say South Korea, so end of October they announced their carbon neutrality by 2050, it was accompanied with a sort of unspecified but you know, up to $US7 billion in funding to help drive that outcome.  Does Australia risk being at a disadvantage if it doesn't have that level of sort of capital deployed into it by government to help drive things?  Because that is what's happening in parts of Europe as well.  Have you got a view on that?

MH: I do and it's a bit … It's a good question and it’s a bit heretical.  Governments are obsessed at putting money into things.  You know the market out there is huge.  What we actually need is policy and policy to lead, and to that end I think Australia's done very well.  You know we talked about pull factors before, the push factors in Australia are either every single state and territory has a hydrogen policy or a sustainable energy policy.  The Australian hydrogen policy and led by Alan Finkel and others is a very good one.  It's a very good policy and I was only talking to the Minster the other night, I said to him mate, there was a COAG meeting in November of 2019 where all states and commonwealth signed up to a hydrogen policy and I said to him … "that was a historic agreement and will be viewed in years to come as a historic agreement" of course it got no press, because the states weren't jacking up, there were no arguments and it was Friday night in Perth and in the middle of the cricket test as well but nevertheless it was a profound decision for all our governments to come together.  And we're a bit unique here in Australia at the moment, you know, usually, and this is with my former lobbying hat on, an industry goes to a government tells them there is a problem and asks the government to act.

At the moment with hydrogen we have governments leading the debate and that won't last forever, but they are taking the leadership role and there's a bit of a, there's a bit of a challenge there for the hydrogen sector, the emerging hydrogen sector, to, you know, organise and come forward with its wants and needs.  So you know we've got this push and pull factors happening.  I don't think it's about money and you know, we've looked at a lot of the programs.  Tasmania has a brilliant hydrogen policy.  Small maybe, but brilliant.  But when you go and look at those, a lot of those, those RFPs, the technical data that is needed and required it can be … you have to make a decision, do I stay on our own path, self-funded path of RND or do we try and bend a bit to help this government, to comply with this government program.  That's a big juggling act.  If you're a start-up you'll probably go with the government.  If you're us you've got to think long and hard about how you do it.

So I think policy …, sorry before I go, the other, the other challenge and, that [*] can maybe address this… it's really dry stuff around regulation.  You know for the lawyers here on the line there's going to be plenty of work because, you know, at Star Scientific we're sort of the frontier of hydrogen science.  The problem is simple things like putting together a facility like we're in now … you know your departmental or your council regulators looking to the playbook and they see hydrogen hmm, ah rocket fuel and that's it.  There's no, there's no regulations in place for what we do.  So unfortunately we have to massively over engineer everything that we do.  So, you know, and there's an ongoing need for companies like Star Scientific and governments of all three levels to just evolve this regulatory environment around hydrogen.

RG: Yeah it's a good point.  Off topic slightly but I think on point, at Ashurst we did Australia's first two large scale waste to energy projects.  Now that is tried and proven technology in a huge number of developed economies around the world, incredibly clean these days, unlike the 90's and even at a sort of regulatory perspective you had to find a pathway through and yet that's tried and true, proven, you know, all around the world.  So once you hit the leading edge you're absolutely right I think that will be an area that could perhaps do with a little bit of focus from a pathway approvals you know, perspective for sure. 

And you mentioned tenders, I mean, there are governments around the world that are issuing tenders, you know, now for opportunities so, I think it's heartening to see and hear that we are, you know, in Australia we are at the forefront of the scientific edge of the development as I think most of our audience would know.  Despite element around our policy settings, you know, we have a significant amount of install capacity that is renewable but that will only continue to grow in Australia and I think the convergence of the energy companies around the world into energy transition and their focus into renewables and you know, I think all of the big globals are driven in that direction away from, ultimately transitioning away of hydro carbons will see the renewable piece that you need to work play out.

I think exciting times and I think if we can continue to be focused on it from an Aussie regional perspective, then that's really important.  I think some of the commentary suggests that the blue hydrogen, so the sort of the CCS, the carbon capture, storage projects will play an important role but I think that depends on where and circumstances.  Because if you're not located near a reservoir where you can, you know, economically store and you've got industrials with existing process plant and big energy needs nearby then that might be something that works sort of in the interim.

What I might do Matt is see if … we've got the chat function to see if anyone has any questions.  We've a couple of minutes left so we managed our time as we said we would.

If anyone has any questions feel free to sort of jot them down now and technology permitting we can introduce them into the discussion?

MH: Okay, while that happening one of the reasons why I have a job is, and going back to my opening comments, there's been this enormous upsurge of interest in hydrogen and as I said governments, I think the Australian governments have done really, really well and they are going to evolve but there is so much to take in a policy sense.  You know, where there is a current process, I think it's still before the Australian parliament, on offshore wind turbines and how to do it.  We need to engage in that.  We have incredible educational institutions around the country, the CRC for the blue economy largely based out of Tasmania but other states as well, looking at the offshore economy, offshore wind and aquaculture and how they combine which is a really interesting play.  There is so much to take in which is why we need good intermediaries, if I may say so, to try, you know, just try and interpret for us what is going on. 

The whole politics thing you know, the American election was raised earlier, there's the politics of climate and there is what's happening in the real world and what's happening in the board rooms and in their RND facilities around the world and they've been two different things.  I think they're coming together, but our view at Start Scientific is just let the politics look after itself.  We will go and talk to the customers, talk to the market, talk to our scientists and see what they need and continue to evolve in that way.