Australia's Green Hydrogen Dream Fades: 5 Key Challenges Holding Back the Industry

The Australian government has been investing heavily in green hydrogen as a solution to climate change, but the industry is struggling to take off due to several challenges. Green hydrogen is a zero-emissions alternative to traditional fossil fuels, but it is expensive and lacks demand. The country has yet to develop a large-scale green hydrogen industry, and many projects have been scrapped due to economic and political turmoil. As a result, the hype around green hydrogen in Australia is fading, and the industry's future is uncertain.

Key Takeaways:

• The learning curve for producing large volumes of green hydrogen is steep, with current facilities operating at low volumes and much smaller than proposed projects.
• Demand for green hydrogen is limited, with Australia using only around 500,000 tonnes a year, less than 1% of national energy consumption.
• The chicken-and-egg problem exists, where green hydrogen proponents won't invest in high-volume production unless there are large users to buy the product, but large users won't invest in changing their processes unless assured of supply.
• Green hydrogen is expensive, with little evidence that buyers are willing to pay more for it, and subsidies are needed for it to compete with conventional production.
• Economic and political turmoil has made companies more cautious about investing outside their core business, and global inflation has driven up the cost of electricity needed to produce green hydrogen.

Statistics:

• Currently, Australia produces very low volumes of hydrogen using natural gas, producing greenhouse gas emissions.
• Around 15 facilities in Australia are currently producing green hydrogen, but all at low volumes, between 8 kilograms and one tonne a day.
• The Central Queensland Hydrogen Hub would have produced about 200 tonnes of green hydrogen daily, scaling up to 800 tonnes in the 2030s.
• Australia uses around 500,000 tonnes of hydrogen a year.

Sources:

• The Conversation (Au and NZ) -- by Alison Reeve, Program Director, Energy and Climate Change, Grattan Institute
• Grattan Institute report on how hydrogen could help decarbonise the Australian economy.