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PWC Report Embracing Clean Hydrogen for Australia

How the journey towards decarbonisation can be fuelled by Hydrogen

Executive summary

Clean hydrogen provides the opportunity to decarbonise the hard-to-reach sectors of our economy, where electrification may otherwise fall short

We aspire to reach a day in which the resource that powers our heating and cooking, fuels our daily commute, and forms the cornerstone of our international exports is a carbon-free fuel source, safeguarding the stability of our environment while continuing to serve and benefit the Australian economy.

To date, adoption of renewable energy targets have been at the forefront of curbing carbon emissions globally, with nations setting ambitious but increasingly deliverable targets of 30%, 50% or even close to 100% of power generation from renewable sources in the coming decades.

However, with only approximately one third of greenhouse gas emissions attributable to the electricity and heat sector,1 a further solution within the transport, chemical and industrial sectors must be pursued if we are committed to extending decarbonisation throughout the economy.

The opportunity to realise this future as a reality lies with the production and use of clean hydrogen, a versatile, storable, transportable, carbon-free fuel source.

Global momentum is growing across the hydrogen industry, with few sectors likely to remain untouched by this energy revolution.

Within Australia, recent funding and policy announcements from State and Federal governments, including adoption of the National Hydrogen Strategy in November 2019, is building upon the momentum of existing pilot programs.

Projects are already underway to address new uses for hydrogen and improve the economics of production to meet forecast demand, both domestically and internationally.

At PwC, we are monitoring the sector landscape and engaging with research bodies, policymakers, developers, industrial players and strategic investors, each with an incentive and role to play in helping to progress this nascent industry.

The industry may appear to be slowly finding its feet, with disaggregated projects from a number of sectors looking to develop links across the supply chain, but the future of the hydrogen industry over the coming decade looks bright, as it aims to take its first steps from crawling to walking.

Executive Summary (cont’d)
To date, global demand for hydrogen has been limited primarily to its use as an industrial
feedstock, relying on ‘grey’ hydrogen generated through steam reforming of fossil fuels, emitting
approximately 9kg of Carbon Dioxide for every 1kg of Hydrogen produced.
With the rapid growth in renewable electricity and falling costs of wind and solar power, the
opportunity to produce low or zero carbon-emitting forms of hydrogen has captured the imagination of
industry, consumers and policymakers seeking further opportunities to decarbonise our society.
For climate-conscious consumers seeking alternatives to hydrocarbon fuels in the transport,
heat and chemical sectors, hydrogen has certain competitive advantages over batteries and
electrification, although hydrogen and battery fuel cells should be viewed as complementary as each
finds its niche in a zero carbon economy.
Harnessing energy from the universe’s most abundant element is not a new concept, but we can
do much more to produce and use hydrogen in a way that maximises its potential to transport
and use carbon-free energy across multiple sectors

Hydrogen is:
✓ Storable, retaining its energy far longer than utility scale batteries;
✓ Transportable, in gas or liquid form;
✓ Easily converted (eg. to Ammonia) or blended (eg. with natural gas) to tailor its composition to the
end use;
✓ Lighter than battery-stacking, for more efficient use in heavy vehicle transport such as trucks, buses and trains.
Australia can lead the global shift to hydrogen:

  • Abundant renewable energy potential at low cost – integral for the development of industrial-scale green hydrogen;
  • Strong existing trade links – well-positioned geographically for the high hydrogen demand
    economies of Japan, South Korea, China and Singapore;
  • Proven track record in industrialising commodity production – at the forefront of natural gas production and trade, with well-developed regulatory, safety and market infrastructure.
  • Understanding Terminology
  • Grey Hydrogen – hydrogen derived from fossil fuels, typically involving the combustion of gas or
  • coal in steam methane reforming (SMR), with little to no Carbon Capture, Utilisation and
  • Storage (CCUS) involved.
  • Clean Hydrogen – hydrogen with little to no carbon emissions directly resulting from the
  • production process. Comprising both Blue and Green Hydrogen.
  • Blue Hydrogen – hydrogen derived from fossil fuels but considered carbon-neutral due to
  • substantial use of CCUS technology.
  • Green Hydrogen – hydrogen derived from renewable electricity, produced from electrolysis
  • of water, with effectively zero carbon emissions.
  • Quantifying hydrogen
  • Hydrogen can be deployed for many uses, as a form of electrical energy, molecular energy, or as
  • a chemical input. The relevant use will determine the appropriate unit of measurement when
  • referring to quantities of hydrogen.
  • For consistency throughout this paper we will refer to hydrogen by weight:
  • 1kg hydrogen = 33.3kWh = 120MJ
    Or in other words:2
  • 1kg hydrogen = 100km driven in a hydrogen fuel cell passenger car
  • 1kg hydrogen = 14.5hrs of air conditioning
  • 1kg clean hydrogen avoids 15kg CO2
Clean Hydrogen hydrogen with little to no carbon emissions directly resulting from the production process. Comprising both Blue and Green Hydrogen.  

Through the falling cost of renewable energy and the abundant availability of solar and wind resources, Australia has the potential to produce hydrogen for global export at a competitive price.

Additionally, the ability to convert and store renewable energy in hydrogen, which is then either pumped into the gas networks or contained in hydrogen fuel cells, provides an opportunity to strengthen Australia’s domestic power supply.

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