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Andrew Forrest’s scaling back of green hydrogen projects demonstrates the limitations of what was once considered a ‘Swiss army knife’ solution. By Mike Seccombe.
Andrew Forrest faces reality of green hydrogen’s limits
Tim Buckley was in Shanghai last month looking at cars, and what he saw amazed him.
There were electric vehicles capable of travelling 1000 kilometres between fast charges. Hybrids that can go 2000 kilometres. One company that can swap out a battery, robotically, in three minutes at any one of thousands of sites across China. Other companies that warranty their batteries for 20 years – not to mention carmaker BYD’s “rifle test”, which demonstrates that the new blade battery will not burn even after a bullet is shot through it.
The director of think tank Climate Energy Finance came back convinced that electric vehicle manufacturers now had the answers to all concerns about EVs: range anxiety, battery life, flammability and price.
He is now utterly convinced of something else, too. “The hydrogen car is dead,” he says.
Sure, some “deluded” diehards such as Toyota and Nissan persevere in making them, says Buckley, but sales of hydrogen cars are infinitesimal compared with those powered by lithium-ion batteries. Hydrogen cars, he says, will be killed off by Chinese electric innovation.
He offers his glimpse of the future of automotive transport as an example of the way scientists, entrepreneurs, financial analysts like him, and governments are rapidly reassessing their views on the role hydrogen will play in the green energy revolution.
It wasn’t so long ago that renewables pundits glowingly described hydrogen as the “Swiss Army knife” of renewable technologies, able to be turned to almost any purpose.
Only five years ago, for example, when the first National Hydrogen Strategy was presented to government by Australia’s chief scientist, Dr Alan Finkel, it foresaw hydrogen being used not only to power vehicles, but for home heating and cooking via the gas reticulation network, as a means of storing electricity generated by wind and solar and providing an alternative to fossil fuels for baseload power.
The “flexible, safe, transportable and storable fuel” would be piped around the nation and exported around the world to “hydrogen hungry” countries.
“We can become a leader in the new industry I call ‘shipping sunshine’,” said Finkel at the time.
He, like so many others, has since changed his tune.
These days the Swiss Army knife metaphor is used mostly to convey scepticism.
Fiona Simon, chief executive of the sector’s peak body, the Australian Hydrogen Council, says that the gas could be used in many ways.
“But you wouldn’t use it for most of those things, because there is a better tool.”
The Grattan Institute’s energy program director, Tony Wood, says hydrogen, like the Swiss Army knife, can do “quite a few things, not particularly well. If you need a proper screwdriver, you get a proper screwdriver. If you want a pair of pliers, get a proper pair of pliers.”
“If you can electrify, electrify,” says Wood.
That’s not to say hydrogen has no role in Australia’s, and the world’s, future green economy, but it will be a much more limited one than was envisioned just a few years ago, as Finkel readily concedes.
Replacing fossil gas with electric appliances is a better way to decarbonise homes, he says, in part because new appliances such as heat pump water heaters, air-conditioners and induction cookers are so much more efficient.
Likewise, batteries have proved to be a better and cheaper alternative for “firming” intermittent wind and solar in the electricity grid.
To date, those grid-scale batteries have been lithium-ion, but within the next few years a new type of battery, using common and cheap sodium instead of lithium, will revolutionise large-scale energy storage as well as heavy transport, says Peter Newman, professor of sustainability at Curtin University and the coordinating lead author on transport for the UN’s Intergovernmental Panel on Climate Change.
The new batteries are less energy-dense than lithium ones, which means they are bulkier, but they provide higher power for greater duration and are faster-charging, among other advantages.
“Sodium batteries will be much more effective because they work at that big scale,” says Newman.
Thus they will obviate the need for fossil gas to back up solar and wind in the electricity grid, and also hydrogen. As with cars, as with domestic heating and cooking, hydrogen is not the way of the future.
Newman questions, too, the economics of a hydrogen export industry.
“It escapes. It’s so hard to store and transport. It corrodes everything. It loves oxygen, it’s always trying to turn itself into water,” he says. To turn it into a liquid, “you have to cool it to minus 250 degrees. It’s just … incredibly difficult engineering.”
It’s also, at present, prohibitively expensive.
Tim Buckley confesses he got it wrong a few years ago when he was bullish about the prospects of producing cheap, “green” hydrogen for export.
The process of making green hydrogen involves splitting water molecules – H2O – by electrolysis, using cheap electricity generated by wind or solar.
His enthusiasm, he says, was driven by a belief that the cost of renewable electricity would continue its downward trajectory and halve by 2030, and that the cost of electrolysers would fall by as much as 75 per cent.
“Five years ago, I was projecting solar to cost $20 or $30 per megawatt hour, and wind likely to be $50 to $70. But now, in the latest GenCost report from AEMO, they’re talking about solar at $60. And wind at $100.”
And the cost of electrolysers has not come down anything like the extent to which it was forecast.
Simply put, a lot of people got carried away with the hype around hydrogen. The most common element in the universe, the one that powers the stars, would also power the Earth.
And no one in Australia quaffed more deeply of “the Kool-Aid on the way hydrogen would do everything” than mining billionaire Andrew “Twiggy” Forrest, says Newman.
Forrest invested big in hydrogen and promised big. His company, Fortescue, had set a target of producing 15 million tonnes of green hydrogen by 2030.
So it was big news last week when Forrest dropped the target and announced he was scaling back some projects and shifting focus “upstream … [to] get the cost of electricity down”.
The renewable energy sceptics in politics and the media piled on – particularly members of the federal opposition, who have long had a prickly relationship with Forrest. He has described the Coalition’s plans to build nuclear reactors as “bulldust … policies [of] politicians masquerading as leaders” and accused them of “dividing us with the false hope that we can cling to fossil fuels”.
They saw an opportunity to attack Labor’s support of the nascent hydrogen industry. Its Hydrogen Headstart plan will provide $4 billion in support to selected large-scale renewable hydrogen projects and it has budgeted a further $6.7 billion in production credits for any projects that get off the ground.
“Twiggy’s abandonment of green hydrogen has blown a gaping hole in the Albanese Labor Government’s energy plans,” shadow minister for climate change and energy Ted O’Brien said in a media release.
“Despite offering billions in taxpayer funds these projects are still failing to get off the ground.
“With the collapse of Labor’s green hydrogen plan … our energy security is under serious threat as the government continues to force 90% of Australia’s 24/7 reliable baseload energy out of the grid over the next decade.”
Even by the tendentious standards of Australia’s climate wars, the release was exceptional in its misrepresentation of the facts.
First, Labor is not forcing baseload energy out of the grid. Coal plants are closing because they are old, breakdown-prone and uncompetitive in cost with renewables.
Second, Forrest has not “abandoned green hydrogen”, although he has decided against following through on a memorandum of understanding with the energy company AGL at the site of the old Liddell coal power station near Newcastle. His company remains committed to several major projects in the United States, Norway and Brazil, where it has access to cheaper electricity. It also is pushing ahead with an electrolyser plant in Gladstone, Queensland, and a pilot plant in the Pilbara, which aims to begin producing “green” iron from next year.
Furthermore, Forrest’s company was never in line for the funding under the Hydrogen Headstart program. The government has yet to decide from its shortlist, and Fiona Simon expects an announcement before Christmas of two or three major projects. Far from having “collapsed”, the government scheme is yet to start.
In a written response to The Saturday Paper, Forrest conceded the price of power “remains a challenge in Australia”, hence the decision to refocus on renewable electricity generation.
“We are by no means winding back on our commitment to green hydrogen,” he said.
“We’re also firmly committed to our goal to become the world’s leading green iron producer.”
That last sentence and his commitment to the Pilbara project are significant, as they accord with the revised thinking of energy experts in relation to hydrogen, summarised neatly by Finkel as: “use it where you make it”.
Newman elaborates: “What you need to export are the processed minerals, not the ability to process those minerals in Japan, or Germany, or Korea or China with green hydrogen.”
Hydrogen can substitute for coal in the process of turning iron ore into metal or bauxite into alumina. It can be used to make fertiliser or explosives or even aviation fuel. But the way to go about it is to make the hydrogen in the same place as those other things are made.
At least for the foreseeable future, says Tony Wood, grid-based electricity is “nowhere near” cheap enough. “But at the point where the electricity is produced, it can be cheap.”
There is no need to pay for transmission infrastructure. Electrolysers can potentially be turned on and off as required, to take advantage of sunshine or wind.
Forrest has yet to abandon the idea of “shipping sunshine”, but Wood believes that “Twiggy has twigged” to the sense of making and using hydrogen in situ.
Simon is not surprised Forrest’s plans are evolving, for everything in the renewables sector is evolving. “It’s the industrial revolution again, in half the time,” she says.
“And hydrogen is hard. It’s a long-term play. It’s going to be expensive and difficult.
“A lot of MOUs [have] been signed over the last few years, and I don’t know anyone who necessarily thought every one of those would pan out.”
The politics are grim, she concedes. “But they are to be expected when we are in a reignited climate war heading into an election.”
This article was first published in the print edition of The Saturday Paper on July 27, 2024 as "Hydrogen’s hurdles".
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