Some 3,000 sq km of additional land is being acquired in the arid region for subsequent expansion and downstream industries, said James Leong, co-founder of Climate Impact Corporation, a Sydney-based firm formed in 2022, which is developing the project.
“Australia has plenty of flat terrain and we have the best infrastructure – railways and highways,” said the Hong Kong-based private equity veteran. “The beauty of hydrogen is that it can be reshaped into downstream products needed by different industries.”
00:47
Green hydrogen: can China reclaim its glory in EVs, batteries and solar panels?
Green hydrogen: can China reclaim its glory in EVs, batteries and solar panels?
Alternatively, the green hydrogen can be turned into methane through a complex process, as the Green Springs project envisages. The company proposes to transport the component of natural gas via existing gas infrastructure.
Green Springs plans to deploy European and American equipment to extract moisture from the air to overcome water scarcity in the region, and Chinese equipment to produce solar energy and hydrogen. It takes nine tonnes of water to produce one tonne of hydrogen.
Climate Impact is in talks with a large Japanese utility, which wants to procure green methane to replace liquefied natural gas for its power plants, Leong said.
“Japanese and South Korean shipping, power and steel companies are seeking low-carbon fuels and chemicals,” he said. “Some want green ammonia, some want green methanol and others green methane.”
Climate Impact last month formed a non-binding agreement with US-based GE Vernova – formerly part of General Electric – to collaborate on designing green hydrogen manufacturing modules. They have set a target to produce 500,000 tonnes of hydrogen annually at US$2 per kg. The current cost of producing green hydrogen is estimated at about US$4.50 to US$4.60 per kg, according to the Hydrogen Council, an initiative launched at the World Economic Forum in 2017.
He is also in talks with Japanese, European and Asian banks for loans to cover 70 per cent of Green Springs’ cost, with low-carbon energy funds, and sovereign and pension funds taking the rest as equity stakes.
Climate Impact is not the only start-up that has proposed a mega green hydrogen project down under.
BP increased its stake in the project to 64 per cent, acquiring a 15 per cent stake held by Macquarie Capital and the Australian bank’s Green Investment Group for an undisclosed sum. BP has set its sights on capturing 10 per cent of the global hydrogen market.
The US$36 billion project, spread over 6,500 sq km in Western Australia, aims to build some 26GW of solar and wind farms to power 14GW of electrolysers to produce 1.6 million tonnes of hydrogen annually.
Since 2019, when the Australian government unveiled a strategy to turn the nation into a low-carbon-energy superpower, more than 100 hydrogen production and associated projects worth US$127 billion have been announced.
At least 80 are green hydrogen projects, with 15 having passed final investment decisions for work to start.
In February, the federal and Western Australia governments agreed to invest A$140 million (US$93.4 million) by mid-2028 on a training and research institute and port upgrades to handle large renewable energy equipment.
Meanwhile, the federal government’s budget last month included A$8 billion of financial support – mainly tax incentives – over 10 years for renewable hydrogen production.
On the demand side, the Japanese government in February passed new legislation to provide subsidies to green hydrogen producers and importers, by funding the price difference between hydrogen and natural gas.
“Unlocking this sort of finance is critical to allow green hydrogen to enjoy economies of scale and reach price competitiveness against fossil fuels,” said Jen Carson, head of industry at non-profit Climate Group.
Despite such support, it is unclear when these mega projects will get backing from customers and financiers to get them off the ground.
Analysts said the feasibility of many projects is still being ironed out because of logistics challenges and uncertainties in the supply chain and export markets.
“The engineering, physics and money have to be right to create the demand,” said Grant Hauber, strategic energy finance adviser for Asia at the Institute for Energy Economics and Financial Analysis. “Right now, it’s not there without massive subsidies.”
While most of the countries have production incentives, plans for transport infrastructure and markets for the products need developing, he added.
The transport of liquid hydrogen was successfully demonstrated in 2022 by Suiso Frontier, the world’s first liquid hydrogen carrier.
The ship used advanced insulation and construction technologies, but risks inherent to new technology have to be mitigated, said Alex Lua, the natural resources risk consulting engineer for Asia at risk adviser WTW.
They include loss of containment, hydrogen flammability, extremely low storage temperatures, collision or grounding and metal embrittlement caused by hydrogen absorption.
Hydrogen will definitely play an important role in the global energy mix in future, but it remains to be seen when it will be available abundantly and cheaply, according to Lin Boqiang, dean of Xiamen University’s China Institute for Studies in Energy Policy.
“But that doesn’t mean there’s no need to develop green hydrogen,” he said. “Current planning and government support are still very important, because you need to build the supply chain so that when the tipping point for hydrogen application arrives, you can react fast enough.”
Electrolyser costs could fall by 80 per cent to US$130 per kilowatt in 2050 from US$650 in 2020 if installed capacity reaches 5,000GW, according to Irena’s projections in 2022. To meet global green hydrogen demand, electrolyser capacity needs to grow to 350GW by 2030 from 0.5GW in 2021.
To achieve global climate ambitions, alkaline electrolyser makers have to achieve a cost target of 42 kilowatt hour (kWh) per kg of hydrogen by 2050, compared with 47 to 66kWh in 2020, according to Irena.
Some start-ups have achieved technology breakthroughs that could accelerate the green hydrogen supply chain and market development, if these can be scaled up successfully.
“Last year, we exhibited our technology at an international trade show in France and it was well received by our international peers,” said Gao Xiaoping, chairman of CM Xiageng. “However, it will take several more years of hard work for us to excel in mass producing our products while ensuring good quality.”
The company has developed an electrolyser membrane that allows hydrogen ions to move through it much more efficiently, reducing electricity consumption by a fifth compared with conventional electrolysers, according to co-founder and CEO Paul Barrett.
Hysata will soon start working with partners on commercial trials. Last month, the start-up closed a US$111 million series B fundraising, which included strategic investors such as BP, Danish wind turbine giant Vestas, South Korean steel firm Posco and Malaysian energy firm Petronas.
Hysata aims to commercially deploy its flexible-capacity electrolysers in the second half of this decade at industrial customers’ facilities, allowing them to generate green hydrogen on site.
“We have designed our system in 5MW building blocks that can be snapped together like Lego blocks to become 100MW branches, which can then be deployed in their tens to reach gigawatt scale,” Barrett said.
Hydro X is another start-up seeking to overcome the logistics challenge. The Israeli firm won the silver award at this year’s Tera smart energy innovation competition hosted by gas supplier Hong Kong and China Gas (Towngas).
CEO Assaf Sayada said the company’s proprietary catalyst enables hydrogen to be stored and transported safely via liquid carriers like plastic or stainless steel tanks.
Hydro X has been exploring with Hong Kong utilities CLP Group and Towngas the feasibility of deploying its technology on transporting the gas to help them with their decarbonisation, he said.
Currently, hydrogen is typically compressed and liquefied by applying extreme temperature and pressure, and transported in specialised tank trucks or tube trailers.
“To produce green hydrogen, you need lots of renewable energy and the logistics costs over long distances are too expensive at US$6 to US$7 a kg,” Sayada said. “Our technology can keep the cost flat at US$1 and completely change the rules of the game.”