5 min read

How Australia Plans to Use Hydrogen to Decarbonize Its Industries and Exports

How Australia Plans to Use Hydrogen to Decarbonize Its Industries and Exports

Introduction

Australia’s commitment to decarbonizing its economy is firmly rooted in leveraging hydrogen, particularly green hydrogen, as a key enabler for reducing carbon emissions across a wide range of industries. The 2024 Australian National Hydrogen Strategy outlines an ambitious and multifaceted approach to decarbonize domestic industries and establish Australia as a global hydrogen export powerhouse. This technical report examines how hydrogen will be used to decarbonize key sectors, with a focus on renewable hydrogen, and assesses the government's plans for creating a sustainable hydrogen export market.

Decarbonizing Domestic Industries

Australia's domestic decarbonization strategy is heavily focused on renewable, or "green," hydrogen produced through electrolysis powered by renewable energy sources such as solar and wind. Green hydrogen is central to the country’s plans for lowering emissions in industries that are hard to abate, including metals production, ammonia synthesis, and heavy manufacturing.

1. Green Hydrogen as a Central Solution

The cornerstone of Australia's hydrogen strategy is the production of green hydrogen. This involves using electrolysis to split water into hydrogen and oxygen, with the energy supplied entirely from renewable sources. With vast renewable resources, Australia is well-positioned to produce green hydrogen at competitive costs, contributing to decarbonization in both domestic industries and export markets.

Hydrogen is expected to play a pivotal role in transitioning Australia’s energy-intensive sectors away from fossil fuels. The plan prioritizes green hydrogen in three key industrial sectors: iron and alumina production, and ammonia synthesis for fertilizers and chemicals.

2. Decarbonizing the Iron and Steel Industry

As the world's largest iron ore producer, Australia is uniquely positioned to decarbonize its steel industry using green hydrogen. In conventional steelmaking, iron ore is typically reduced using carbon-intensive coke and coal. By switching to hydrogen as a reducing agent, Australia aims to produce low-emission green iron, a process that releases water vapor instead of CO₂.

This green iron strategy aligns with the broader National Interest Framework, which promotes low-carbon manufacturing and aims to position Australia as a global leader in sustainable metal production. The transition to green iron production not only helps Australia meet its domestic emissions targets but also provides a competitive advantage in a global market increasingly demanding low-emission steel products.

3. Decarbonizing Alumina Refining

Hydrogen is also a key solution for decarbonizing alumina refining, one of Australia's most energy-intensive industries. Alumina production typically relies on natural gas for calcination, the process of heating and drying bauxite to extract alumina. Replacing natural gas with hydrogen for calcination can significantly lower emissions from this process.

In addition to hydrogen calcination, the strategy also explores the potential for electrification of the alumina refining process, which could complement hydrogen's role in reducing emissions. These measures are critical for achieving Australia's goal of creating a zero-emission pathway for its alumina refining sector, which has substantial potential to become a global leader in green metals.

4. Decarbonizing the Ammonia Industry

Ammonia production is another target for decarbonization in Australia. Currently, ammonia is produced by the Haber-Bosch process, which relies on natural gas (methane) as both a feedstock and a fuel source, making it highly carbon-intensive. The Australian National Hydrogen Strategy seeks to replace natural gas with green hydrogen in ammonia production, enabling the synthesis of green ammonia with zero carbon emissions.

Green ammonia is not only essential for decarbonizing fertilizers, which are vital for Australia's agricultural industry, but it also holds potential as a clean energy carrier. Green ammonia can be used directly in power generation or as a hydrogen carrier for easier storage and transport, thus playing a crucial role in Australia's broader energy transition.

Establishing a Green Hydrogen Export Market

Australia’s strategy also emphasizes the establishment of a competitive hydrogen export market. With its vast renewable resources and geographical proximity to key hydrogen-importing countries, particularly in Asia, Australia aims to become a global green hydrogen powerhouse. The export-focused part of the strategy is centered around both direct hydrogen exports and exporting hydrogen derivatives such as green ammonia.

1. Direct Hydrogen Exports

The direct export of hydrogen, either in compressed or liquefied form, presents logistical and technological challenges, particularly due to hydrogen’s low energy density and the difficulty of storing and transporting it efficiently. Despite these challenges, the strategy acknowledges that certain markets, particularly in Asia and Europe, will have high demand for direct hydrogen imports, especially as countries strive to meet their carbon neutrality targets.

Investment in infrastructure such as hydrogen liquefaction facilities and export terminals is crucial to making direct hydrogen exports viable. Furthermore, collaboration with international partners to develop hydrogen transportation technology and infrastructure is necessary to ensure the economic and technical feasibility of direct hydrogen exports.

2. Exporting Green Ammonia

In the near term, exporting green ammonia may offer a more practical solution for hydrogen transport. Ammonia has a higher energy density than hydrogen and can leverage existing ammonia infrastructure for storage and shipping. Once transported to the destination market, green ammonia can either be used directly in various industrial applications (such as fertilizers or chemicals) or cracked back into hydrogen for energy use.

This approach allows Australia to export hydrogen in a cost-effective form while ensuring that importing countries can still utilize the hydrogen as needed. Establishing green ammonia as a hydrogen carrier offers Australia a competitive edge in the global hydrogen market, while also providing a viable pathway to scale up hydrogen production and exports.

3. Targeting Key Markets

Australia's hydrogen export strategy focuses on building strong international partnerships with key trading partners, especially in Asia (Japan, South Korea, and China) and Europe. These regions have ambitious decarbonization goals and are expected to become major importers of hydrogen to fuel their energy transitions.

Australia’s proximity to Asian markets and its robust trade relationships provide a natural advantage in securing hydrogen supply agreements. The strategy emphasizes the importance of long-term international collaborations to ensure market access and the development of a stable hydrogen export economy.

Government Support and Initiatives

To accelerate the adoption of hydrogen across industries and support the growth of a hydrogen export market, the Australian government has introduced several supportive policies and incentives.

1. Hydrogen Production Incentives

The government is rolling out a Hydrogen Production Tax Incentive to reduce the cost of green hydrogen production and make it competitive with fossil fuel alternatives. Additionally, the Hydrogen Headstart Program aims to support early movers in the green hydrogen space by providing financial backing for large-scale projects.

2. Hydrogen Hubs and Industrial Precincts

Hydrogen hubs, which co-locate hydrogen production and consumption facilities, are a central feature of the government’s strategy to reduce costs and stimulate innovation. These hubs will be integrated into broader industrial precincts, promoting synergies between industries and accelerating the adoption of hydrogen technologies.

3. Infrastructure Development

The success of hydrogen as a decarbonization tool depends on the development of supporting infrastructure, including expanded electricity grids, hydrogen pipelines, and water access for electrolysis. Investment in transport infrastructure, such as hydrogen fueling stations and ports, is also a priority to support both domestic consumption and exports.

4. Guarantee of Origin Scheme

The Guarantee of Origin Scheme, initially focused on green hydrogen, is being expanded to cover green metals and low-carbon liquid fuels. This scheme is critical for ensuring that Australia’s green products, such as hydrogen, green steel, and green ammonia, meet international sustainability standards, enhancing market access and attracting investment.

5. International Collaboration

International partnerships in research, development, and technology transfer are key pillars of Australia’s strategy. By collaborating with global hydrogen leaders, Australia aims to shape global market rules, develop advanced hydrogen technologies, and facilitate the transfer of best practices to accelerate hydrogen adoption.

Conclusion

Australia’s 2024 National Hydrogen Strategy outlines an ambitious and comprehensive approach to leveraging green hydrogen for decarbonizing its industries and becoming a leading exporter of hydrogen and hydrogen derivatives. The focus on green hydrogen production from abundant renewable resources, coupled with strategic government incentives and international partnerships, positions Australia as a global leader in the hydrogen economy.

The success of this plan will depend on effective implementation of policies, sufficient investment in infrastructure, and overcoming technical challenges associated with hydrogen production and transport. If successful, Australia’s hydrogen strategy could significantly contribute to the global effort to combat climate change while providing a blueprint for other nations pursuing hydrogen-based decarbonization.