The Hunter is in a race to cash in on an emerging global hydrogen market that will be worth an estimated $1.4 trillion by 2050.
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Goldman Sachs estimates that, if realised, the region's hydrogen exports could eventually replicate if not exceed the value of existing coal exports.
The investment banking company also estimates that green hydrogen - produced with renewable energy - will reach cost parity with hydrogen produced from gas (blue hydrogen) in some regions by 2025. This would bring the cost of producing a kilogram of green hydrogen to $US1.50.
Not far behind is hydrogen cost parity with diesel in long-haul heavy road transport, which could be reached as early as 2027.
It's good news for the Hunter, which is leveraging hydrogen to transform the region's economy into a clean energy powerhouse.
The federal government's energy roadmap lays out a plan for Australia to become a top-three exporter of hydrogen to Asian markets by 2030.
The plan aligns with a 2021 report, Reimagining the Japan Relationship, which highlighted opportunities for Hunter energy exports, particularly hydrogen.
"Australia supplies two thirds of Japan's key industrial materials and close to one third of its entire energy needs. The structure of this trade will have to change fundamentally as Australia and Japan decarbonise their economies," the report produced by the Australia-Japan Research Institute and the Australian National University said.
But the clock is ticking on the potential for hydrogen to be a pillar of the Hunter's clean energy future.
We need to move quickly and we need to move early otherwise we are going to miss out on the race to build the hydrogen economy.
- NSW Treasurer Matt Kean
"We need to move quickly and we need to move early otherwise we are going to miss out on the race to build the hydrogen economy," NSW Treasurer Matt Kean told the Newcastle Herald.
"We know Japan and South Korea, two of our main coal export markets, have said hydrogen is going to be the fuel that will power their economies in the future. We need to make sure we build the renewable energy infrastructure that is going to power the production of hydrogen."
The state government committed $70 million in March 2020 towards the establishment of green hydrogen hubs in the Hunter and Illawarra as part of the Net Zero Industry and Innovation Program.
In addition, the federal government has declared the Hunter as one of seven national hydrogen hubs designed to supercharge the development of a multibillion-dollar export industry.
The region was selected as the only NSW hub site due to the high level of existing interest from industry stakeholders, its skills and research capabilities, infrastructure and resources.
"Other regions may say we have land as well but in this region we also have expertise at the CSIRO energy centre, the University of Newcastle and heavy industry. We have a number of energy sinks, such as Tomago Aluminium," University of Newcastle energy researcher Professor Behdad Moghtaderi said.
"These advantages combined with very good infrastructure for distributing electricity makes the Hunter a unique region to deploy energy from hydrogen."
The University is also leading the Hunter Hydrogen Taskforce, which developed the Hunter Hydrogen Roadmap on behalf of the Committee for the Hunter. The roadmap translates state and national ambitions for hydrogen into a targeted set of actions in the Hunter to accelerate renewable hydrogen generation, storage and use.
A number of industry groups led by advisory firm and business accelerator Energy Estate are also working to transform the Hunter Region into a $2 billion 'hydrogen valley'.
The Hunter Hydrogen Network (H2N) project - a large-scale hydrogen production, transportation and export project - seeks to enable the development of the hydrogen economy in the Hunter Valley in partnership with hydrogen users and exporters.
The first stage of the project aims to produce green hydrogen and associated green feedstock for mining, vehicles and other industrial uses in the Upper Hunter.
The second phase will assess the transportation of hydrogen through a dedicated hydrogen pipeline to Newcastle, supplying future local users and exporters, including producers of green ammonia for export, green feedstock into the chemical sector, green fuels and hydrogen turbines to provide green dispatchable energy solutions.
Orica and Origin Energy announced on Monday that they would conduct a formal investigation into the potential for a hydrogen production plant on Kooragang Island driven by renewably generated electricity.
Producing green hydrogen from a 55-megawatt electrolyser would reduce the Kooragang plant's greenhouse gas emissions and help it achieve its ambition of reducing its emissions by 40 per cent by 2030, and to reach "net zero" by 2050.
It follows an announcement late last year that AGL and Fortescue Future Industries would conduct a feasibility study to manufacture green hydrogen at the Liddell Power station site.
The LAVO battery, which is about the size of a large fridge, can be hooked up to an existing array of solar panels. Inside electrolysers use that power to convert water into hydrogen and oxygen.
While enthusiasm about hydrogen's economic potential is at an all-time high in Australia, elsewhere debate is intensifying about its role in shaping energy transitions.
"I have a colleague who calls hydrogen the champagne of the energy system," Timon Wehnert, head of the Future Energy and Industry Systems division at Germany's Wuppertal Institute for Climate, Environment and Energy, said.
"I think hydrogen is absolutely a necessity in a future energy system for certain applications like carbon neutral steel making but you need to make a very careful assessment of which parts of industry, which part of energy supply, you really plan to fuel with hydrogen because it is fairly expensive and producing it is energy intensive and in a way inefficient."
Unlike Australia, which sees massive export markets, Germany is weighing up where it will source its hydrogen from.
"Will we produce it or import it from other European countries? What kind of infrastructure do we need in terms of ports or pipelines? That is the debate which is very strong in Germany because it's clearly beyond an individual company's decision," Dr Wehnert said.
"It needs to be a joint effort supported by the government and a roadmap that shows the levels of hydrogen we expect to be using. Based on that, we need to build infrastructure so that companies can make their own investments."
The federal government's adviser on the research, development, transition, and application of low emissions technology, Alan Finkel AO, believes that Australia's ambition around hydrogen will need to be tempered with a large dose of patience.
"What we are seeing, especially in Australia and around the world, is enormous excitement surrounding hydrogen. A lot of it is focused on, 'let's just make a lot of hydrogen and make it more cheaply'.
"That's a good thing but the demand side needs even more attention because it takes a long time to convert the international shipping industry or trucking industry or steel industry into big users of hydrogen and other chemicals made from hydrogen.
"It's but the demand side intrinsically takes longer to develop than the supply side. We need to balance our investments, be patient. It will take longer than the optimists are hoping, but it'll be much faster than the pessimist are predicting. It will be one of those things ... it is feeling slow as it's happening but in 2050 when we look back, we'll say, 'Gosh, that was fast back in the 2020s'."
Andrew Forrest's green energy arm Fortescue Future Industries has long-term plans to produce 50 million tonnes of renewable clean hydrogen a year, equivalent to the output of some of the world's largest oil and gas companies.
Australia's biggest hydrogen developers have called on the federal government to create a $19bn Net Zero fund, aimed at slashing emissions and speeding up the fuel's rollout to the steel and heavy transport industries and in the nation's gas sector by 2030.
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