Hydrogen is the most abundant element in the world, number one in the periodic table for those who still remember our chemistry classes. For a long time, hydrogen has been touted as the ‘fuel of the future’ but nothing has really happened. What is different now? Momentum: investment in real projects, the Paris Agreement, government policies, and a broader recognition that not a single solution will solve our challenges in energy and transport markets – we need technology to help us.
We are now, more than ever, seeing strong interest in hydrogen globally. Hydrogen has an array of potential applications, including power generation, zero-emission fuel cell transport (cars, buses, trucks, trains, ships, forklifts, aerospace), energy storage, and industrial uses.
Interest is coming from governments who want to be educated about the scale and nature of opportunities, as well as the policy signals that will create a vibrant investment environment – and from private sector players. They are investing heavily to diversify their businesses, become part of the disruptions in energy and transport markets, and help meeting climate targets. All interested parties see hydrogen’s versatility and storage potential over longer periods as its main advantages as an energy carrier. This means reliability of supply. A more holistic, whole-supply chain focus means governments and industry are also approaching hydrogen as a significant mechanism to boost economic development, investment and job creation.
At a global level, many of our clients are showing a growing interest in hydrogen. The Hydrogen Council, a global initiative of nearly 40 leading energy, transport and industry companies, forecasts a US$2.5 trillion hydrogen market by 2050, with 30 million jobs created and 6Gt of annual CO2 abatement.
Japan has been leading the charge towards a hydrogen economy with support from both government and industry. Japan’s Basic Hydrogen Strategy released just after Christmas 2017, reveals the top-down thinking around creating demand and supply for hydrogen, simultaneously. It is a good example of how to unpack spill-over benefits in innovation and industry from a relatively fragile energy security position backed by a commitment to reduce emissions.
The International Energy Agency has also identified hydrogen as instrumental in diversifying the global energy mix and reducing emissions. Shell predicts hydrogen will be a material energy carrier and important to industry and the transport sector after 2040. By the end of the 21st century, it is envisaged that hydrogen could supply a quarter of all transport energy demand.
Clearly, these things only become real when they are followed by investment. We are seeing action on this front: China wants to transform Wuhan into a ‘Hydrogen City’ by 2025 with up to five world leading hydrogen enterprises, 100 hydrogen-fuelling stations, and annual production of hydrogen fuel cells exceeding $20 billion. Meanwhile, Shell and ITM Power are building the world’s largest 10MW hydrogen electrolysis plant at Rhineland refinery in Germany, where hydrogen will be used for the processing and upgrading of products. They are also building a new hydrogen refuelling station at one of the UK’s busiest service stations, with hydrogen being produced on-site and co-existing with petrol and diesel pumps.
Leeds, in England’s midlands, is in the process of exploring the conversion of the existing natural gas network to 100 percent hydrogen with minimal disruption to consumers. Fuel Cells and Hydrogen Joint Undertaking is a public-private partnership supporting initiatives in advancing fuel cells and hydrogen across Europe, with over $2 billion in funding earmarked for projects to 2020. Hyundai is the leader in South Korea with its Nexo FCV’s driving range of 800km.
The car and fuel cell technology was showcased at the recent Winter Olympics in PyeongChang. Germany is procuring 14 fuel cell hydrogen Coradia iLint trains from Alstom. They have a range of up to 1,000 kilometres, and can reach a maximum speed of up to 140 km/h and will replace diesel trains, meaning no emissions. And in the US, hydrogen truck startup Nikola Motor is planning to build a $1.3 billion factory in Phoenix whilst Amazon and Walmart are introducing fleets of hydrogen fuelled forklifts across their networks of warehouses.
KPMG’s Automotive Executive Survey 2018 showed the car industry slightly favouring FCVs over battery electric vehicles (EVs). FCVs offer the convenience of longer range, quicker charging and, for the incumbent players, a similar supply chain. We believe both EVs and FCVs will prevail and complement each other.
From a technology perspective, most solutions are already available. The focus is now shifting to the development of hydrogen infrastructure and improvement of manufacturing capabilities at commercial scale, to achieve cost-competitiveness and mass market acceptance. To realise this promising vision, it is paramount that investors, industry and governments intensify and coordinate their efforts.
It is early days in this long exciting hydrogen journey. We can only be part of it if we have a ticket. This race is important for Australia as we seek to export our energy exuberance on a competitive and sustainable footing.