There is a race under way to decarbonise the global economy. The prize is both a healthy planet and the economic rewards of new, clean, green industries. Australia is well placed to be a winner, with abundant renewable energy resources - sun and wind - and some of the fastest renewable energy installation rates on the planet. As author and academic Ross Garnaut recently observed, "Australia has the potential to be an economic superpower of the future post-carbon world".
We have the potential, but will we achieve it? Unfortunately we're being held back by the federal government's fixation on preserving the highly polluting coal industry.
The latest chapter in this long story will play out at the COAG Energy Council meeting this Friday. The federal government will ask states and territories to endorse a National Hydrogen Strategy. This is exciting, because hydrogen can be a clean energy source, and Australia has great opportunities to lead the way in this emerging industry. Unfortunately, but unsurprisingly, the federal government wants to create hydrogen in Australia using fossil fuels, in particular, by using dirty coal. Not only would this increase Australia's greenhouse gas emissions, it would miss the opportunity for a world-leading green hydrogen industry, powered by our rapidly growing renewable energy industry.
Hydrogen itself is a miraculously clean fuel - it only releases water into the atmosphere when combusted. But hydrogen is created by using a lot of electricity, and that electricity can come from dirty sources, like coal, or clean sources, like wind generation. For those of us concerned with addressing climate change, and who believe our future economic prosperity lies with green industries, the approach we should take is obvious. If Australia invests in a hydrogen industry, it should be a green hydrogen industry, only producing hydrogen using electricity from renewable sources.
In the future, green hydrogen produced in Australia is likely to be in high demand. The world is aiming for zero emissions, compelled by climate change risks and by communities demanding action. The countries likely to import Australian hydrogen - such as Japan and Korea - will be demanding zero emissions hydrogen. Producing emissions-intensive hydrogen from fossil fuels misses the opportunity to meet the demand and exposes our industries to disadvantages in the likely event of future carbon pricing. In a warming climate, coal technology is a poor investment.
Green hydrogen produced in Australia will provide benefits beyond the economic return. A green hydrogen industry will mean more investment in renewable electricity generation. This will lower the cost of renewables even further. And the additional generation capacity also means greater reliability of electricity supply domestically. Renewables are high achievers in the electricity grid, ensuring reliability and meeting peak demands.
A green hydrogen industry offers opportunities for zero emissions manufacturing in Australia. Rather than exporting products like iron ore to China, in the future we could have our own zero emissions steel manufacturing, using hydrogen produced by wind and solar. This is one example of green hydrogen-based industries that could reduce emissions and bring local jobs and economic opportunities. Places like South Australia and Tasmania are already booming with renewables generation and could take advantage of green hydrogen industries.
Australia's energy ministers have a big decision to make and the stakes are high.
Defenders of hydrogen made using coal will argue that the carbon emissions from the process can be reduced using 'carbon capture and storage' or CCS. The risk of course is that CCS will fail to deliver. The Australian government has spent $1.3billion on CCS research since 2003 and it has failed to live up to the hype.
While carbon dioxide emissions from hydrogen generation are easier to capture than emissions from power stations, getting CCS to work at desired capture rates of at least 90 per cent is likely to be challenging and expensive.
In any case, even CCS capturing 90 per cent of emissions at the production plant still leaves 10 per cent of emissions escaping into the atmosphere. Then there are the significant 'fugitive' emissions released in the extraction, transport, processing, and mining of the coal. Lastly, consider also that the 'captured' carbon needs to be stored for ever; any leakage renders the whole exercise futile. The smartest option is to not create the emissions in the first place.
Hydrogen created using fossil fuels is sometimes called 'clean hydrogen', but that's greenwash. Hydrogen made using fossil fuels with yet-to-be invented CCS is a back-door approach to artificially extending the life of fossil fuels. The production of hydrogen using coal or gas is likely to be highly costly. It's not 'clean hydrogen', it's 'brown hydrogen'.
Australia's energy ministers have a big decision to make and the stakes are high. The smart approach is to ensure it is green hydrogen, produced from renewable electricity. This means zero emissions for us, a new export industry, the opportunity to grow green manufacturing industries, and increased energy reliability and affordability. The other path - the 'fossil-fuels-as-usual path' - seeks to lock in dirty coal, and it will only lead to more pollution, higher costs, and missed opportunities.
- Shane Rattenbury is the ACT Minister for Climate Change and Sustainability