The mining industry can't expect to get green hydrogen delivered in handy trucks or cylinders to replace diesel.
In an already dangerous sector, mines will need to become chemical plants if they want to use the alternative fuel because it will need to be produced and used on site, new research explains.
"It's a very important part of decarbonising this industry, but it does have challenges," consultant Andrew Wilson told AAP.
The Embracing the Green Hydrogen Transformation in Mining report prepared by the global consultancy firm dss+ takes a practical view.
"We're talking about building a chemical plant that has renewable energy at scale, produces hydrogen and stores it - that's a completely different business to being an iron ore or mining company," Mr Wilson said.
The federal government has set a target for Australia to be a major player in green, or renewable, hydrogen by 2030, along with a push for electrification to slash fossil fuel use.
Mr Wilson says there is "tremendous potential" for green hydrogen as governments become wary of carbon emissions in global supply chains.
"The chemical industry has been dealing with hydrogen for 100 years. It's a very difficult material to work with," he said.
"It's a big step for the mining industry to actually think about how to manufacture and store this product."
Customers in world markets are going to be under the same growing pressure to favour low-emission sources of critical minerals and iron ore, and be able to prove their supply chain is low emitting and avoids modern slavery.
In mining operations, the adoption of green hydrogen can reduce greenhouse gas emissions by replacing diesel fuel in haulage trucks, which can contribute up to 80 per cent of a mine's emissions footprint.
Other benefits include the removal of diesel particulates and the reduction of ventilation load requirements in underground mining, the dss+ report says.
BHP is partnering with leading steel manufacturers to investigate hydrogen use in steelmaking, Fortescue Metals Group is driving the development of green hydrogen production, and Anglo American plans to convert trucks to green hydrogen across numerous operations.
But the dss+ report also warns the introduction of large quantities of hydrogen may increase the risk of fires, explosions and arc flash - a type of electrical explosion.
A thorough review of operational risk management, asset integrity and reliability programs is recommended, with risk reduction dependent on effective design, material selection and engineering controls.
Many are touting Australia's potential to be an enormous green hydrogen market, despite having to compete with hefty subsidies in the United States.
A new Climate Council report has singled out Queensland as a leader, as the world looks for sustainable products and materials.
"Queensland is primed to attract the global investment dollars as investors prioritise clean industries over polluting ones, and our trading partners race to achieve net zero emissions as soon as possible," economist Nicki Hutley says.
Trials and investment to manufacture renewable hydrogen are already underway in Gladstone and Townsville, which could not only decarbonise heavy industries such as aluminium but also produce green ammonia and renewable hydrogen export opportunities if scaled up.
"As continuing coal mining and gas extraction threatens efforts to limit harmful climate change, support for sectors like non-fossil fuel mining and clean energy will be essential to protecting the economy and workers," Ms Hutley said.
But David Scaysbrook, co-founder of energy investment house Quinbrook, warns it will be very difficult for Australia to compete with the US on hydrogen exports to Asia or Europe.
"Rather than call on the federal government to go toe-to-toe with the Biden administration on matching subsidies, which I think is ridiculous, we should be looking more opportunistically at the supply chain," he said.
"Critical minerals really are at the heart of that."
We should also be looking at creating alternative renewable energy supply chains to China, he adds.
Meanwhile, a $2 billion investment by Japan this week to commercialise brown hydrogen made from Latrobe Valley coal in Victoria is great news for regional jobs, according to union boss Trevor Williams.
"The pilot project has demonstrated that carbon-neutral hydrogen can be economically generated from Latrobe Valley coal and transported to Japan," he says.
Mr Williams says the hydrogen plant could open a pathway for producing other carbon-neutral products including urea, ammonia and diesel exhaust fluid Adblue, supporting Australia's self-sufficiency in these products.
But dss+ director Mr Wilson says for mining it has to be green hydrogen even though it may be more technically challenging.
"If you're using blue or grey hydrogen, or whatever colour you choose, you really are kidding yourself in terms of your carbon reduction footprint," he said.
"You can't be half pregnant."
If businesses don't do it properly, they'll be caught out on emissions compared with competitors in the long run, Mr Wilson warned.
Australian Associated Press