Focus vs funding: Australia’s green hydrogen advantage

The Action Exchange’s Georgia McCafferty was one of eight global sustainability leaders invited to analyse the innovations driving global change for Springwise’s Horizon 2030 report. Here, she discusses the '‘Swiss army knife” of climate solutions: green hydrogen.

Producing green hydrogen requires an abundant supply of cheap renewable energy

As the world seeks realistic solutions to transition from carbon-emitting energy sources and production processes, the hype around green hydrogen in Australia has become fever-pitched. Advocates describe green hydrogen as the “Swiss army knife” of climate solutions and tout the nation’s abundant access to water, land and sunshine as competitive advantages that provide a unique opportunity to develop a lucrative hydrogen market domestically and for export.

Behind the hype, the realities of green hydrogen technology, production and transport in Australia are far less rosy. Despite more than half a century’s worth of research and development to produce green hydrogen at scale, the technology to produce, store and transport green hydrogen remains nascent. Economic realities also mean Australia’s green hydrogen promise is more of a pipe dream. 

The cost of green hydrogen production in Australia needs to be around AUD$2 per kilogram to be competitive. With no subsidies like those freely available in the US, the EU and the Middle East, the price gap remains significant—the cheapest costs of producing green hydrogen presently sit at AUD$10-$15 per kilogram. That’s before the prohibitive costs of storage and transport are added.

Proponents argue that Australia’s industry will soon reach a tipping point where demand for both green hydrogen and energy transition investments will see the costs of production fall dramatically. Yet even with Australia’s inherent natural advantages, it will remain hard to compete with larger, better subsidised overseas producers.

However, there are industrial-grade reasons to be bullish. Many experts believe Australia’s pot of green hydrogen gold will be found in less glamorous domestic projects that combine the country’s dominance in natural resources with green hydrogen used at source to transition heavy industry, air fuel and agriculture. 

Chair of Australia’s National Hydrogen Strategy, Dr Alan Finkel, and the national scientific research body, CSIRO, have both said that Australia’s green hydrogen advantage will likely lie in projects that use hydrogen as a chemical alternative to black coal or natural gas to produce green iron, or that aim to produce green jet fuel or fertiliser. 

In the short to medium term, Australia cannot produce green hydrogen at a scale and cost that will enable it to compete with countries that apply subsidies like the US Inflation Reduction Act. But with focused investment in a select portfolio that plays to the nation’s real strengths, Australia does have a chance to lay the foundations for a strong industry that can grow rapidly once technology and economics catch up with expectations.