National strategies released by governments globally, including in Australia, Japan and Germany as well as the European Union, offer roadmaps for the development and deployment of a hydrogen industry at scale. Roadmaps are useful because they can help to mobilise resources, and help create certainty about governments’ commitment to particular technology choices. They can also help create a market niche within which hydrogen technologies are able to develop even when they are uncompetitive relative to more emissions intensive technologies (McDowall, 2012).

The focus of many national hydrogen strategies is on domestic uses of hydrogen (in the transport, industrial or power sectors). In contrast, Australia’s National Hydrogen Strategy is explicitly international in scope. It specifically mentions the development of Japan’s National Hydrogen Strategy, and identifies hydrogen exports as an important economic opportunity. A key policy approach to realise Australia’s export potential is the creation of hydrogen hubs and to use policy to help early stage development. Large-scale exports to trading partners in the Asia-Pacific region is identified as an important indicator
of success.

Companies are also laying the ground work for the development of supply chains between Australia, Germany and Japan. Japan’s National Hydrogen Strategy envisages the development of a supply chain for hydrogen and associated vectors within this decade. A number of demonstration projects are already under development and, under the leadership of National Energy Resources Australia (NERA), a series of hydrogen technology clusters will support hydrogen supply chain development under the Hydrogen Technology Cluster Australia (H2TCA) initiative. In the case of Germany and Australia, the German Ministry for Academy and the Australian Department of Foreign Affairs and Trade have combined to commission a feasibility study (‘HySupply’), looking at the costs and technical challenges associated with establishing a supply chain between the two countries.

2020 Measures of success for being a major global player

Australian Hydrogen Technology Cluster Network

Hydrogen Technology Cluster Australia Technology Hubs

These are welcome developments. With the capacity for producing huge amounts of low-cost renewable energy, Australia is well-placed to become a powerhouse in supplying low carbon hydrogen globally. And the three countries have a shared interest in ensuring that low emissions hydrogen industries develop at the scale and pace required to help reach net zero emissions globally by the middle of the century. This will be crucial to improvements in the capital costs of electrolysers.

Shared Challenges in the Low Carbon Hydrogen Transition

The interdependence of policy development within the three countries highlights some important shared challenges around embedded emissions, and industry scale up. 

Shared Challenge 1: Low Carbon

The hydrogen strategies released by Australia, Germany and Japan envision a long-term goal of deploying hydrogen and associated vectors at scale in support of decarbonisation, and in support of the widely adopted goal of reaching net zero emissions by mid-century. The emission intensity associated with the production of different types of hydrogen is recognised as varying significantly (Longden et al, 2021). The figure below presents a comparison of the emission intensity of hydrogen produced from coal and gas with and without carbon capture-and-storage, with the direct emissions from the combustion of the fossil fuels for an equivalent amount of energy. The salient fact is that hydrogen from fossil fuels is generally associated with significant amounts of residual greenhouse gas emissions, even at high rates of carbon capture. Only hydrogen produced from gas with a high capture rate is below the European CertifHy Guarantee of Origin scheme low carbon threshold. At present emission intensive technologies dominate the production of hydrogen globally, centred on steam methane reforming (SMR). 

Emission intensity of hydrogen production processes and different fossil fuels.

There are different approaches in national strategies towards the emissions from hydrogen production. Some indicate that in the long run it is crucial that end use demand for hydrogen is supplied using low carbon hydrogen. Others, however, imply that it may be beneficial to enable scale up of hydrogen use on the demand side by allowing for cheaper but more emission intensive technologies, such as SMR. In an alternative view it makes more sense to invest in zero-carbon hydrogen via electrolysis powered by renewable energy from the start as this will minimise emissions and help to drive down costs of electrolysis. 

Governing these different approaches is crucial to a successful deployment of low carbon hydrogen. In an analysis of a supply chain between Australia and Japan using hydrogen, for example, we found that there is no benefit on a supply chain basis associated with Australia exporting ammonia to Japan if this is done using business as usual SMR technology to produce hydrogen, matched with the Haber-Bosch process to produce ammonia (Stocks et al, 2020).

Thus, it is important to govern the emissions embedded in hydrogen and ammonia. One approach is to enable consumers to differentiate between the level of emissions embedded in different hydrogen products. This does not solve the problem of renewable ammonia being costlier, but it does allow consumers to make informed purchasing choices. 

Schemes under development in each of these countries recognise the utility of enabling end users to choose between hydrogen with different levels of embedded emissions. The approaches that are being developed differ, which raises the question of mutual recognition or the harmonisation of hydrogen certification. 

The need for harmonisation is a common issue in the area of standards and certification (White et.al. 2021). Energy efficiency standards are typically domestic in nature, for example, and not readily recognised internationally. Given that the expectation is that there will be substantial trade and cross-border investment in hydrogen, and the leading roles Australia, Germany and Japan play in the developing global hydrogen economy, there is an important opportunity to coordinate standards and certification in order to facilitate trade between different jurisdictions as seamlessly as possible.

Shared Challenge 2: Scaling Up

A crucial driver of the declines in unit costs that we have seen, and of low carbon technologies such as solar photovoltaics, wind power, and batteries, is the deployment of these technologies at scale. Recognising this, Australia, Germany (and the European Commission) and Japan have released long-term targets and timetables designed to provide greater certainty to businesses domestically so that it makes sense for them to invest in hydrogen production capacity. In addition, Australia and Germany are undertaking a feasibility study to assess the costs and technology constraints that may exist in developing a supply chain between the two countries, and Australia and Japan have a number of demonstration projects under development, which can be used to assess costs and technology constraints prior to commercialisation. 

Each of these efforts are testing techno-economic pathways to scaling up hydrogen and associated vectors. They will produce important knowledge about technical feasibility, and environmental and economic costs. Australia, Germany, and Japan have an interest in ensuring the lessons of this work is shared. Beyond this, the three countries also have an interest in sharing information about technical, economic, and environmental progress and challenges in potential end-use sectors identified in their national strategies.