Out-Law Analysis 3 min. read

Hydrogen: Australian-German project presents business opportunities

Plans to explore a new hydrogen supply chain between Australia and Germany offers a unique opportunity for developers, funders, state and federal governments, renewable energy producers, contractors and other businesses in the power industry to expand internationally and invest in supporting infrastructure.

The Australian and German governments announced in August that they will collaborate on a joint feasibility study looking into the establishment of a hydrogen supply chain between the two countries. Australia and Germany are natural partners, with Australia well positioned to become a world leading supplier of hydrogen from renewable energy sources, while Germany is both a high demand importer and a supplier of advanced technology and scientific expertise. The feasibility study is expected to begin before the end of 2020 and last for approximately two years.

Both governments are on record in seeing the potential of renewable hydrogen, as a clean energy source, to lower carbon emissions, with measures aimed at harnessing the gas' potential set out in the respective national hydrogen strategies published in Australia and Germany.

The specifics of the joint feasibility study

The joint feasibility study being undertaken by the Australian and German governments will cover production, storage, transport and the use of renewable hydrogen.

Specifically, the feasibility study will focus on:

  • comparing current technology and research readiness levels along the whole supply chain. Supply chain infrastructure includes powerlines, pipelines, storage tanks, refuelling stations, ports, roads and railway lines and any other facilities needed for hydrogen supply;
  • the exchange of technologies, knowledge and experiences between both German and Australian partners;
  • assessment of Australian potential to produce hydrogen and hydrogen-based energy carriers from renewables for export to Germany and associated markets;
  • identification of economic, technological and regulatory requirements for the transport of and trade in hydrogen and hydrogen-based energy carriers produced from renewables;
  • determination of demand and end use for hydrogen and hydrogen-based energy carriers produced from renewables in relevant industries in Germany and associated markets;
  • identification of economic, scientific, technological, regulatory and logistical barriers of the feasibility of the supply chain;
  • identification of business models for hydrogen and hydrogen-based energy carriers produced from renewables.

The governments have also said that the feasibility study will also assess current technology and research and pinpoint existing barriers for the development of a hydrogen industry.

The Australian government is currently inviting expressions of interest for an Australian research and industry consortium to partner with Germany industry on the study.

An evolving market

The national hydrogen strategies developed in Australia and Germany both point to significant development in the market for hydrogen-based renewable energy in the coming years, with associated opportunities for businesses.

Australia's federal government has said it wants to be a "world leader" in renewable hydrogen production by 2030. From 2025 onwards, the strategy focuses on large-scale market activation, which entails: identifying signals that large-scale hydrogen markets are emerging, building Australian hydrogen supply chains and large-scale export industry infrastructure, and building and maintaining robust sustainable export and domestic markets and supply chains.

Australia's hydrogen strategy is adaptive and focuses on removing market barriers to efficiently build supply and demand and to accelerate the country's global cost-competitiveness. The joint feasibility study with Germany zeroes in on building that demand and will bolster the export of hydrogen renewable energy to Germany by ship – a cheaper alternative to more expensive submarine cable networks.

Through international engagement, Australia will work together with other countries to develop a scheme to track and certify the origins of internationally traded clean hydrogen, and to shape international markets to open new frontiers for trade. To this end, it adopted a suite of eight international standards to enable the continued development and implementation of Australia's growing hydrogen sector.

In Germany, the ambitions are similar. The national hydrogen strategy is centred on achieving two goals: raising the demand for hydrogen in the industry, the private sector, and with individual consumers, and to significantly increase hydrogen production.

The strategy paper provides for:

  • inclusion of hydrogen in national emission trading;
  • hydrogen rates for energy intensive industries such as steel or chemistry;
  • inclusion of green hydrogen in the transport sector's greenhouse gas quota, and introduction of a hydrogen quota for the aviation sector in the long term;
  • support of green hydrogen generation capacities by "carbon contracts for difference" steered by carbon dioxide pricing;
  • lower costs for green hydrogen production in the context of the renewable energy levy; and
  • green hydrogen production at sea.

Germany has committed to becoming greenhouse gas neutral by 2050 and is aiming to cut its emissions by at least 55% by 2030. 

Co-written by Sarah Chan, graduate lawyer at Pinsent Masons.

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