“Hydrogen offers great potential for both Australia and Japan to confront the challenges posed by the energy transition, an opportunity for Japan to achieve material decarbonisation of its economy and an opportunity for Australia to continue to derive value from its rich and diverse resource endowment as a major energy exporter.”
Those were the words spoken Woodside Energy CEO Peter Coleman earlier today at the 57th Australia Japan Business Co-operation Committee (AJBCC) conference in Osaka, Japan.
The AJBCC’s objective is to raise the profile of Japan, promote and increase business opportunities and strengthen ties between Australia and Japan for the benefit of Members as well as the broader community.
Coleman gave a presentation as part of the event’s Resources and Energy, Renewables and Fossil Energy, SDGs and ‘3E+S’ session.
The session highlighted the challenges faced by both Australia and Japan in an era which is increasingly focusing on sustainable development goals (SDG); environmental, social and governance (ESG); and progress on reducing carbon emissions.
“Hydrogen is an energy carrier that has no carbon emissions when it is used,” Coleman said. “That’s why users love it so much. That’s why it’s sometimes referred to as the Holy Grail.”
“As you can see in the graphic (pictured above), we think there is a role for both blue hydrogen and green hydrogen.”
“Blue hydrogen is produced through steam methane reforming of natural gas, with the emissions managed at that point. This is proven technology and readily financeable. Finance will be extremely important as we talk about moving projects to scale.”
“Green hydrogen is the ultimate Holy Grail, produced by electrolysis of water, using electricity from renewable sources. Hydrogen can be used in a wide variety of applications including power generation, transportation and industrial processes, making it one of the most convenient of energy products.”
“Japan is well aware of this and has been making impressive progress in its efforts to build a hydrogen economy.”
As a major supplier of energy to Japan, Coleman said Woodside Energy has been doing a lot of work on how it can support Japan’s hydrogen ambitions.
“Hydrogen from renewables does not exist at scale today,” Coleman continued. “One of the challenges to scaling up green hydrogen is the provision of sufficient renewable power to support its production.”
“This is a challenge for Japan, given its small land mass and population density and topography. But is also a challenge for Australia. Yes, we have plenty of sunshine and wind and a large land mass. And yes, renewables have undergone dramatic growth and will continue to grow. But massive growth will be required if renewables are to support large-scale green hydrogen exports and that will mean dealing with challenges that include land access rights, construction of transmission lines and variable weather patterns.”
“Let me illustrate the scale of the challenge: if Japan was to meet its targets and close the gap it currently has with its Paris commitments by closing all of its current coal-fired power station fleet and replacing it with green hydrogen, it would require somewhere between 350-400GW of renewable power.
“Capturing that solar power would require a land mass some 3.5 times the area of Tokyo, or roughly 60% the land mass of Japan. Japan could do it in other ways, but just think about that as an example. It’s a mammoth effort that can only be led by governments in a concerted way. Industry has a role but does not have the scale or the finance to do this.”
“…if Japan was to meet its targets and close the gap it currently has with its Paris commitments by closing all of its current coal-fired power station fleet and replacing it with green hydrogen, it would require somewhere between 350-400GW of renewable power”
“These challenges will, no doubt, be eventually overcome. But in the meantime, blue hydrogen can provide the impetus to build out the new supply chain that will be needed. From hard infrastructure of pipelines, terminals, trucks, power stations and vehicles, to soft infrastructure of regulatory standards, a trained and certified workforce, consumer acceptance and trading relationships.”
“Blue hydrogen is a proven technology today, with production costs around a third to a quarter of green hydrogen.”
Coleman told AJBCC attendees that the key to keeping unit costs low will be developing large-scale projects, which there is a lot of attention in both Japan and Australia on achieving this.
“It’s not enough for energy to be low in emissions –to be scalable, it also needs to be competitively priced,” he said. “Governments time and again have fallen foul of the electorate when they are not able to supply competitively priced energy into the system. Australia has many examples of that over the past ten years.”
“Australia and Japan have forged new energy pathways before and we can do it again as we work towards building a hydrogen economy. Just like the genesis of the LNG industry, this is going to require enduring partnerships between buyers and sellers of energy. It’s going to require vision and readiness to take risk and commit to taking supply as the market develops.”
“There are still some challenges to be resolved around transport of hydrogen and the management of emissions from its production. But there’s also a lot of effort going into overcoming them, and scope for technology partnerships as we build a new industry that will necessitate global collaboration.”
“Unless we solve this challenge of getting renewables at scale or carbon sequestration, the net carbon footprint from production of hydrogen is actually greater than LNG. All you do is shift the problem to the producer from the buyer and that doesn’t solve anything because carbon knows no boundaries. It’s a problem we’ll need to solve collaboratively.”