Australia plans to be a big exporter of green hydrogen to Asian markets, but they don’t need it

In its last quotethe federal government has pledged hundreds of millions of dollars to expand Australia’s green hydrogen capabilities.

Green hydrogen is produced by electrolysis of water, powered by solar and wind electricity, and is key to the government’s “technology, not taxes” approach to meeting its climate target of net-zero emissions by 2050.

The government aims to create a major green hydrogen export industry, in particular for Japan, for which Australia signed an export agreement in January. But how our latest research suggests, the probable scale may well be exaggerated.

We show that Japan has more than enough solar and wind power to be energy self-sufficient, and does not need to import fossil fuels or Australian green hydrogen. Indeed, Australia as a “renewable energy superpower” is far from a sure thing.

Japan has a lot of sun and wind

“Green” hydrogen could be used to generate electricity and also to form chemicals such as ammonia and synthetic jet fuel.

In the federal budget, hydrogen fuel is among the low-emission technologies what will you share more than 1,000 million Australian dollars. This includes $300 million to produce clean hydrogen, along with liquefied natural gas, in Darwin.

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Australia plans to be a the three main exporters of hydrogen to Asian markets by 2030. The idea is that green hydrogen will help replace Australia’s declining coal and gas exports as countries deliver on promises to cut domestic greenhouse gas emissions to zero.

Behind much of this discussion is the notion that overpopulated jurisdictions like Japan and Europe have insufficient solar and wind resources of their own, which is incorrect.

Our recent study we investigated the future role of renewable energy in Japan and modeled a hypothetical scenario in which Japan had a 100% renewable electricity system.

We found that Japan has 14 times more solar and offshore wind power potential than it needs to meet all of its current electricity demand.

Electrifying almost everything: transport, heating, industry and aviation. doubles or triples electricity demandbut this still leaves Japan with five to seven times more solar and offshore wind power potential than it needs.

After building enough solar and wind farms, Japan can get rid of fossil fuel imports without increasing energy costs. This eliminates three-quarters of its greenhouse gas emissions and eliminates the security risks of relying on foreign energy providers.

Japanese energy is also cheaper

Our study comprised an hourly energy balance model, using representative demand data and 40 years of historical hourly solar and wind weather data.

We find that the levelized cost of electricity for a power system in Japan dominated by solar and wind power is US$86-110 (A$115-147) per megawatt hour. Levelized cost is the standard method for calculating the cost of generating electricity over the lifetime of a generator.

This is similar to Japan’s average spot market prices in 2020 ($102 per megawatt hour), and is about half the cost of electricity generated in Japan using green hydrogen imported from Australia.

The Iwanuma Rinku Mega Solar Power Station in Japan.
The Yomiuri Shimbun via AP Images

So why is it so much more expensive to produce electricity from imported Australian hydrogen, compared to local solar and wind power?

Essentially, it’s because 70% of the energy is lost converting Australian solar and wind energy into hydrogen compounds, shipping them to Japan, and converting the hydrogen back into electricity or into motive power in cars.

Thus, hydrogen as a source of energy is unlikely to become a major export industry.

What about the export of sustainable chemicals? Hydrogen atoms are needed to make synthetic aviation fuel, ammonia, plastics, and other chemicals.

The main elements needed for such products are hydrogen, carbon, oxygen, and nitrogen, all of which are available everywhere in unlimited quantities from water and air. Japan can easily make its own sustainable chemicals instead of importing hydrogen or finished chemicals.

However, the Japanese cost advantage is smaller for sustainable chemicals than for energy, so there may be export opportunities here.

What about other countries?

While large-scale fossil fuel deposits are found in only a few countries, most countries have a lot of solar and/or wind power. The future decarbonized world will have much less trade in energy, because most countries can obtain it from their own resources.

Solar and wind include three quarters of new power plants installed around the world each year because they produce energy cheaper than fossil fuels. About 250 gigawatts per year of solar and wind power are being installed around the world, doubling every three or four years

Densely populated coastal areas, including Japan, Korea, Taiwan, the Philippines, Vietnam, and northern Europe, have vast offshore wind resources to supplement on land solar and wind

Prime Minister Scott Morrison driving a hydrogen car in November last year.
AAP Image/Pool, William West

Also, densely populated Indonesia has enough calm tropical seas to feed the whole world using floating solar panels.

Will international markets need Australian power for when the sun isn’t shining and the wind isn’t blowing? Probably not. Most countries have the resources to reliably and continuously meet energy demand without importing Australian products.

This is because most countriesincluding Japan (and, for that matter, Australia) have a great capacity for pumping hydroelectric out of the river, which can store energy to balance solar and wind power at times when they are not available. Stronger batteries and internal transmission networks also help.

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Australian prospects

Get rid of fossil fuels and electrify almost everything with renewable energy reduces greenhouse gas emissions by three quartersand reduces the threat of extreme climate change. It removes the security risks of relying on other countries for energy, as illustrated by Europe’s dependence on Russian gas.

It will also reduce energy costs and eliminate oil wars, oil spills, cooling water usage, open pit coal mines, ash dumps, coal mine fires, fracturing gas hydro and urban air pollution.

Australia’s coal and gas exports need to drop to zero before mid-century to meet the global climate target, and solar and wind power are doing most of the heavy lifting via renewable electrification of just about everything.

But as our research makes clear, while Australian solar and wind power is better than most, it may not be enough to overcome the additional costs and losses of exporting hydrogen for power supply or chemical production.

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A really big prospect for Australian renewable energy export is iron exportin which hydrogen produced from solar and wind power could replace coking coal.

This allows Australia to export iron rather than iron ore. In this case, the raw material (iron ore), solar and wind power are all found in the same place: in the Pilbara.

While hydrogen will undoubtedly be important in the future clean global economy, it will be primarily for chemicals rather than energy production. It is important to keep perspective: solar and wind electricity will continue to be much more important.

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