Beware people talking clean hydrogen, they are the ones who brought you clean coal

Former prime minister Malcolm Turnbull has warned that Australia is running out of time to compete with the rest of the world on green hydrogen, and has warned authorities not to be swayed by the fossil fuel push for so-called “blue hydrogen” and carbon capture.

“We need to act with urgency,” Turnbull, who – among his many new roles since leaving politics is chair of the global Green Hydrogen Organisation – told an offshore wind and green hydrogen conference in Melbourne on Tuesday.

“We have every single resource we need in abundance, except for one: And that is time, and time is running out.

“We’re in a green hydrogen race to redesign industrial society in record time. If we are in a battle to save our planet, as we are, we have to mobilise our national resources as we would for war, not for a languid tea party.”

Turnbull said that at the end of last year, only one Australian green hydrogen project with a capacity of 10MW had reached financial close by the end of last year – compared to more than 1700MW of capacity in the US and Europe.

“We need to pivot fast and with conviction,” he said. “We have give renewable energy a real chance against entrenched fossil fuel and carbon intense interests.”

Turnbull said he was pleased that the federal government’s $2 billion “Hydrogen head start” program would focus only on green hydrogen, and not the blue hydrogen with carbon capture being pedalled by the coal and gas industries.

“Blue hydrogen blue hydrogen .. is a mechanism from the fossil fuel industry to essentially delay the transition to the green hydrogen economy,” Turnbull said. “Beware people talking clean hydrogen, they are the same people that brought you clean coal.”

Turnbull said green hydrogen will have an important role in decarbonising the chemical and fertilizer sectosr, as well as heavy industries like steelmaking and those heavy transport sectors which cannot be easily electrified.

He said it would also play as a storage medium for renewable energy, together with batteries and pumped hydro, and dismissed nuclear small modular reactors as a “fantasy”.

However, he warned that Australia’s planning processes were too slow – a theme picked up at the conference by a number of would-be developers, and highlighted the differences between Queensland and NSW, where the process has become very slow.

“We run the real risk of, even if we have resolved our political differences about climate change and the need to respond to it, even if we are no longer having climate wars and people saying global warming is a hoax or whatever, you’ve to get this stuff built.

“Moore’s law does not apply to digging holes. There is no substitute for getting on” with the projects.

Offshore wind is still many years away in Australia, and while the government is in the process of declaring up to six renewable energy zones, it has yet to award its first licences for project feasibility studies.

Jo Evans, the secretary of the department of climate change, said the first offshore wind feasibility licences should be issued by the end of the year – a whole host of international energy giants are competing for these licences with often overlapping project proposals in the Gippsland zone.

The first generation from offshore wind is not expected until around 2028, at the earliest, but the conference also heard of the supply chain issues and a 30 per cent increase in costs, according to RWE’s head of offshore in the Asia Pacific Jens Orfelt.

There are expectations that some of those recent price pressures will ease in coming years, but Orfelt and others said Australia will need to think carefully about the structure of its tenders, and its supply chain requirements.

This included allowing for price inflation to be factored into contracts to avoid project cancellations that had affected some major projects in Europe and the US.

Jonathon Cole, the head of Corio, the offshore wind offshoot of Macquarie Group, said the technology had succeeded over the past decade in bringing its costs down below nuclear, and then gas. But now was facing the biggest and quickest rise in the cost of capital for four decades.

“The cost of capital is going up quickest it has in 40 years,” Cole said. “It’s an inflationary environment that we  haven’t seen for a long time … and the supply chain has never been more fragile.

“We need a process that sets price of offshore wind in a fair way, and  not the only part of society that doesn’t aim to make adjustments to cost in the face of inflationary pressures.

“The other thing is to set the price at an appropriate point in the process. There are many examples where the price has been set too early, and either the developers have made too much money, or as we’ve seen in some markets the project becomes unsustainable because the market is saying those prices don’t work.”