Federal government seeks input on proposed hydrogen “guarantee of origin” scheme

The Morrison government is seeking input into a proposed national certification scheme for hydrogen production that would allow different sources of hydrogen, including those produced using fossil fuels or renewable energy, to be distinguished.

In a discussion paper released this week, the Department of Industry, Science, Energy and Resources has sought feedback on a possible guarantee of origin scheme, including how to best distinguish between hydrogen produced renewable energy, and hydrogen derived from fossil fuels.

Renewable hydrogen may be produced using electricity directly sourced from sources like onsite wind and solar projects, and the certification scheme will consider how electricity sourced in-directly, through power purchase agreements or programs like GreenPower, will also be treated.

Consultation on the proposed scheme will also consider how hydrogen produced using fossil fuels, such as through coal gasification or steam methane reforming, will be treated and how features like carbon capture and storage will be considered.

The proposed approach would see a certificate issued for each tonne of hydrogen produced, that includes information about the associated emissions from its production, where and how the hydrogen was produced, as well as the primary energy sourced used.

The discussion paper indicates that the Clean Energy Regulator may be tasked with administrating such a guarantee of origin scheme, with the regulator already responsible for administrating a number of similar registries, including those for the federal Renewable Energy Target, the Emissions Reduction Fund and the National Energy and Greenhouse Reporting scheme.

“The establishment of a hydrogen Guarantee of Origin (GO) certification scheme is a priority under Australia’s National Hydrogen Strategy,” federal energy and emissions reduction minister Angus Taylor said. “The Hydrogen GO certification scheme will measure and track the carbon emissions from hydrogen production, enabling customers who buy hydrogen in the future to choose the product best suited to their needs.”

“The scheme will also cover a variety of ways in which clean hydrogen can be produced, including from renewable sources and from methods using gas or coal with substantial carbon capture and storage.”

Australian Hydrogen Council CEO, Dr Fiona Simon, welcomed the release of the consultation paper, including the work the federal government was undertaking to collaborate with other countries to develop a consistent international certification regime.

“The development of an internationally recognised certification scheme is vital for the growth of a hydrogen industry in Australia as it helps our producers demonstrate the provenance of their hydrogen and provides consumers and export partners with assurances that the hydrogen they are using is renewable or zero emissions,” Simon said.

The moves to establish a national certification scheme was likewise welcomed by the Clean Energy Council, saying that it was likely that international hydrogen buyers would be willing to pay a premium for hydrogen that can be verified as being produced using renewable energy sources.

“There are currently around 35 hydrogen production projects in the development pipeline across Australia, which will need to be able to provide a guarantee of origin to negotiate offtake agreements. With this in mind, it will be imperative to have a guarantee of origin scheme operational as soon as feasible,” the Clean Energy Council said in a statement.

“It’s clear that international customers and trading partners have a preference for renewable hydrogen, and we expect that over time customers will also be willing to pay a price premium for this renewable product. It is therefore critical that we can differentiate renewable hydrogen from other fossil fuel-based sources.”

The Smart Energy Council also welcomed news that the federal government was making progress on the development of a national certification scheme for hydrogen, but the industry body was disappointed that the government’s consultation materials have overlooked a scheme that it was already in the process of establishing.

The Smart Energy Council launched its own renewable hydrogen certification scheme earlier in the year and had already secured support from the Victorian and ACT governments, along with a number of early-stage hydrogen projects.

“In the time since the Australian Government was first scheduled to release a discussion paper on certification (late 2020), the Smart Energy Council (through its Hydrogen Australia division) has established its own Zero Carbon Certification Scheme for renewable hydrogen, ammonia and metals projects,” Smart Energy Council CEO John Grimes said.

“The Smart Energy Council is already certifying our first project, ActewAGL’s renewable hydrogen refuelling station, and has announced our second certification project – Yara’s ARENA-funded renewable ammonia project in the Pilbara.”

“The discussion paper is a useful, if long-delayed, start by the Australian Government on critical certification issues but it reinforces our view that the Government is failing Australians by refusing to develop a national energy or a national climate change policy or to commit to strong short and long-term emission reductions strategies,” Grimes added.

Consultation on the discussion paper is open until 30 July.