Finkel says there is no political will for hydrogen targets in Australia

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Finkel says there was no political consensus for hydrogen targets, and cast doubts about long-term cost effectiveness of hydrogen using carbon capture.

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Chief scientist Alan Finkel says he deliberately avoided recommending national targets for hydrogen in Australia, as part of the National Hydrogen Strategy released last month, because it was unlikely he could get unanimous agreement from energy ministers.

Speaking at a forum hosted by the Clean Energy Council in Sydney, Finkel said it was apparent there would be opposition to any hydrogen targets, so he instead focused on addressing some of the immediate barriers to building a hydrogen sector in Australia and addressing some of the skills and regulatory gaps.

Finkel did not specify which ministers were opposed to the introduction of a national target for hydrogen, but suggested that there may have been opposition from federal ministers Angus Taylor (energy and emissions reductions) and Matt Canavan (resources).

“Some states, in particular, are willing to take the chance and possibly have some small price impact in order to achieve a hydrogen target. Others not. The Commonwealth might not be, and to try to get them all to agree on target, we obviously discussed it with the ministers, and it just was not practical,” Finkel said.

“I’m delighted to see New South Wales announce state-wide targets not a target to get 10% into one suburb of Sydney is a state-wide target that the minister has announced. And to me that vindicates the approach that we’ve taken.”

Finkel said he wanted to a avoid a repeat of the Clean Energy Target recommendation contained within Finkel’s review of the National Electricity Market, which was swiftly abandoned by then Turnbull government. 

The Clean Energy Target recommendation, was the only recommendation of Finkel’s National Electricity Market review that was not formally adopted by the COAG Energy Council, following opposition from the federal government.

Seeking to avoid the same fate, Finkel told the forum that he instead opted to use the National Hydrogen Strategy to develop a “pathway” for how governments can support the early establishment of the industry in Australia.

Finkel blamed the prevailing political environment for an inability to specify a target for the adoption of zero-emissions transport, lamenting the lack of “political will” to get behind such a goal, which could accelerate the adoption of both electric vehicles and hydrogen-fuelled vehicles.

“In terms of domestic targets, Australia just has not been able to get its political will together to have zero-emissions vehicle targets of any kind. For us to impose that through the hydrogen strategy was effectively impossible,” Finkel told the Clean Energy Council forum.

Finkel said that it was crucial that Australia was proactive in establishing safety and skills initiatives that would build confidence amongst future customers of an Australian hydrogen industry.

“The first step is to adopt a nationally coordinated approach to deal with issues like safety,” Finkel said. “Safety, always has to be number one, today and going forward. Communities will not have much tolerance for industry that doesn’t have safety as the highest priority.”

Many countries, including South Korea, Japan and Germany, which are all exploring ways to ramp up the use of green hydrogen within their own economies, effectively see Australia as a preferred supplier of hydrogen, reflecting Australia’s natural advantage in renewable energy resources and gas export experience.

Finkel said that the National Hydrogen Strategy had been designed to ensure Australia can seize this opportunity, and a key part of doing so was to first build capabilities within Australia’s domestic market, to demonstrate Australia could be a credible global supplier of hydrogen.

“The credibility issue is important. They want to know that we are seeing the value of hydrogen and we have the expertise to be an available, continuous, supplier,” Finkel said.

“Everybody we spoke to, from politicians to investors to other countries, they all keep coming back to the importance of having that domestic expertise for credibility and actual productivity purposes.”

The National Hydrogen Strategy takes a “technology-neutral” approach to the development of a hydrogen industry in Australia, exploring both the potential of hydrogen production using renewable energy sources like wind and solar, as well as through the use of coal and gas combined with carbon capture and storage.

Finkel acknowledged that the working group tasked with developing the strategy had been directed to do so by the COAG Energy Council, which is largely steered by federal energy minister Angus Taylor, but also that he agrees that the most important consideration is the ultimate impact on emissions.

“We were specifically, under the terms of reference, instructed to be technology-neutral, and we have been, and so it doesn’t look like any of the taskforce’s, or my, personal preferences,” Finkel told the Clean Energy Council forum.

“Look, I’m on public record. And I have been ever since we did the electricity review, of genuinely being technology-neutral. I think the only thing that counts is the emission of carbon dioxide into the atmosphere.”

The hydrogen strategy left open the potential for low emissions hydrogen to be produced using fossil fuels as a feedstock, through the conversion of coal and natural gas, and storing the carbon emissions produced through the process.

ACT energy minister Shane Rattenbury attempted to seek commitments from other energy ministers to only pursue the development of renewable hydrogen, but the proposal was blocked by Angus Taylor, who refused to allow the meeting of the COAG Energy Council to consider the proposal.

However, Finkel said he was uncertain about whether the use of fossil fuels to produce hydrogen could even remain cost-effective in the long term, particularly with expected improvements in the cost of renewable energy and electrolysis technologies.

“If you can do hydrogen production cost-effectively from a fossil fuel pathway, being methane or coal, with substantial carbon capture and storage, I’m not talking about trivial carbon capture and storage, substantial carbon capture and storage such that it comes in at an acceptable level, then so be it. Can you do that cost-effectively? The answer is maybe,” Finkel added.

“So, I don’t know the answer. I don’t know whether it would be cost-effective. Today, it could be cheaper than electrolysis from solar and wind. Will it be ten years from now? Or 20 years from now, cheaper than electrolysis? I don’t know.”

The hydrogen taskforce and working group will continue to work with the COAG Energy Council on the implementation of the National Hydrogen Strategy and is expected to report back to energy ministers on progress when they next convene sometime in 2020.

This week, construction commenced at the $11.4 million hydrogen production facility at the Tonsley innovation district in South Australia. The project will include the installation of a 1.25MW hydrogen electrolyser, with the hydrogen produced to be blended with the district’s natural gas supply, as part of a trial undertaken by Australian Gas Networks.

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