Hydrogen injects reality into gas-fired energy transition

This week’s world’s first shipment of liquid hydrogen from the port of Hastings in Victoria to Japan may prove as important to Australia’s future prosperity as the first shipment of iron ore to depart the Pilbara was in the 1960s.

It marks an important milestone in the transition that Australia’s fossil fuel-based resource economy seeks to make as the world heads towards a lower-carbon future. It is also an opportunity to inject greater reality into thinking about the scale of the global energy transition and what’s actually required to ensure the cleaner future has access to affordable and reliable energy.

First are the technological challenges to make international trade in clean energy possible.

The $500 million Hydrogen Energy Supply Chain pilot project uses brown coal hewed from the Latrobe Valley to refine hydrogen.

To make transporting by ship feasible, the hydrogen must be super-cooled to minus 253° to reduce its volume. This is much colder than the minus 161° needed to ship liquefied natural gas.

Former Chief Scientist Alan Finkel says the world’s first liquified hydrogen carrier, the Japanese-built Susio Frontier, is an “engineering marvel”. The vessel’s vacuum seal, which keeps its extra-chilled cargo safe and stable at sea, is the kind of air lock that keeps astronauts alive in deep space.

This underlines that the energy transition will primarily depend upon human ingenuity and innovation. Such as the novel gravity-based storage system that Korea Zinc is set to build near its Townsville refinery, which uses renewable energy to lift heavy blocks into the sky that can descend to generate electricity when the sun isn’t shining or the wind isn’t blowing.

Australia’s pioneering of global hydrogen exports also underlines that an orderly energy transition in a decarbonising world will take decades. It will be no small thing to produce the cleaner energy needed to keep the world powered every day, especially when many people in developing nations are not connected to mains and aspire to do so to escape poverty.

“Blue” hydrogen made by burning coal or gas, with the carbon released either captured and stored or offset, is currently the only technological possible and cost-effective method of hydrogen production.

This has tangled it up in the climate activist cause of the moment – calls for an abrupt global exit from all fossil fuels by 2030. Europe’s energy crisis – which has allowed Vladimir Putin to weaponise Russia’s gas supplies – shows how the transition can go wrong.

The alternative is fashionable posturing on green issues, instead of facing up and helping solve the challenges of decarbonising the world.

Environmental zealotry, such as Europe’s uncoordinated renewable generation frenzy and the closing down in Germany of zero-emissions nuclear power plants, has led to energy shortages, skyrocketing fuel prices, and geostrategic risk.

This was the point underscored by the 2022 annual letter of BlackRock chairman and chief executive Larry Fink, who declared that the world must move through “shades of brown to shades of green” on the way to net zero carbon emissions by 2050.

Two years after the world’s biggest fund manager announced it was divesting from thermal coal, Mr Fink has recalibrated BlackRock’s position by recognising that “to ensure continuity of affordable energy supplies during the transition, traditional fossil fuels like natural gas will play an important role both for power generation and heating in certain regions, as well as for the production of hydrogen”.

Last April, an influential proxy adviser, the Australian Council of Superannuation Investors, announced that its industry superannuation fund backers would vote against the reelection of directors of companies deemed to be taking insufficient action on climate change.

Yet ACSI’s position on big bank lending for gas fired energy transitions, such as Woodside Energy’s Scarborough and Pluto Train 2 project remains unclear. Following BlackRock’s lead, Australia’s finance sector, including Big Super and its proxies such as ASCI, also needs to get real about gas’s crucial role as a transition fuel of global importance.

The alternative is fashionable posturing on green issues, instead of facing up and helping solve the real challenges of decarbonising the world while keeping cleaner energy affordable and reliable during the transition.

Source: https://www.afr.com/

Tags: Australia, Gasfired Energy, Hydrogen