Hydrogen: The fuel of the future

Hydrogen, one of the most abundant elements on Earth, can be produced from a diverse range of resources, including non-renewable resources such as fossils fuels, and cleaner, more sustainable resources like wind, solar, geothermal or biomass. Due to advancements in renewables technology, Hydrogen is poised to become as versatile as it is abundant. With a broad range of applications, Hydrogen can be used to power hydrogen fuel cell vehicles, homes, industry and can be converted to agricultural chemicals such as ammonia to make fertiliser. Within Australia, Queensland is well placed to expand its hydrogen economy paving the way for significant investment opportunities for both foreign and domestic investors.

The investment in ‘green’ hydrogen production is a key economic and reputational opportunity identified by stakeholder countries such as Japan, Korea, China and the European Union, all of which have ambitious targets to progress decarbonisation activity and reduce overall greenhouse gas emissions to net zero. While perhaps best known as one of the largest exporters of liquefied natural gas, Australia has a multidisciplinary and rapidly diversifying energy industry, drawing expertise from various sectors and, with a well-established and regulated energy market, Australia is well positioned to capitalise on this golden opportunity.

Queensland has infrastructure at key ports, an abundance of energy resources, and technical and research capabilities. These attributes make Queensland an ideal location to establish infrastructure in renewable hydrogen. In recognition of its potential to build large scale renewable hydrogen projects and the economic and reputational opportunity of using hydrogen, Queensland has grown in favour as a foreign investment destination among many global investors. At present, a significant number of foreign companies are investing in green hydrogen projects in Queensland which if successfully developed, will be of economic scale. For example:

• Iwatani Corporation, Kawasaki Heavy Industries, Kansai Electric Power Company, Marubeni, APA Group and Stanwell Corporation (one of Queensland’s energy generators) have formed a consortium to develop a large-scale renewable hydrogen facility in Aldoga, west of Gladstone;

• Japan’s largest oil company, ENEOS Corporation, is studying the feasibility of establishing a commercial scale hydrogen supply chain between Japan and Queensland;

• the Port of Townsville and Ark Energy (a subsidiary of Korea Zinc Co. Ltd., the world’s latest producer of zinc, lead and silver and one of Australia’s leading renewable energy companies specialising in wind, solar and hydrogen), signed a memorandum of understanding to investigate the use of hydrogen for the transport industry by developing a renewable hydrogen facility and providing hydrogen export facilities at the Port of Townsville; and

• Fortescue Future Industries (FFI), a subsidiary of Fortescue Metals Group, have commenced construction of the world’s largest electrolyser facility in Gladstone, Queensland, the first stage of which will be a $114 million electrolyser facility and thereafter expanded to include green manufacturing technology such as cables, batteries, wind turbines and solar panels.

Additionally, the demand for hydrogen will see Australia produce and export 80,000 PJ to countries such as Japan, Korea and China by 2050, delivering 160,000 Australian jobs to the Australian economy and generating a potential revenue of more than USD2.5 trillion per annum.

On 14 February 2022, Australia exported the world’s first shipment of liquified hydrogen to Japan as part of the AUD 500 million Hydrogen Energy Supply Chain pilot project, marking a significant milestone for Australia’s hydrogen industry and a sign of the opportunities to come.

Further, DLA Piper has recently advised Engie and Mitsui on all stages of the development, construction and financing of a 10 MW electrolyser, 18 MW PV array and an 8 MW battery energy storage system to produce renewable hydrogen to be supplied as a feedstock to produce renewable ammonia to service local and export markets. This is one of the world’s first industrial scale renewable hydrogen projects and one of Australia’s largest renewable hydrogen plants to be built in Western Australia.