Giving oxygen to hydrogen

Wednesday, 24 October 2018

Hydrogen is emerging as a serious contender to fuel the heavy transport fleet of the future – especially trucks and shipping and perhaps, some day, even aviation.

OPINION: Among the blizzard of press statement that emanate from any government covering every little thing, it would be easy to overlook Energy Minister Megan Woods' announcement this week of a memorandum of cooperation with Japan on hydrogen fuel development.

Memorandums of anything – understanding, cooperation, mutual interest, whatever – are often what you sign when you've got nothing to sign. At least you get a photo out of it and, if you're quick, maybe a nice pen.

However, this memorandum is an interesting indicator of the Government's attempts to find industries to encourage as it tries to move New Zealand from laggard to leader on transition to a low-carbon economy.

That's important to Woods right now. While she was jetting around the world, her legislation to stop the granting of new offshore oil and gas exploration permits was plodding to its inevitable conclusion at hearings of Parliament's Environment Select Committee.

If all those ducks were in a row, hydrogen production could become a whole new export industry that might dwarf the current receipts from the oil and gas sector. So the argument goes, Pattrick Smellie says.

* Govt backs new Hydrogen Association as boost for alternative energy, and exports

* Why the oil industry got its marching orders quickly and quietly**

The oil and gas ban is proving to be a two-edged sword politically, particularly since no matter how often Woods denies it, the evidence is strong that the ban is more likely to increase than decrease global emissions of greenhouse gases.

Especially questionable has been her claim that the vast quantities of methanol currently made from natural gas in New Zealand won't end up being produced in China, using higher-emitting coal because of China's emissions trading scheme.

As climate change policy expert Christina Hood told the Environmental Defence Society's recent business and climate change conference in Auckland, the Chinese ETS is not really an ET'HyS yet and currently only applies to the electricity sector.

To be fair, Hood said that 'the idea is that different sectors will come in' and that China is 'really, truly serious about climate policy'.

So, there may be a Chinese ETS that creates a market price for carbon that will rule out producing methanol from coal by the time Methanex runs out of gas in New Zealand and production shifts, perhaps to China.

However, to claim that as fact today involves some heroic assumptions about the way a command economy with market characteristics will actually develop its climate change policies in years to come.

The oil and gas ban is proving to be a two-edged sword politically, particularly since no matter how often Woods denies it, the evidence is strong that the ban is more likely to increase than decrease global emissions of greenhouse gases.

In the meantime, the interest in hydrogen is the visible tip of the debate at the Cabinet table about the opportunities that might emerge from getting ahead of, rather than always following, new technology trends.

Among the most alluring to some, if not all, ministers is the potential to produce 'green hydrogen', using renewable electricity as the feedstock.

That's because hydrogen is emerging as a serious contender to fuel the heavy transport fleet of the future – especially trucks and shipping and perhaps, some day, even aviation.

Conventional wisdom says that electric batteries won't work for heavy freight, because they lack the range for long distance trucking and because they will weigh too much to make economic sense.

Hydrogen emerges as a realistic alternative, although it would require construction of a whole new distribution system that is more likely in large economies like Japan, the United States or China before it emerges in New Zealand.

Here, hydrogen might find early use as a replacement for gas and coal in electricity-generating 'peaker' plants.

The dream is that New Zealand could have a competitive advantage in hydrogen production since the vast quantities of electricity required to produce it would be near-as-dammit 100 per cent renewable. Hence 'green' hydrogen.

If all those ducks were in a row, hydrogen production could become a whole new export industry that might dwarf the current receipts from the oil and gas sector. So the argument goes.

It's a respectable idea, although it's very much in its infancy.

It's barely a month since the announcement that a New Zealand Hydrogen Association had been formed, led by transport infrastructure firm Fulton Hogan and involving a such as Siemens, Contact Energy, private transport group HW Richardson, and Hyundai.

Like Woods's announcement from Japan, the group's very existence is a harbinger.

More concrete than either is the construction, already under way, of a pilot hydrogen production plant in Taupo, with technology supplied by Japan's Obayashi Corp and investment capital from local Maori geothermal resource owner, Tuaropaki Trust.

There is a very long way to go before it will even be clear whether there is to be a global 'hydrogen economy', and therefore an opportunity for New Zealand.

In the meantime, however, expect increasing focus in this emerging area.

- BusinessDesk