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The massive steel mill that overshadows Wollongong Beach relies on coal and iron ore, which are at the heart of Australia’s resource-rich economy. Now the city south of Sydney is a testing ground for Australia’s hopes for industrial transformation based on a new resource: hydrogen.
Next to the steel mill, a university spinout called Hysata has converted an 8,000-square-foot building to make electrolysers that separate hydrogen from water, both for export and to support Australia’s need to develop hydrogen fuel for industrial use.
Hysata, whose backers include Danish wind turbine developer Vestas and British venture capital firm IP Group, expects commercial production rates by 2025. It is a rare example of an Australian company looking to become a key part of the manufacturing segment of the energy supply chain Economy that is more used to easily transporting its natural resources to other countries.
Chris Bowen, Australia’s energy minister, announced A$20 million (US$13 million) in government funding for Hysata at the opening of the plant. “Hysata is an example of what this region can achieve,” he said.
Australia has been talking for years of becoming a world leader in hydrogen supply due to its potential to process it with abundant renewable energy. Exports of “green” hydrogen, produced by passing water through a renewable-energy electrolyser, could offset expected long-term declines in coal and natural gas sales.
However, the country has made little progress in securing the investments needed for a hydrogen sector and is now encountering determined efforts from other governments to develop cleaner energy. These include America’s Inflation Reduction Act, the clean energy subsidy introduced by US President Joe Biden last year, while countries like India and China have announced bold hydrogen plans.
Energy Secretary Chris Bowen (centre) at the opening of Hysata’s electrolyser manufacturing facility last month
Alison Reeve, a former head of Australia’s hydrogen task force and now a staffer at the Grattan Institute think tank, said the country has missed its window for a head start. “Australia has made great strides when it comes to hydrogen. We have a lot of nice slide decks with 3D renderings, but we haven’t built that many yet,” she said.
Australia’s previous Conservative government supported hydrogen production as a policy measure but maintained its support for the fossil fuel sector, including coal.
The Labor government elected last year set new climate targets for the country, supported broader investments in renewable energy and gave hydrogen a more central role in the energy transition. One intention is for cities like Wollongong to be able to bid for funding from an A$2 billion ‘Hydrogen Headstart’ program included in the 2023 budget to support hydrogen production.
Hydrogen power would allow places like Wollongong to “manufacture and export everything from renewable energy to green steel,” said Jim Chalmers, Australia’s Treasurer, announcing the budget. “Capturing these industrial and economic opportunities will be the greatest driver and determining factor for our future prosperity.”
The government also announced in August that it was preparing its own version of US subsidies to encourage more investment in clean energy projects.
Bowen said Australia’s hydrogen industry could generate an additional A$50 billion in gross domestic product by 2050 and create more than 16,000 jobs. He stressed that 40 percent of the world’s hydrogen projects are in Australia and said the country needs to extract more value from the energy supply chain.
Still, domestic investment would only be one piece of the puzzle. While pilot projects have been undertaken to ship liquefied hydrogen to Japan, the cost and complexity of the process leaves it unclear how Australia can best export the hydrogen.
One possibility is to mix green hydrogen with nitrogen to produce “green” ammonia, which is easier to export due to the high cost of transporting liquefied hydrogen. Another view is that it would be more effective to embed the green energy in other exports, such as using hydrogen to process minerals like iron ore before shipping.
The Hysata facility in Wollongong
Alan Finkel, Australia’s former chief scientist and Hysata board member, said the country’s proximity to Asia and trade ties with countries like Japan means it is still well-positioned to “deliver sunshine” in the future as the natural gas and coal exports decline.
Andrew Forrest, the mining magnate, has been one of the most vocal advocates of hydrogen’s role in decarbonizing the country’s heavy industry and creating a lucrative new export.
Many are still unconvinced. “The rhetoric surrounding hydrogen is ridiculous,” said a senior Sydney banker, who argued that natural gas remains the country’s export base. Gas exports generated more than A$90 billion in revenue in 2022, according to consultancy EnergyQuest.
Nevertheless, the beginning investments in the hydrogen supply chain are a welcome sign. Mike Molinari, managing director of IP Group Australia, said the progress of companies like Hysata shows Australian technology is being compared to the performance of leading universities in the UK and US and is attracting investment. “There is some substance here. . . We only invest when we see a technology that is truly globally differentiated,” he said.
There is also the potential that Australia’s push towards hydrogen will attract the skilled workers it needs. One of Hysata’s employees is Scott Abrahamson, who spent decades working in Silicon Valley at Apple and other technology companies. He said he was lured out of retirement in Colorado by Hysata and relocated to Wollongong, lured by the impact the company could have.
“We have a real opportunity to promote Australia,” he said. “It’s about changing the world. How often do you get this opportunity?”
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