Green hydrogen is an emerging technology for reducing emissions that requires further investment in research and development. For some parts of the transport sector, the case for green hydrogen is more viable that electrification. The development of a domestic hydrogen industry in Australia could assist in decarbonising harder-to-abate industrial sectors, including heavy and long-distance transport.

Hydrogen can be produced using fossil fuels – generating emissions – or via zero-emissions means such as electrolysis, a process that uses renewable-powered electricity. While electrolysis uses significant quantities of water, strategies such as using recycled water can help avoid impacts on natural resources. Green hydrogen can be used as a zero-emissions fuel and energy source in industrial processes.

Hydrogen’s use in the transport sector depends on where it can offer greater benefits than electrification technology, providing superior cost value or being better fit for purpose. Hydrogen passenger cars and buses have been developed, but the capital and operating costs are expected to remain higher than battery-electric alternatives. Currently, technology adoption and higher costs mean that for passenger cars, urban buses, delivery vans, light commercial vehicles and some industrial vehicles; hydrogen is unlikely to stack up. Analysis in the UK suggests that vehicles that do not regularly drive over 300 miles (approximately 480kms) without stopping, are better suited to battery electric vehicle technology than a hydrogen fuel cell vehicle.

However, vehicles that are travelling longer distances have a strong case for using hydrogen to help reduce emissions. In Australia, freight trucks and trains travel long distances through regional and remote areas, which could create demand. Hydrogen-fuelled trucks are suitable for long distance journeys, heavy payloads (where the weight of batteries is a disadvantage) and cases where rapid refueling is needed. In the case of long distance freight rail, hydrogen may aid in the transition away from diesel, as the refuelling infrastructure could be cost-competitive with electrification. Currently, only 10 per cent of Australia’s heavy rail network is electrified. The costs of building an overhead charging network for Australia’s vast regional freight routes could mean it is more competitive to switch commercial vehicle fleets to hydrogen, including the creation of associated fuelling infrastructure. There is also going to be demand from harder-to-abate sectors, such as shipping and long-distance air travel, to use green hydrogen for fuel. Hydrogen use should be prioritised for transport modes where electrification is not viable or feasible, particularly for vehicles travelling long distances.

Recent analysis conducted by Climateworks Australia and CSIRO for the Australian Energy Market Operator (AEMO) explored a 1.5 degree-aligned ‘hydrogen superpower’ scenario. There has been a significant improvement in hydrogen technology since previous Climateworks and CSIRO analysis in 2019. The ‘hydrogen superpower’ scenario modelled hydrogen making up two per cent of fuel use, by 2030, in order to achieve a 1.5 degree scenario. By 2050, the same scenario models hydrogen making up 34 per cent of fuel use.

Australia has the opportunity to become a global leader in green hydrogen production. Vast renewable energy resources create ideal conditions for developing green hydrogen to use domestically, as well as becoming a leading global exporter. There are major opportunities for creating jobs and economic benefits; an Australian hydrogen industry could create 2,800 jobs and add $1.7b in value by 2030.  To make these opportunities reality, Australia needs to rapidly accelerate the green hydrogen industry and keep pace with global competitors – who are also developing hydrogen industries.

Hydrogen costs are expected to continue to fall, driven by cheap renewable electricity and lower electrolyser capital costs resulting from global deployment at scale. Australia has the potential to bring down the costs of hydrogen through ready access to renewable energy and storage of this energy in green hydrogen. Then, the energy can be deployed into the Australian energy grid to enable more stability. Analysis by the Australian Industry Energy Transitions Initiative finds the potential of these measures to reduce electricity costs to $20–$30/MWh by 2050, substantially lower than current costs.

As the world transitions to a net zero economy and Australia’s major trade partners commit to net zero by 2050, Australia will only remain a major energy exporter by developing zero-emissions fuel technologies, including hydrogen. This shift will require financial support for research development and commercialisation, appropriate infrastructure, regulation and licencing, and skills development.

Australia can act now to test the opportunities hydrogen offers. It is critical that the next decade sees increased research, development and deployment if a green hydrogen industry is to be established in Australia. Implementation of national, state and industry strategies will be needed at a bigger scale and faster pace. Existing strategies require explicit emissions reductions outcomes in line with net zero by 2050 targets. 

Green hydrogen has a role to play in helping Australia decarbonise its transport sector. This fuel needs to sit within a broader emissions reduction strategy: electrifying some transport modes, reducing demand for others and shifting to more efficient modes such as public transport, walking, cycling and shared mobility options.

Look out for our coming blog posts that dive into how to tackle our growing freight sector, and how public and active transport can shift emissions. In the meantime, find out more about our work on transport and electric vehicles.