LETA News • Guarantee of Origin: Why certifying clean hydrogen is a key part of Australia’s clean energy transition


Guarantee of Origin: Why certifying clean hydrogen is a key part of Australia’s clean energy transition

Ensuring low emissions hydrogen will be globally recognised and supported by local business and industry with a leading certification scheme

28 Feb 2022

Key callouts

  • The scheme should certify clean hydrogen only and set minimum thresholds of emissions intensity
  • The scheme should be technology neutral
  • Australia should collaborate with a trading partner and involve Standards Australia to develop the scheme

Hydrogen has a critical role to play in the transition to a clean energy future. And becoming a global exporter of net-zero energy products could be one of Australia’s biggest contributions to decarbonisation. Setting labelling standards will certify locally-produced hydrogen and track emissions from production, giving global markets certainty about the hydrogen produced for export.

Australia should implement a simple certification label of “clean hydrogen” as part of a Guarantee of Origin scheme to help take advantage of growing demand for hydrogen now and in the future.

The scheme should also be technology neutral and created in collaboration with a key regional trade partner. These recommendations are part of LETA’s submission to the Australian Government about a hydrogen certification scheme for Australia.

LETA’s Chief Executive Officer Mark McCallum said how the government responds to the developing hydrogen market will influence investors.

“As projected hydrogen demand is yet to meet expectations, the focus should be on positioning Australia to harness existing resources, infrastructure, skills and strong trading relationships to take a leading role in the developing market,” he said.

The International Energy Agency has said that the international hydrogen trade alone could be worth up to US$300 billion by 2050 under a global net-zero scenario.

State of play

LETA’s submission comes as the first State of Hydrogen report found Australia is well on the way to becoming a leading producer of clean, affordable hydrogen by 2030 – creating jobs and boosting the economy.

“We are world leading. Australia has the largest pipeline of announced clean hydrogen projects in the world, a very significant achievement,” Minister for Industry, Energy and Emissions Reduction Angus Taylor said.

The report found demand for Australian hydrogen is strong as the government strives for its hydrogen production goal of $2 per kilogram. ​​But the expected barriers facing the industry include reducing hydrogen delivery costs, increasing demand and achieving low-cost hydrogen production at scale.

“If our current pipeline of clean hydrogen projects is completed on time, Australia could be one of the world’s largest hydrogen suppliers by 2030,” the State of Hydrogen report found.

Low emission technology such as carbon capture utilisation and storage (CCUS) as well as next-generation innovations such as the Allam Cycle have a crucial role in quickly achieving low-cost hydrogen production.

A recent feasibility study into the Allam Cycle’s use in Australia found it could boost export revenue by $35 billion by producing clean hydrogen from coal as well as help position Australia as a global net-zero energy exporter.

Simplifying the certification here at home

There is currently no single agreed definition of hydrogen, let alone clean hydrogen. In fact, hydrogen and its production is currently designated by what the submission calls a “rainbow of colours” – for example blue hydrogen produced with CCUS or green hydrogen produced from renewable energy. Having the simple designator of ‘clean hydrogen’ is the best way to move forward and overcome the challenge of finding global agreement of colour-based classifications.

“Clean hydrogen is considered to be hydrogen produced using renewable energy, nuclear or using fossil fuels with CCS,” the LETA submission stated.

This certification language will help to develop and maintain a competitive market as hydrogen produced with CCUS is likely to be the main path to low-carbon hydrogen in the short to medium term as production costs are lower than other technologies.

The submission also backs the government’s intention to develop a scheme that includes the transparent calculation of carbon emissions and allowing the market to establish demand. It supports consideration of hydrogen carriers – such as ammonia – due to the difficulty associated with hydrogen transport.

A scheme for all clean production technology

An important consideration when developing a certification scheme is technology neutrality – meaning certification should be adaptable to all commercially-saleable clean hydrogen production technologies.

The submission recommended governments should not be looking to promote, subsidise and develop certain industries or technologies over others. Instead, a technology should demonstrate that it produces hydrogen below a certain emissions threshold to be considered clean.

As more technology pathways for hydrogen production develop, this emissions threshold could be adjusted over time. This is also important as it builds flexibility within the scheme to support new pathways as emerging technologies are developed and brought to market. Plus, multiple technologies will help support innovation by reducing the risk of investing in new technology.

Working hand in hand with a regional partner

Australia’s hydrogen industry is well positioned to contribute to the success of the market globally. It is already one of the top three exporters of hydrogen to Asia. And by 2030, demand for hydrogen is expected to top 3 million tonnes in Japan, South Korea and China alone. As one of Australia’s closest trading partners, Japan would be well placed to work alongside Australia to test the functionality of a certification scheme, the submission recommended.

Alongside industry and government, Standards Australia should be involved in shaping the certification scheme as the country’s key standards body. It has already commenced work aimed at identifying hydrogen standards and represents Australia’s national interests to the International Organization for Standardization (ISO). This connection enables Standards Australia to advise on international standards alignment.

No better time than now

With the Australian Government committed to a national plan to reach net-zero by 2050, it also recently announced it would begin testing the design of a guarantee of origin scheme with industry.

The scheme to be tested will measure and track hydrogen production emissions from a range of production methods using different technology. The trial aims to put Australia in a position to play a central role in shaping the global trade of hydrogen, ensuring national schemes support industry growth and attract investment.

Internationally recognised hydrogen certification has a huge part to play in helping hydrogen maximise its potential as a key part of a clean energy transition. In addition, Australia is primed to be a major exporter of hydrogen to a growing global market. Making the most of this opportunity means having an enabling hydrogen guarantee of origin scheme in place.

Interested in knowing more about the potential of hydrogen in Australia? Explore further here.

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