Australia's nascent green hydrogen sector is gaining momentum. Here are 5 stocks to watch

Momentum for Australia’s budding green hydrogen sector reeceived yet another boost yesterday with the NSW Government announcing its $3 billion strategy.

New South Wales premier Dominic Perrottet, Deputy Premier Paul Toole, and Treasurer Matt Kean were joined by Fortescue Future Industries chairman and founder, Dr Andrew Forrest AO, to announce what has been described as a nation-leading strategy to drive the state towards hydrogen success.

Perrottet addressed the conference yesterday by highlighting that as the world moves towards a renewable energy future, NSW wants to be at the “cutting edge, the leaders of the pack – not just here but around the world.”

Big figures for big opportunities

“This $3 billion dollar investment from the NSW Government as part of this strategy will leverage over $80 billion dollars of private investment,” Perrottet said.

“It will lead to the creation of over 10,000 jobs, it will increase the size of the NSW economy by over $600 million dollars.

“Now they are big figures, but those big figures lead to big opportunities for the people of New South Wales.”

Toole described the hydrogen hubs in NSW’s regional areas such as Illawarra and the Hunter as “powerhouses of the state” where the government is investing “in the future, in our kids and in jobs.”

In the NSW’s transition away from coal, he said the government was focused on “what is next and what the future is going to look like.”

10,000 new jobs by 2030

Treasurer and Energy Minister Matt Kean said between $80 and $270 billion dollars of private investment will be coming into NSW between now and 2050, which will see 10,000 new jobs in the state by 2030.

In addition to delivering an already committed $70 million to develop the state’s hydrogen hubs in the Illawarra and the Hunter, the strategy includes:

Exemptions for green hydrogen production from government charges;
A 90% exemption from electricity network charges for green hydrogen producers who connect to parts of the network with spare capacity;
Incentives for green hydrogen production; and
A hydrogen refuelling station network to be rolled out across the state.

Without a definition, progress will be difficult to track

Lee White, a research fellow with the Australian University’s Grand Challenge for Zero Carbon Energy in the Asia Pacific, said while the strategy outlined potential market barriers, such as supporting infrastructure development for export, she would have liked to have seen a clear definition of green hydrogen in NSW’s strategy.

“Without this, progress towards goals will be more challenging to track, and eligibility of projects for funding may be unclear at times.

“While green hydrogen should broadly refer to hydrogen generated by electrolysis with electricity from renewable sources, determining that the electricity supply is renewable is not a straightforward task if hydrogen production is grid-connected,” she said.

For green hydrogen to reach its emissions mitigation potential, White said there needs to be good tracking of embedded emissions, including from electricity generation.

“The NSW plan mentions relying on the developing national certification scheme for green hydrogen – the green hydrogen definitions and calculation methodologies laid out in this scheme will be essential in determining whether production and cost targets for green hydrogen have in fact been met.”

Hydrogen moves by other states

The Western Australian Government published its hydrogen strategy and roadmap back in November 2020, which identified 26 initiatives the WA government is supporting.

In September, the McGowan government pledged $61.5 million to grow the emerging industry in the West.

Premier Mark McGowan said the $61.5 million initiative “will attract investment, support work to grow a local hydrogen production industry and drive local demand for hydrogen – delivering local economic benefits and helping WA meet its emissions reductions targets.”

Queensland has also made the headlines this week with a series of hydrogen commitments with Forrest.

These include a Global Green Energy Manufacturing Centre (GEM) in Gladstone, which will comprise the manufacture of wind turbines, long-range electric cabling, solar photovoltaic cells, electrolysers and associated infrastructure and a partnership with Incitec Pivot – Australia’s largest fertiliser supplier.

FFI will conduct a feasibility study to convert their ammonia-production facility at Gibson Island in Brisbane to run on green, renewable hydrogen. Currently, the facility uses natural gas as a feedstock.

‘No bigger industry than green hydrogen’

At the conference yesterday, Forrest said there will be no bigger industry than green hydrogen, green ammonia, and green electricity.

“It will dwarf the scale of iron ore and it will dwarf the scale of coal in our country,” he said.

He also addressed the naysayers, those still convinced climate change is faux.

“Do not deny your voters their future, do not talk it down, do not belittle it, give them the choice.

“The fossil fuel sector has had a magnificent day and the fossil fuel sector will still play an important role for years to come.

“But to talk down and to belittle the huge green energy sector that will be the largest in the world to your constituents means you are betraying their trust in you and giving them absolute falsehoods when they are relying on you for the truth.”

ASX green hydrogen stocks

Green hydrogen can be best described as a hydrogen-produced fuel obtained from electrolysis of water with electricity generated by low-carbon power sources.

While there aren’t many hydrogen focused companies chasing the green hydrogen dollar now, it can be expected that there soon will be.

Here is a list of green hydrogen stocks to watch.

Province energy Ltd (ASX:PRL)

Global Energy Ventures has commenced the HyEnergy Export Feasibility study on PRL’s HyEnergy Zero Carbon Hydrogen Project this month, with the aim to demonstrate the technical feasibility study and commercial advantages of GEV’s compressed hydrogen shipping solution.

Pilot Energy (ASX:PGY)

Along with its traditional oil and gas activities, the NSW headquartered company is planning to undertake several feasibility studies – two in the Mid-West region and one in the southwest region of WA – as to the viability of blue hydrogen projects.

The studies are all expected to kick off in Q2 FY22.

Hazer Group (ASX:HZR)

The part graphite/part hydrogen player is aiming to produce green hydrogen from biogas via its commercial demonstration project which is currently under construction.

Lion Energy (ASX:LIO)

In the June quarter, the company announced it had raised $2.8 million to back its green hydrogen strategy which targets first mover status in production in Australia.

To that end, LIO has appointed Queensland University of Technology (QUT) to assist in locating green hydrogen infrastructure in Queensland and has signed a MOU with Wagner Corporation to pursue green hydrogen, as well as appointing GPA Engineering to undertake a hydrogen production and refuelling concept study.

QEM Limited (ASX:QEM)

Vanadium player QEM has a stake in the hydrogen sector, recently announcing plans to study “green hydrogen opportunities” at its Julia Creek vanadium and oil shale project in Queensland.