The most abundant element on the planet, hydrogen is an excellent source of energy and is globally considered a significant part of a green energy future.

The European Commission’s European Green Deal made this clear – identifying hydrogen as a priority area as it works toward climate neutrality in 2050.

In Japan, hydrogen was identified as a priority when the Asian nation became the first country to adopt a Basic Hydrogen Strategy – a roadmap to a hydrogen society which is expected to grow the nation’s hydrogen market 56-fold (not a typo).

South Korea also has hydrogen in its sights, laying out its Hydrogen Economy Roadmap in 2019 which also sets sights on a hydrogen economy, particularly on its roads.

The conversation around hydrogen in Australia is growing too. A national hydrogen strategy was released on 2019, with a view to making the industry a major player in the global market by 2030.

Late last year the Australian Renewable Energy Agency (ARENA) provided Yarra Pilbara Fertilisers with almost $1 million of funding to support a study into the production of renewable hydrogen and ammonia, and $1.28 million to Australian Gas Networks to establish an Australian Hydrogen Centre, which will investigate the blending of hydrogen into natural gas pipelines in South Australia and Victoria.

Last month, Woodside signed a memorandum of understanding with the Tasmanian government to build one of Australia’s largest electrolyser projects – a project which would introduce renewable hydrogen to the state’s energy mix.

And just weeks ago, Fortescue Metals Group chair Andrew ‘Twiggy’ Forrest announced his plans to power an Australian steel market on emerging green hydrogen technologies.

On paper it’s all smooth sailing, but the challenges facing green hydrogen as an energy source are ones which will take some solving – and explaining for the investor looking to get involved.

Firstly, there’s the fact that hydrogen deposits don’t exist in quite the same way as those of other gasses. It’s found bonded to other elements and requires extraction.

Hydrogen expert and Ebony Energy managing director Adam Bacon told Stockhead that while the element was recognised as an outstanding and potentially clean energy source, it wasn’t always clean in practice.

“The challenge is finding the most economically viable way of producing hydrogen to enable the development of the hydrogen ecomony – historically the vast majority of hydrogen has been sourced through either coal or gas, so fossil fuels,” he said.

“There’s hydrogen in water, but some reports suggest it’s 10 times more effective to use coal or gas than to split water using solar or renewable energy – the process which produces what’s known as ‘green’ hydrogen.

“Some reports suggest that by 2030, green hydrogen will be economically viable, but at the end of the day we need to fast track the hydrogen economy – the challenge is actually getting it in an economically viable way which displaces or replaces the fossil fuels we’ve historically been dependant on.”

The gap between brown hydrogen – the type produced from fossil fuels – and green hydrogen produced from water via renewables, is one which presents a dilemma.

Finding a middle ground (or colour)

Meeting in the middle of economically viable and emission conscious is one thing that Ebony Energy, which is currently an acquisition target of Hexagon Energy Materials (ASX:HXG), is eyeing at the Pedirka project in the Northern Territory.

Pedirka is technically an underground thermal coal resource, and Ebony is pursuing blue hydrogen at the project – meeting the middle between the emission-producing brown hydrogen and the currently cost prohibitive green hydrogen.

“The reason we’re focused on coal to hydrogen is we have an abundance of the stuff – we know it has a diminishing level of acceptability as an energy source,” he said.

“What we can do is through a steam reformation process, we can convert the coal into hydrogen, and then we capture the carbon dioxide that comes off the coal as we separate the hydrogen, we sequester the carbon back into the ground.

“By doing this, we’re able to create carbon neutral hydrogen production from a fossil fuel source.”

Using this process, the carbon dioxide is typically pumped into an old oil or gas well and doesn’t enter the atmosphere.

Turning coal to hydrogen – syngas – is a process well known and used around the world, but not so much in the local context, where our mineral endowment has typically removed the need to use it.

While unique in its approach, Ebony is not the only company exploring its options around delivering on a hydrogen energy future.

Using its patented Hazer Process to produce low emission hydrogen at its planned Hazer Commercial Development project in Western Australia, Hazer Group (ASX:HZR) is working towards contributing to the global hydrogen market.

Meanwhile, a subsidiary company of Real Energy Corporation (ASX:RLE), Pure Hydrogen, this month signed a term sheet with Port Anthony Renewables Limited to develop a hydrogen plant at Port Anthony in Victoria, alongside JV partner Liberty Energy. That project’s aim would be to reduce Port Anthony’s carbon emissions while undertaking the same activities as it has for many years.

RLE is currently in the process of merging with Strata-X Energy in a deal which would create a new company named Pure Hydrogen. The company has a goal to produce hydrogen through multiple channels, pursuing production from gas and from water.

Whatever the method, the bigger vision for all is moving towards and contributing to a green hydrogen economy – something Bacon says will take steps, rather than a quantum leap.

“Ebony’s view, given it will take time for green hydrogen to become economic, is to create a solution which is capable of taking a coal body, gasifying it, sequestering it so we’re carbon neutral and have zero carbon footprint, and helping to create the hydrogen economy which helps the countries like Japan and Korea and Australia start to use and consume hydrogen,” he said.

At Stockhead, we tell it like it is. While Hexagon Energy Materials and Pure Hydrogen are Stockhead advertisers, they did not sponsor this article.