Q+A: Hazer Group CEO Geoff Ward discusses all things hydrogen

Back in 2010, through a research program at the University of Western Australia, the ‘hazer process’ was discovered.

It is a process which uses natural gas (methane) and unprocessed iron ore to create a low cost and low emissions ‘clean’ hydrogen.

At the time, the wind and solar revolution was just starting to take off and while hydrogen was not a huge focus point yet, research into electrolysers, fuels, and vehicles was being carried out and the long-term role hydrogen would potentially play in today’s economy was well understood.

The university team, along with Hazer’s founder and chief technology officer Andrew Cornejo, discovered that using metal (iron oxide) as a self-manufacturing catalyst to run a pyrolysis process produces two products – hydrogen and a solid graphitic carbon.

And now, after years of development, Hazer is discovering that its technology is maturing at just the right time as countries and companies around the globe work towards a goal of achieving net-zero emissions by 2050.

Stockhead sat down with Hazer Group (ASX:HZR) CEO Geoff Ward to discuss all things hydrogen.

How has investor interest in the hydrogen space taken you by surprise?

“We have been working towards this for three to four years during my time as chief executive,” Ward says.

“When you think through how prolific wind and solar have become and the limitations for taking advantage of that and when you look at the cost of oil and gas-based energy now and compare it to the cost of wind and solar, you can see there is an enormous incentive to using more wind and solar and less oil and gas. There is starting to be a massive economic driver as well as an emissions driver.

“There is an enormous investment opportunity here for both corporates and investors over the next 20 to 30 years. We aren’t seeing a quick flicker, we are seeing the start of a major transition akin to the start of wind and solar in the early 2000s, or the accelerated build out of natural gas in the early 1980s.”

Can you talk to me about the barriers to entry for new hydrogen stocks?

“I think to answer that question we need to talk about where all this interest in hydrogen comes from and what does it mean,” Ward says.

“Hydrogen is an extension of the transition to the low carbon energy system, a good way for investors to think about it is renewables 2.0 if wind and solar were renewables 1.0.

“Over the first two decades of this century, we have done an incredible job of bringing the cost of wind and solar down and pushing renewables into the grid but going forward we know we need to have more ability to store, more ability to transport and more ability to transform renewable energy.

‘We aren’t seeing a quick flicker, we are seeing the start of a major transition akin to the start of wind and solar in the early 2000s’

“Hydrogen itself is a way to store, transport, store again and use renewable energy in a way that is efficient because you can go from energy to hydrogen and hydrogen to energy without creating carbon. That means it will work with battery storage, pumped hydro, and long duration storage to make our energy system stable.

“It will also work as a diesel replacement, petro-chemical feedstock, and a direct fuel for things like steel, glass, cement, and long-distance transport.

“In terms of barriers to entry, there’s a couple of different ways you can look at it.

“Firstly, a lot of the hydrogen industry is likely to become a relatively commoditised, highly competitive and highly efficient sector with low barriers to entry like wind and solar is now. You’re essentially building more wind and solar, connecting it to electrolysers, and then you’re transporting that hydrogen through readily available technology to refuelling stations and to storage.

“Every component of that is likely to become hyper efficient and will come down in cost dramatically over the next 30 years, because they are all manufactured goods, and they all benefit from economies of scale.

“Then in other areas such as emerging technologies, you can have a strong competitive position with the barrier to entry being that your technology takes time for others to replicate.

“I think the approach taken by Fortescue Future Industries (FFI) to be a manufacturer of the materials as well as the manufacturer of equipment is very important, because you might make more money manufacturing and supplying equipment then you will be producing the hydrogen.”

For Hazer, did building your technology during lean times add an advantage over newcomers to the space?

“A development of technology such as ours takes time,” Ward says.

“I think our technology is maturing at just the right time; 10 years ago there wasn’t a market for hydrogen from clean sources. And a much smaller market for graphite and carbon products.

“Both of those markets are expected to increase enormously over the next 5 to 10 years and with the way the hydrogen market is evolving… We’ve gone from aspirational targets and roadmaps and getting industry aware of how hydrogen will play a role and what that role is, to then focusing on demonstration projects and technology acceleration, which is exactly the phase that we are at.

“And that is completely aligned with the international development of hydrogen, which is setting extremely large targets for 2050.”

Do you think Australia has the potential to become a hydrogen superpower?

“We are blessed with good conditions for a lot of the hydrogen economy, we are well blessed with renewable resources and a strong, technically capable industry,” Ward says.

“Australia has an enormous opportunity, but we’ve got to be careful that we don’t miss it, that we don’t turn our back on the most valuable parts of this coming change.

“We’ve got to be careful that we don’t assume that the hydrogen economy will emerge the same way as the resource economy over the last 30 to 40 years because in our view it’s an industrial value chain not a resource value chain, so it’s going to be quite different.

“I think for Hazer to take advantage of it we must be good at using hydrogen, that’s how we decarbonise our industry and position ourselves to be competitive manufacturer and producer of goods.

“We’ve got to continue to invest in research and development in the university sector and technology sector so that we become a designer and manufacturer of the goods used to produce hydrogen – not just a host to hydrogen production sites, which are made of imported goods.”

What should investors look for in a hydrogen stock?

“Investors should look for differentiation – what role is it really going to play in the hydrogen value chain?” Ward says.

“There is a lot of hype around hydrogen now and there is a lot of truth to that hype, but it is going to be a very competitive industry with a lot of large players and small players.

“I think in all the hydrogen investment opportunities it’s the same as any investment opportunity – look for a company that has a strong competitive position and the capability to deliver on its plan. A sensible plan that has substance behind it.”