WA fronts up $61.5 million in green hydrogen pitch

The WA Government wants to stake its claim as the place to go to develop green hydrogen projects, pledging $61.5 million in this week’s State Budget to grow the emerging industry in the west.

Premier Mark McGowan today announced a package including a $50 million fund to stimulate a domestic end market in transport and industry for the much spoken about, but fledgling, commodity.

Demand for renewable backed hydrogen is tipped to grow to more than US$10 trillion by 2050 by Goldman Sachs, which green hydrogen advocate Andrew Forrest recently claimed would dwarf Australia’s famous $150 billion iron ore industry.

McGowan said hydrogen could sit alongside iron ore and LNG as one of WA’s major export industries in the coming years.

“Hydrogen offers incredible potential for our State, with the capacity to sit alongside iron ore or LNG as a major export commodity – supporting local jobs and delivering wealth for all Western Australians,” he said.

“My Government is focused on making sure WA has every advantage to secure opportunities and investment in the emerging hydrogen industry.

“This $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.”

Majors and minnows share in Government cash splash

Petroleum giant BP recently identified WA’s windy and sunny Mid-West and Gascoyne region as having the right attributes to make green hydrogen production technically feasible in the resources-led state.

It is one of three companies that will enjoy a $300,000 grant from McGowan’s war chest, for a study on converting the mothballed Kwinana oil refinery into a clean energy fuels hub.

APT Management Services will also receive a $300,000 grant to investigate an Australian first of converting the Parmelia gas pipeline into a 100 per cent hydrogen delivery system.

The third grant will go to small cap shipping developer Global Energy Ventures (ASX:GEV), which is going full steam ahead on the idea of exporting future green hydrogen from Province Resources (ASX:PRL) and Total Eren’s 8GW HyEnergy project near Carnarvon as compressed hydrogen in its specially designed hydrogen ships.

The project would be established in a region which is also being stalked by Andrew Forrest’s Forestcue (ASX:FMG) for its green hydrogen potential.

GEV managing director Martin Carolan said the announcement was one of the largest concrete commitments from a State Government in the green hydrogen space, providing a strong investment signal for companies with operations and aspirations in WA.

“This would be the first time there’s been any funding made available to an exporter as part of the overall value chain,” he said.

“So the local governments and the federal government are focused on hydrogen hubs, which is a common theme at a federal level and at a state level, you’ve seen that here as well.

“So now would be the first time that an application has been made on its merits, that supports all the objectives of the WA Hydrogen Fund. And that is to define an export supply chain using a WA based company and its own intellectual property.”

Hydrogen costs

Currently most hydrogen is made via the steam methane reforming process, which uses fossil fuels as feedstock.

Green hydrogen on the other hand is produced by running an electric current through water with a machine called an electrolyser, which is powered by wind, solar, or hydro energy, and splits H2O into its constituent parts of H2 and oxygen.

While there are other options emerging to export renewable energy from places like Australia to resource poor nations in Asia such as South Korea, Carolan believes compressed green hydrogen could be the best method.

“We’re saying you’re going to take what is a relatively expensive form of energy in the form of hydrogen, we want to make this as efficient a process as possible,” he said.

“So all we want to do is compress and increase the density to a point where you can put into a ship and sail it and then unload it in its purest form, as opposed to liquefaction.

“(That) has a very large energy intense process, as does ammonia.”

GEV plans to complete a feasibility study on using its ships to export green hydrogen from an offshore loading facility off the Gascoyne coast in the first half of 2022.

Carolan said GEV could be shipping into a new international export market for the commodity by the second half of this decade.

“It depends which forecast numbers you look at, but the market from 2020 to 2030, is going from sub-100 million tonnes to north of 100Mt,” he said.

“The market today is 97% consumed at the point of production. So there is no international export market operating today outside of the shipping of ammonia.”

Not all customers are looking for ammonia, which also comes with conversion costs.

“So what we’re trying to achieve is the first pure hydrogen export solution. And by aligning with the HyEnergy project, we’re trying to have a shipping capability or a transport capability ready for the mid 2020s.

“And we sort of think that 2026 could be the target, or at least what we’re targeting for.”

Oakajee development on the cards

Taxpayers will also tip $7.5 million into an access road to kickstart the long-mooted Oakajee Strategic Industrial Area in the Mid-West, and $4m to develop the plan to activate Oakajee as a green energy hub.

Oakajee was best known as the site of an ill-fated iron ore port proposal during the last boom. The region is now set to be the focus of significant investment by WA in renewable technologies.

“Renewable hydrogen presents a big opportunity for industries right across WA to reduce their emissions and embrace a cleaner future, and our funding commitment to demand stimulation will help companies take that leap,” WA Hydrogen Minister Alannah MacTiernan said.

“This latest round of feasibility studies presents exciting opportunities for hydrogen across WA.

“BP’s proposal to convert the old Kwinana oil refinery into a green hydrogen hub will help to revitalise Kwinana and bring this facility into a low-emissions future.

“We’ve seen real success off the back of previously-funded studies – including our $375,000 investment into feasibility of ATCO’s Clean Energy Innovation Park in early 2020, which went on to secure a $28.7 million Australian Renewable Energy Agency grant.”