BusinessNZ Energy Council


Govt urged to be cautious in hydrogen push

Feb 19, 2020 | News

Steve Rotherham – Fri, 14 Feb 2020

What role should the government play in developing the country’s hydrogen sector?

The government’s Vision for Hydrogen in New Zealand green paper has attracted more than 70 submissions with stances ranging from enthusiasm to strong scepticism.

Many submissions were very supportive of hydrogen. There is broad agreement that hydrogen is versatile and flexible.

But other submissions posed questions on what role government should play in developing the sector and whether it should be backing hydrogen over other energy storage options.

A versatile fuel

On Wednesday, Energy and Resources Minister Megan Woods told a BusinessNZ Energy Council breakfast forum in Wellington that the government’s green hydrogen plan was a “key component” of its 2019 energy policy workstream.

“I am very positive about the potential for hydrogen – not just as an emerging domestic energy source and storage technology, but as a potential export industry,” she said.

She presented a powerpoint image of an energy and climate policy jigsaw. One of the eight interlocking pieces was “Green Hydrogen” – second from the top left after “Renewable Energy.”

There was no mention of generic energy storage. It seems the government has already decided green hydrogen is its preferred form of energy storage for excess renewables production.

The green paper – and many submissions – note that hydrogen can also be used for transport and industrial fuel.

It can also be used with gas infrastructure, as well as fuel cells, either on its own or blended with natural gas.

The New Zealand Hydrogen Association says green hydrogen could decarbonise industrial processes – including process heat.

“Green hydrogen could also reduce emissions substantially from chemical synthesis operations – especially ammonia, but potentially also methanol – and even provide an emissions-free pathway to produce iron,” the NZHA says.

In its submission, Hiringa Energy says green hydrogen offers the best pathway to decarbonise commercial and heavy freight, buses and material handling equipment.

But Hiringa acknowledges the current relative cost of green hydrogen makes it uncompetitive against fossil fuels.

“Government support will be required for early projects that substitute existing fossil fuel feedstocks for industry,” Hiringa says.

It argues government should focus on projects which provide material demand for green hydrogen to unlock economies of scale – such as ammonia, methanol, steel, refining and hydrogen peroxide production.

The role of government

But many submitters question whether it is appropriate for the government to encourage hydrogen over other technologies, and express concerns government investment in green hydrogen could be poor use of taxpayers’ money.

Straterra says the government must be cautious how much it invests to develop hydrogen technologies, as New Zealand lacks the resources to be a leader in advancing such technology.

“The country – government and private sector – does not have the resources to lead the way and government money must be spent wisely,” the minerals sector association says.

“For example, single companies globally – particularly in the US and China – are spending billions of dollars on fuel research alone.”

Mercury agrees and says government should leave investing in hydrogen up to the market.

“New Zealand has limited resources and must focus on the most cost-effective and efficient options to deliver emissions reductions – this means direct use of abundant renewable electricity,” the generator-retailer says.

“The value of the government’s hydrogen strategy will be in providing robust scientific and commercial analysis to ensure only credible and viable applications are understood and considered.”

Is picking winners a losing game?

The Major Electricity Users’ Group says government should focus on removing barriers to the uptake of hydrogen to make the energy sector ‘hydrogen ready’.

But government should also make the sector ready for batteries and other emerging energy storage technologies, and should ensure all feasible low-cost future energy paths remain viable, according to MEUG.

“Hydrogen is just one option for future energy use and storage that different generic classes of consumer at different years in the future and different rates of uptake may elect to use.”

University of Canterbury Professor of Mechanical Engineering, Susan Krumdieck, is more pointed in her comments.

“The role that the government is assuming in the vision document is not appropriate,” she says.

“When the government decides that it will champion a particular technology, then there is serious risk of circumventing the rational engineering work that must be done to ensure safety because of political forces.

“The ‘challenges’ are technical, and must be dealt with by engineering experts. If government is asking the general public what are the challenges, then we are already embarking on a dangerous trajectory.”

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