Craig Greaves – Wed, 19 Feb 2020
https://www.energynews.co.nz/
The New Zealand Government should support all forms of hydrogen production if it wants to develop a viable hydrogen economy, a visiting energy expert says.
World Energy Council member Massimiliano Cervo, an Argentine consultant, spoke at a BusinessNZ Energy Council event in Wellington yesterday.
He suggests the Government issue a “hydrogen decree” to incentivise investment in hydrogen, regardless of how it is produced.
The Coalition Government wants the economy to achieve net-zero carbon emissions by 2050 and it says hydrogen can play a key role in achieving that goal.
But it appears focussed on developing a hydrogen economy that is exclusively ‘green’ – produced with zero emissions, using renewable energy.
Cervo says a green-only vision is too limiting. In a small country like New Zealand, green hydrogen cannot ensure the scale and supply needed for a sustainable hydrogen economy. In the early phases of developing a hydrogen sector, other forms of H2 production must be used.
He says the Government should also encourage ‘blue’ hydrogen via natural gas as a transition to a low-carbon economy.
Even ‘brown’ hydrogen – produced using coal – should be a short-term option, he says.
“Going all-in with 100 per cent green hydrogen at the start is admirable, but it faces a real risk of market failure.”
Start brown or blue, then go green
Cervo says only companies with deep pockets can absorb the capital risk of committing to a new energy market that might not mature for 10 to 20 years.
To establish a sustainable market, they must be allowed to make money with minimal constraints.
“Once the cost of hydrogen drops and a viable market begins to develop, companies will reach break-even points,” he says.
“At that point they can clean the production process with the increase of the demand.
“By cleaning the process as much as we can along the way – with the commitment of government and companies – a sustainable market for green hydrogen will emerge.”
Companies could be given a set period in which they could generate hydrogen through steam reforming with carbon capture technology, says Cervo.
“Once this period ends, those companies must commit to changing their production to green hydrogen.”
A split economy
Once established, New Zealand’s green hydrogen economy should be split between a domestic and export market, Cervo says.
Green hydrogen can be used domestically to decarbonise heavy transport and industry; to blend into the gas grid; and to provide quick electricity for grid stabilisation at times of peak demand.
But green hydrogen must be converted into ammonia to be viable for export. It is much easier to store and ship ammonia than green hydrogen.
“The export market can be served by using a synthetic reaction to transform green hydrogen into ammonia feedstock for shipping,” Cervo says.
Once the ammonia arrives at its export destination, it would be reversed back into hydrogen by a catalytic conversion.
Green ammonia also has lower operating and capital costs as its production is decoupled from volatile natural gas commodity prices.
Cervo argues New Zealand is particularly well-placed to export hydrogen in this manner. It already sends ammonia overseas, giving it the infrastructure and know-how to make this a safe, reliable and economic export option.
He says New Zealand’s location is also well suited for shipping to the world’s largest hydrogen consumer markets – South Korea, India, China and Japan.
In 2018, New Zealand and Japan signed a memorandum of cooperation to develop hydrogen technology.
“That bilateral agreement is a fundamental pillar for this business strategy, which aims to provide Japan not only with green hydrogen to satisfy their demand but also with green ammonia that will replace regular ammonia as a more sustainable product,” Cervo says.