Thanks to its natural advantages and its expertise garnered from its world leading resources sector, Australia is tipped to become a major player in the global green hydrogen market.

Backed by strong multi-government funding, Australia-based companies are moving to commercialise green hydrogen related technology, distribution systems and the clean energy product itself.

For example, a new report from Fitch Solutions subsidiary BMI highlights Fortescue Future Industries’ recent announcement that it has developed the capability to manufacture its polymer electrolyte membrane (PEM) electrolyser within Australia, an essential equipment for the production of green hydrogen.

These kinds of endeavours are positioning Australia to have a strong role in the global growth of green hydrogen which was estimated to be valued at around $6.4 billion in 2022 and is expected to hit over $510 billion by 2032, growing at a phenomenal CAGR of 54.98% from 2023 to 2032.

Asia-Pacific powerhouse

The report suggested that Australia will be the Asia-Pacific’s key producer of green hydrogen.

BMI has found that Australia’s renewables sector has experienced strong developments in its project pipeline over the last quarter.

As of August 2023, its Key Projects Data (KPD) program has identified 417 non-hydropower renewables projects in development in the country with a total power capacity of 292 gigawatts. That is a sizeable jump from the previous quarter when 330 projects producing 163 gigawatts were noted.

BMI says the recent shift by major power companies such as AGL Energy, EnergyAustralia, and Origin Energy announcing significant renewable plans is a sign that the strong government policy support is having an effect.

Large hydrogen project pipeline

According to BMI’s research, the strong growth of the renewables sector will be complemented by the market’s ambitions for green hydrogen production.

It says Australia has one of the region’s largest pipelines of green hydrogen projects, with about 64 projects in development, totalling 64 gigawatts in capacity.

“With more renewables coming online, we believe it will also feed into public and private sector ambitions for green hydrogen production facilities in the market, providing readily available electricity to power the operations of such facilities,” the BMI report said.

“Over the long term, we believe that Australia will be Asia-Pacific’s key producer of green hydrogen, aiding markets in their green hydrogen ambitions.”

The study added that local developments in the manufacturing of technology such as PEM electrolysers will help drive Australia’s renewables capacity growth.

BMI noted that Australia has also already advanced partnerships with Asian markets looking to import green hydrogen, such as Japan, with business envoys, and Singapore, with the Singapore-Australia Green Economy Agreement.

According to their research, Japan plans to secure about 12 million tonnes of hydrogen by 2040 and Singapore targets to have hydrogen supply about 50% of its power needs by 2050.

Pure Hydrogen advancing

Australian juniors such as Pure Hydrogen (ASX: PH2) are also making inroads into developing and marketing key technologies to support Australia’s hydrogen future.

Pure Hydrogen is building a network of clean hydrogen production facilities across Australia while supplying the market with multiple fuel cell products such as trucks, buses and generators.

It has just inked an agreement for $125 million in funding support for its rapidly developing business.

The funding facility agreement with Monard Capital provides Pure Hydrogen with the capacity to purchase a stable of hydrogen fuel cell (HFC) trucks, vehicles and equipment which can then be rented to approved customers, inclusive of service and hydrogen supply.

Subject to a successful accreditation process, the facility is expected to be available to credit approved customers from early 2024.

Pure Hydrogen recently signed an agreement for the delivery of a HFC waste collection truck to the east coast of Australia waste management company Solo Resource Recovery, which will be trialed in municipal contracts in northern New South Wales.

What is green hydrogen

Green hydrogen is hydrogen generated by renewable energy or from low-carbon power.

It is expected to gain increasing prominence as it has significantly lower carbon emissions than grey hydrogen, which is derived from fossil fuels without carbon capture.

But there is a cost for going with a cleaner option.

Green hydrogen produced through electrolysis using renewable power is estimated to cost between $15 and $23 per kilogram, depending on availability.

Grey hydrogen produced with cheap fracked natural gas costs $3 per kg in the US, while in Europe, Australia and Asia it costs $7 to $9 per kilogram due to higher natural gas prices.