Getting H2 right

Setting formal emissions targets to drive demand signals and attract investment

At COP26, Australia has solidified its commitment to net zero by 2050, with a projected 30–35% emissions reduction by 2030. The Australian Government has committed to investing more than $21 billion in the next generation of low-emissions technologies, leading to a total of $120 billion of public and private investment in Australia by 2030¹.

In the Australian Government’s updated Nationally Determined Contribution (NDC) submission to the United Nations Framework Convention on Climate Change (UNFCCC), Australia committed to seven stretch goals for low-emissions technology, two of which relate to hydrogen:

In addition to the recent announcement of successful projects in ARENA’s Renewable Hydrogen Deployment Funding Round, the NDC priority stretch goals further affirm the government’s commitment to playing an enabling role in the renewable hydrogen transition. 

Beyond national commitments and goals, setting specific targets in the early stages of an emerging technology may offer greater certainty to manufacturers and investors. A case in point is the emissions standards for new vehicles implemented by global leaders such as Japan², the European Union (EU)³ and the UK⁴. Standards such as these create demand, which will stimulate private investment and accelerate the decarbonisation of the transport sector. For example, the EU has mandated emissions standards for new heavy-duty vehicles (buses, trucks) to achieve fleet emissions reductions of 15% by 2025 and 30% by 2030, relative to a 2019 baseline. 

In the year to March 2021, transport accounted for 17.5% of Australia’s emissions. Of this, 20% of emissions are from medium and heavy-duty trucks, which are ideal for hydrogen use⁵. It is a hard-to-abate sector, but change is urgent to meet our 2050 net zero emissions target. 

Research by the Grattan Institute reinforces the need for practical policies such as emissions standards and scrapping import duties on zero emissions vehicles as key pillars in supporting Australia’s pathway towards net zero. 

Developing a Guarantee of Origin scheme to provide transparency and consistency

The National Hydrogen Strategy identified the establishment of a hydrogen Guarantee of Origin (GO) scheme as a priority action. A GO scheme will support Australia to emerge as a leading hydrogen exporter by enabling different hydrogen products to be compared accurately, providing transparency and consistency to investors, and creating a competitive advantage. 

The Department of Industry, Science, Energy and Resources (DISER) is developing a scheme for Australia (see discussion paper), which is anticipated to be formally released in 2022. DISER, in collaboration with the International Partnership for Hydrogen and Fuel Cells in the Economy, is looking to build on the European scheme CertifHy, which is widely recognised as an industry leader. 

The initial scheme would verify and track the technology used in hydrogen production, the location of production, and the carbon emissions associated with production, both direct (Scope 1) and indirect (Scope 2).

The Australian Government has tasked the Clean Energy Regulator to trial the hydrogen GO scheme, to test the accuracy, administrative burden and verification mechanisms associated with the relevant emissions accounting methodologies outlined in the discussion paper.

In the future hydrogen economy, international customers will demand certainty of the emissions status of the hydrogen they purchase (i.e. whether it is green, blue, grey or another form). Japan and Korea have flagged that hydrogen imports will need to be 'carbon-free' by 2030 and 2040 respectively – however, this does not necessarily mean only green hydrogen if project proponents are able to capture or remove carbon emissions throughout other hydrogen production processes. Developing a GO scheme that is in harmony with other internationally recognised schemes will be a critical step towards Australia’s international competitiveness in the hydrogen industry.

Implementing safety standards to boost community confidence and social licence

As with any new technology, achieving a social licence to operate is fundamental to accelerating uptake and use. Although hydrogen is a well-established energy carrier and has been safely used in Australia for many decades, its use in transport has been less common. Developing and implementing formal, comprehensive safety standards will be essential for a safe workforce, and will also help to reassure communities and increase public trust.

Standards Australia’s technical committee is developing specific regulations and standards that set out specifications, procedures and guidelines for working with hydrogen in relation to safety, quality, technical properties and performance. This committee, ME-093 Hydrogen Technologies, will mirror international standards and establish a robust regulatory framework to instill community confidence⁶.

Establishing a skilled and capable workforce in preparation for the hydrogen transition

As the hydrogen industry scales up in Australia and globally, its potential will expand to include advanced applications, such as combined heat and power and long-distance passenger transportation. To realise the opportunities, Australia will require a workforce that is adequately skilled to work effectively and safely with hydrogen both now and into the future as the applications extend and technologies develop. 

Having a vision of the future-ready workforce will inform education and training requirements to support the current workforce and to establish a pipeline of skilled workers for the hydrogen transition.

In a recent PwC analysis, more than 40 roles needed to support the Australian hydrogen economy in the next five years were identified across six ‘occupational clusters’:

Some of these clusters present opportunities to reskill segments of the existing workforce. For instance, it is likely that managers with backgrounds in oil and gas, chemical processing or electrical systems may be sought to lead hydrogen projects, which would require some augmentation of skills and knowledge. Other clusters are likely to require new, highly specialised roles. For example, heavy vehicle technicians will need to respond to fuel cell technology and will need to be able to work safely with high-voltage systems, including learning how to depower them so that repairs or maintenance work can be undertaken. Given the nature of the work and industries involved, there will likely be a strong focus on locating these clusters in regional areas to drive economic growth and provide an avenue to reduce emissions of FIFO workforces.

In the short-to-medium term, hydrogen-specific skills are likely to be delivered through targeted upskilling initiatives (e.g. on-the-job learning, graduate certificates, micro-credentials). However, as demand for these skills grows, hydrogen competencies can be built into qualifications as core subjects. 

Governments, industry, educational institutions and registered training organisations will need to work together to develop and deliver quality education and training that takes into account domestic and international standards related to the production, handling, transport and use of hydrogen. 

If Australia can build a future-ready workforce supported by strong safety standards, and refine and implement an effective GO scheme, the groundwork will be in place to make the most of the hydrogen demand that is escalating in the global race to net zero. With the right regulatory and social infrastructure in place, getting H2 right is ever closer to reality.

Throughout our Getting H2 right series, we have looked at Australia’s path to building a competitive hydrogen industry, from getting the price right, and establishing a hydrogen-ready supply chain, through to engaging partners and offtakers and navigating policy and regulation. These success factors will need to be considered by project developers and investors as projects progress towards construction and operation. The factors remain essential for both individual projects looking to secure financing, and for the development of the wider hydrogen economy.

_{References
^{1 https://www.minister.industry.gov.au/ministers/taylor/speeches/address-energy-users-association-australia-energy-forum
2 In Japan from 2010 ‘Post New Long-Term Emissions Standards’ apply to all new light-duty and heavy-duty vehicles.
3 Euro 6 standards were introduced in 2007 for light-duty vehicles and in 2009 for heavy-duty vehicles. Euro 6 became mandatory in 2013 in the European Union.
4 In November 2021, the UK Government committed to zero-emission heavy goods vehicles, cars and vans by 2040.
5 https://ageis.climatechange.gov.au/
6 https://www.standards.org.au/getmedia/70a58502-11aa-4de4-a98d-30a20c89c37c/ME-093-Hydrogen-Technologies-Strategic-Work-Plan.pdf.aspx}}