How Coal Bursts Renewable Hydrogen Dream — Vice Versa

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Japan has emerged as a hotspot for the zero emission hydrogen economy of the future. However, the green dream is only as real as the feedstock, and Japan is also moving forward with a major new coal-to-H2 project in concert with Australia. That could help keep the global coal industry afloat — unless, of course renewable resources can ramp up on a competitive basis.

The Coal – Hydrogen Connection

Coal has been losing ground in the thermal market for power generation in the US and elsewhere with the rise of renewable energy.

That still leaves it with a toehold in metallurgy and other industrial markets. That’s the good news for coal stakeholders. The bad news is that those markets will shrink if the global economy continues cooling off as anticipated.

Even without downward pressure from the global economy, aluminum producers and other industrial sectors have are beginning to ditch coal-sourced energy in favor of hydropower and other renewable resources.

Coal stakeholders could still look to the growing hydrogen market for succor. After all, hydrogen doesn’t just come out of thin air. It has to be manufactured from other sources, and one of those other sources is coal.

However, that’s looking like a fragile toehold as well. Natural gas already dominates the hydrogen production field, and renewable hydrogen is becoming competitive as well.

Forget Renewable Hydrogen, Here Comes Coal

Despite the global forces working against it, along comes this coal-to-hydrogen project leveraging coal fields in Australia.

It hit the media radar last fall, when The Age reported that “Japan has identified Gippsland’s abundant brown coal reserves as a cheap source of fuel to be converted to liquid hydrogen and exported in a project valued at $496 million.”

The Age also noted that the project was fast-tracked. That assessment appears to be correct.

Last week Forbes reported that “Japan and Australia have taken their first steps to create new export industry which will convert the world’s most polluting fuel, coal, into its cleanest, hydrogen, and ship it in liquefied form from Australia to Japan.”

Let’s pause for the moment to appreciate the carbon footprint of coal extraction and processing, then try to figure out how that results in a net gain for global action on climate change as Forbes seems to imply.

Okay, so much for that. If you have any further thoughts, drop us a note in the comment thread. Meanwhile, carbon footprint or not, Forbes explains that the project is intended to breathe new life into the beleaguered economy of Victoria, which has been contending with a loss of market share for its low grade “brown” coal.

In other words, domestic politics are at work as much as, if not more than, global carbon management. Australia is depending on its ally Japan to help it climb out of the hole, and it looks like all hands are on deck. The new project is supported by the Japan’s Hydrogen Energy Supply Chain initiative along with Kawasaki Heavy Industries among others.

So Much For The Green Olympics, Maybe

According to Forbes, the Gippsland project is on track to contribute to Japan’s plans for showcasing the hydrogen economy as part of its plans for the 2020 Olympic Games in Tokyo.

That little thing about coal kind of works against the green branding idea for the 2020 Olympics, but it looks like they are serious.

On the other hand, Japan appears to be hedging its bets. Under the auspices of Toyota, Japan is the site of an ambitious renewable hydrogen project that involves “splitting” hydrogen gas from water by applying an electrical current sourced from wind power (the fancyspeak word for that is electrolysis). The country is also hosting a series of small scale water splitters powered by rooftop solar.

Australia also recently embarked on a renewables-to-hydrogen initiative, which leverages an existing gas pipeline network to help pare down costs.

Don’t Look Back Coal, Renewable Hydrogen Is Not The Only Thing Gaining On You

The big picture is also looking shaky. The EU and the US already have major initiatives under way aimed at leveraging wind and solar to supply renewable hydrogen through electrolysis, as well as through biogas and other pathways.

In addition, last February our friends over at Carbon Brief took note of a new hydrogen research paper in the journal Nature Energy. The research team described a scenario in which renewable hydrogen in some markets — Germany and Texas — is already an attractive bottom line alternative for buyers at the small end of the scale, where the cost of natural gas is generally higher.

The research also suggests that natural gas still has a low-cost advantage for large scale industrial buyers, but that advantage will evaporate as the cost of electrolysis continues to fall along with declining costs for wind and solar. Improvements in electrolyser efficiency are  also part of the equation.

The researchers also looked at costs for fossil-sourced hydrogen combined with carbon capture and came up with bad news for coal.

The analysis is a complex one and there are plenty of qualifiers, so a note of caution is in order.

Nevertheless, chances are good that renewable hydrogen projects will see growing interest from investors as the global financial community cuts its coal related risks.

In the latest development on that score, just last week the Australian insurer Suncorp Group announced that it will initiate no new coal relationships from now on, and it will phase out its exposure to coal risks by 2025.

Here in the US, the Department of Energy is floating the idea of using concentrating solar power to produce renewable hydrogen on a large scale, competitive basis. CleanTechnica is reaching out to the agency for an update so stay tuned for more.

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Image: US Department of Energy H2 @ Scale initiative.