Ep67 Australia's Green Hydrogen Reality Check, ft Nick Smith, Global Decarbonisation Advisory

This episode dives deep into Australia's position as an emerging leader in the green hydrogen market, exploring both the immense potential and current challenges facing the industry. Nick Smith, a leading expert, shares insights from his unique perspective spanning corporate, government, and advisory roles, discussing major projects like the 1.8 million tonne Murchison Green Hydrogen Project in Western Australia and the infrastructure developments reshaping the sector. The conversation covers critical topics including cost reduction strategies, safety considerations, financing models, and the shift from export-focused to domestic market applications. With China controlling 80% of global green hydrogen installations and Australia navigating boom-bust cycles, this episode provides a pragmatic assessment of where the industry stands and realistic expectations for the next two decades.

ABOUT NICK. Nick is the Managing Director of Global Decarbonisation Advisory (GDA), bringing together people, projects and capital to accelerate decarbonisation across the energy, mineral processing and hard to abate industrial sectors. Nick is the current President of the International Association for Hydrogen Safety (HySafe), is a member of the International Hydrogen and Fuel Cell Association’s Technical Committee and is a member of the Clean Energy Transition Advisory Committee at the Australia Japan Business Co-operation Committee. Nick has extensive experience as an executive and non-executive director predominantly in Australia and is recognised for delivering world leadership in decarbonisation across the energy sector and mineral extraction and processing sector in Australia. Prior to commencing GDA, Nick held a range of senior executive and leadership roles across the government, gas, and construction materials sectors delivering strategy, policy and commercial advice along with full accountability for business performance and profitability.
Nick holds a Masters degree in Business Administration, is a graduate of the Australian Institute of Company Directors and a Fellow of the Australian Institute of Energy.

FEEDBACK: Email Host | HOST, PRODUCTION, ARTWORK: Joseph Jacobelli | MUSIC: Ep0-29 The Open Goldberg Variations, Kimiko Ishizaka Ep30-50 Orchestra Gli Armonici – Tomaso Albinoni, Op.07, Concerto 04 per archi in Sol - III. Allegro. | Ep51 – Brandenburg Concerto No. 4 in G, Movement I (Allegro), BWV 1049 Kevin MacLeod. Licensed under Creative Commons: By Attribution 4.0 License

Transcript

Ep67 Australia's Green Hydrogen Reality Check, ft Nick Smith, Global Decarbonisation Advisory

PLEASE NOTE: Automatically generated transcript may contain errors. For accuracy, only rely on the original recording.

Joseph Jacobelli: Hello there. Good morning, good afternoon, and good evening. Wherever you may be listening this from. Welcome to episode 67 of the Asia Climate Finance Podcast. Today we've got a great guest talking about a very complex and very rich topic, green hydrogen.

Our guest is Nick Smith, who has a wealth of experience, and you can see all of his background details in the show notes. But one of the great things about Nick is that he is worked for corporates, worked for government.

Now he's an advisor position, a member of several important associations. So he's got a very unique perspective on green hydrogen. Now, why are we talking about green hydrogen Australia specifically? Because Australia is going to be one of the leading lights.

In future years when it comes to green hydrogen, and we also don't talk about Australia in a vacuum, but within the Asia Pacific context, Nick provides a wealth of information, including what's going on right now in terms of projects, what's going on right now in terms of funding, and a variety of other insights.

I really hope that you enjoy this particular conversation and that you find the insights useful. Like I did. And by the way, please do reach out if you have any comments, any questions, any ideas for guests or topics.

Please enjoy the show.

Hello, Nick, and thank you for making it, I know it's evening your time. Morning my time. How's everything in Adelaide? 

Nick Smith: It's going very well. It's a bit cooler than it was over in Europe recently, but and in fact, I think at the moment it's very warm over in Europe, but it's a bit cooler here for us.

So we're in our winter period, so a little bit of rain, which is well needed here, so it's going well. 

Joseph Jacobelli: I should have flown down to Adelaide to see you because we're in the midst of a heat wave, which is highly unpleasant. But anyway, so once again thank you for , making it to the podcast and I'm really looking forward to our discussion.

Nick Smith: Yeah, likewise. And, and thanks very much for giving me the opportunity to come and chat with you. It's a really great opportunity and this is really important things that we're doing to try and mitigate the climate change so that you don't get such hot periods.

Joseph Jacobelli: exactly, exactly.

I think I saw, 

Nick Smith: I think I saw Europe's the fastest warming continent in the world at the moment. 

Joseph Jacobelli: Yes, yes. Having record temperature again. Nick, so we've got your bio in the show notes as usual, maybe a little bit about how you got interested into the energy transition in general. 

Nick Smith: Yeah, look, it's maybe it's an unusual pathway that I've, I've taken over the years, but I, look, I started out as a concreter and spent 20 years in the concrete and quarries industry and in various different roles, commercial and operational roles, then jumped across into the LPG industry and worked in Australia in senior role there, as part, part of the Linda Group globally.

And then I decided that I wanted to do something a little bit different. And so I went and joined the South Australian government and their department for energy and mining. And that's sort of where I really got into, , renewable energy. Operating the off-grid power generation installation of emergency generators, running some very, very innovative policy settings that were designed to really help manage the, the high penetration of renewables and transition that south Australia has been leading the world on with variable renewable energy.

And, and spent the last three years of my decade in, in the government as the executive director of, of growth and low carbon for the energy and mining sector. And, and I think it was back in 2017 that a minister said that he was very interested in hydrogen and wanted to know a bit more about it.

And so, I was, I was one of a number of people tasked with finding out a bit more. And, and as a result in 2017, we came out with a, a roadmap around hydrogen. And so hydrogen's been a part of the story for a long time. And then I turned 50 some a couple of years ago now, and decided that , I wanted to note, think about where I was going to for the next 15 years of my career.

And I thought, well, I've done a lot in South Australia. I'd like to now take this broader than just South Australia and see if I can add value across other parts of the world where , I can share my knowledge that I've gained in, in terms of some of that innovative thinking and, and project consulting and regulatory frameworks.

And ultimately , looking at investing into decarbonization infrastructure. 

Joseph Jacobelli: So you have pretty much the whole spectrum. I mean, you've done the corporate thing, you've done the government thing, and now you're doing the advisory thing. And I understand that, , you are a very active senior member of a couple of organizations related to hydrogen.

So maybe could you explain a little bit about your roles, a little bit about the different organizations? Because I think it's very interesting given that green hydrogen is relatively new. I think we'll get into why, is it new and why is it not new in, in, in a minute. But it's new relative to say solar and wind, obviously.

And would be interesting to understand the kind of ecosystems on how these different associations fit in together, how they work together and at different roles. . 

Nick Smith: Yeah, so I, I'm, I'm the president of the International Association for Hydrogen Safety which is based in Brussels in Belgium.

I'm a member of the Standardization Working Committee for the International Hydrogen Fuel Cell Association, which is based in, in Beijing, in China. And then I'm a member of the Australia Japan Business Cooperative Council's Clean Energy Transition Advisory Committee that supports the board and the members to discuss, , how we can actually make that clean energy transition and, and support Japan in their pathways and their policies and their transition and also support Australian businesses along those areas as well.

So that's the, they're the three key areas that I'm involved in, , from a, from a hydrogen perspective and a renewable perspective. 

Joseph Jacobelli: And how did these organizations fit into the kind of global scheme of things, so to speak? 

Nick Smith: Yeah, so I, I guess , hydrogen safety is not a particularly sexy topic when you start talking to the man on the, on the street, right, a woman on the street.

It's, so I think the role of hydrogen safety is really about underpinning, scientific evidence-based standards and taking learnings from, from incidents and actually compiling that information, sharing that information more broadly. So international Association for Hydrogen Safety is also known as high safe, so I'll just use that for simplicity.

HIE have a, , we, we have a membership base across the world. We, made up of government agencies industry. Research labs, universities and, and consulting firms as well. So it's, it's a, it's a broad church. I think. Focus has really been around pre-normative research and that scientific and technical capability.

, We advocate for the harmonization of regulations, codes and safety standards. And the Centre for Hydrogen Safety out of the US evolved , some time ago now with, with Nick Barilla, who's been involved with HI Safe for many years.

And we've worked reasonably closely together over the time that the Centre for Hydrogen Safety tend to focus more on that industry facing incident based to, , educational piece of work. Mm. HIE tends to be a bit. More at the, the technical research side of things. Mm And then how do we share that knowledge and, and help industry to learn and, , understand where the challenges are, where are the gaps in our knowledge?

What are the things that we need to focus on next? And, and that type of area. And I think that's how I sort of got involved with the International Hydrogen Fuel Cell Association as well out of China. They're looking for, people with, with global knowledge to support them on their standards development and adoption of standards.

And so my role is really to provide input into any standards that may be looking to be developed locally. How does that fit with other standards around the rest of the world so that there is that consistency of harmonization for industry globally. 

Joseph Jacobelli: Mm-hmm. Got it. And then the Japanese one is basically just a cooperation between Japan and Australia, which I guess we'll talk about a little bit more in a minute, but is that right?

Nick Smith: Yeah, yeah. No, that's what I, okay, okay, good. So, really, it's membership based , in Australia it's the A-J-B-C-C in Japan it's the Ja BC, C right. So it's really about, , how do we work together better to create economic opportunities for, for both Japan and Australia.

Joseph Jacobelli: Right. So talking about Australia how, and, and we are going to get into kind of like the commercial development and market potential of green hydrogen. And given, , Australia's kind of leading, leading position there how is Australia positioned to become a leader in green? Hydrogen market within the Asia Pacific region.

Nick Smith: Yeah, look, Australia's blessed with, with some fantastic resources. And, for the last 50, 70 years we've been a resource based economy really. We're blessed with, , lots and lots of, of land, very large country with very minimal population density lot, lots of wind, lots of solar lots of coastal areas.

And , since the seventies we've had a, a strong liquified natural gas industry. We've always had very good coal resources. And also, a third of the world's uranium sits in Australia as well.

Right. So, , so an energy resources industry is, is, is quite well known to the economy. And, and I think that, , the next sort of step is, is , how do you export your energy resources into the future? How do you export the sunshine and how do you export your wind? And one of those ways, originally the thinking was around, , well, let's export it as hydrogen.

There's no carbon attached to that molecule and it's a really good way of doing it. I think, Australia's had a, a very good start at it, but they've recognized like other parts of the world that it's not easy. Mm-hmm. And there's been some headwinds of late. Where, , we've probably seen some of those projects pull back or being mothballed or cancelled.

Which, which is not necessarily a bad thing in, in my mind, but I, I see Australia now sort of starting to pivot and focus for hydrogen to be more used, , in the local markets as opposed to exported. Mm-hmm. I think there's still a lot more work that still needs to be done on, on hydrogen as a carrier or, how do you get it as a transport, as an energy source across to Japan and across to Korea and to China and to part other parts of Southeast Asia where it's required.

And that work still needs to come and be done. But I think that's where, , you're starting to see hydrogen become one of those. Topics where it sits around, , something like a green iron product that can be exported to blast furnaces or to, or to blast oxygen furnaces or electric arc furnaces around the world to help decarbonize their steel industry whilst maintaining that steel.

And, and its importance into the economy as a, as an economic multiplier. So that's where we're sort of seeing that transition more to, to local use and, and production of hydrogen. There are still some massive projects here in Australia that are well underway, but I think the time is now and ironically, we were talking about this in Italy recently at a high safe scientific committee meeting that.

, Somebody who's been in the industry for 30 years was saying, , about every seven years there's a boom and a bust on hydrogen. Right. And the thing is that even though there's a boom and a bust cycle, the trend line just keeps going up in terms of Mm. , The number of projects that are being developed and the amount of hydrogen that's being used in the economy.

So , I think whilst there's some headwinds just recently, there is enormous amount of opportunity for Australia to share their, , resource wealth with the rest of the world without being too crazy and hydrogen's one of those things that plays into it. 

Joseph Jacobelli: Right. You mentioned about projects in Australia.

So what are some of the key projects currently underway in Australia that are setting kind of benchmarks for green hydrogen production and export? 

Nick Smith: Yeah, look, I think probably if I talk about some of the. Macro scale ones, , where the Murchison Green Hydrogen Project in Western Australia that's just received just over 800 million Australian dollars in funding from the government's Hydrogen Head Start policy.

That's being led, by Copenhagen Infrastructure Partners to produce 1.8 million tons per annum of green ammonia on an annual basis mm-hmm. And going to need roughly six gigawatts of onshore wind and solar to supply that. So, , that's, that's moving ahead.

It's, it's a very, it's in a very, very high renewable resource location. , Parts of Western Australia and South Australia. Probably there's half a dozen places in the world that have renewable resources as good as those two locations.

Mm-hmm. So it's, , it's, that's why CIP, , Copenhagen Infrastructure Partners were looking around in Australia because they knew the potential there. The other one that's quite interesting is , the able energy bell Bay Green Methanol or Power Fuels site that they've got in Tasmania.

It's looking to develop a 360,000 ton per annum green methanol project or base, , using hydroelectricity or renewable energy such wind or solar, but predominantly Tasmania has hydroelectricity. And, and looking to build 300 megawatts of Electrolysers. And then if I talk about, , at a smaller scale, what we're sort of really starting to see in terms of projects that are, are moving ahead and companies and organizations that are getting stuff done which I think is really important. Australian Gas Infrastructure Group which is, , they're owned by CKI out of Hong Kong. They've got their Murray Valley 10 megawatt electrolyser project, which is a which is just a gas blending into their distribution network.

Project that's, that's well underway in advance. It's, actually happening. They've got another 60 megawatt electrolyser they're looking to build in Adelaide to add on to the 1.25 megawatt electrolyser they already have here in the trial that they've been running for a number of years now on blending five and 10% hydrogen into the gas networks.

They're looking to do that across the, the whole of the Adelaide Metro. Area, which is the capital of South Australia. So I'm pretty confident that , those are the types of projects that we're really sort of starting to see. And I think also even though transports , there's the haves and have nots in with hydrogen or electric vehicles and I think , even though there's not huge amounts of trucks and vehicles on road that are hydrogen fuel cells at the moment, I think that will continue to play an important role particularly as we move into the marine fuels into the future as well.

So I think , that's, that's where we're starting to see a lot, a lot happen from a hydrogen perspective. 

Joseph Jacobelli: So I guess the next important question is what about cost challenges and economic viability? So what, are the primary cost challenges associated with producing green hydrogen in Australia and the broad Asia Pacific region? And also, how do these costs actually compare to traditional hydrogen production methods and what strategies are being employed to reduce them? So there's a little bit of a mouthful.

So it's all about cost challenges and economic viability. 

Nick Smith: Yeah, look there's no doubt about it. , Australia is a very large remote place to, to do business right. And a lot of these projects are in some very remote areas. But I, I think, , there there's probably not a lot of difference in Australia as there is in the rest of the world in terms of, , what are the challenges?

Well, , the challenges are, , the cost of capital the utilization of your equipment and, and your electricity input costs. , If you, if you think about those, they're the three main things that make up the cost of green hydrogen. So, I think we've seen .

Since then, the war in Ukraine commenced, we saw a significant inflationary impact globally which flowed through to Australia as well , from an energy perspective, but also from a supply chain perspective. So we've seen, , those inflationary impacts on equipment and energy costs.

As I spoke about the remoteness of many of these projects means that to get a workforce there and attract it and maintain it, or to actually build things in very remote parts of Australia. It becomes more expensive in terms of transporting all of your equipment there, getting infrastructure set up and, and having, attracting a workforce there.

So they're some of the challenges. And then I think post COVID, we saw a, a massive infrastructure boom and stimulus from the governments around the state and federal governments in Australia. And we've seen significant demand for housing and immigration post COVID.

And, what we're actually seeing in Australia, we've had this, this massive workforce availability and almost full unemployment in the country for a number of years now that, that's just starting to taper off. So workforce availability and capacity, I.

And capability to, work on some of these projects has also been a challenge as well. And then I think also in terms of supply chain availability, balance of plant equipment integration. And because Australia's a federated nation of states effectively we have a lack of consistent regulations.

Each state has will have similar regulatory environments, but slightly different depending on the topic. So I think, , those are some of the cost challenges around hydrogen. And if you, if you think about where, where do they sit now? I think you're really looking at sort of seven to $8 a kilogram Australian for, , a kilo of, of green hydrogen. And compare that to a grey hydrogen which is, , a $1.50 - 2.00. Well actually in Australian we will probably take that up to $3, 3.50, something like that, a kilo.

So, , I think there's still a way to go. But it's still very early days and, and there's a lot of technology and, and learnings that need to come out of, out of systems. I think there's some challenges in terms of what people projected in terms of lifecycle on stacks.

Versus reality of how they're operating as well. So I think there's all of these learnings that you, , you just have to do with the smaller scale before you go to gigawatt scale. Mm. , And I think we saw a whole heap of , people come out and go, it was almost a competition to see how many gigawatts you could announce, mm-hmm.

Mm-hmm. Some, some years ago. But the reality is that you've got to get there in a reasonably linear scale to start with right. And build on each, pilot plant, each commercial plant, and build on that capability so that you can feed that back into the production and the improvements in technology.

Joseph Jacobelli: So the way, we saw solar equipment, price falling to, , whatever the numbers is, depending on your starting date, probably 90% in the last 20 years or something like that. Same with wind turbines. Has really been scale. And of course it's been thanks to our Chinese friends because they build the scale and everybody else in the world benefits. Is it the same situation with hydrogen? That's what we are waiting for? Large scale? 

Nick Smith: Yeah. Look, I think it is , there's no doubt about it. It helps in terms of efficiencies on your production line, Efficiencies in the supply chain , outsourcing it to specialist companies.

, A little bit like , the automotive sector, , that they outsource the production of vehicle components to people that specialize in that. And then it comes in on a just in time basis, and you put it into the vehicle and suddenly there's a car that's been made at the end of the production line.

Once you start getting that scale and volume coming through, you'll get that value from the supply chain as well. I had the fortune to visit the Cummins manufacturing facility in Fridley last year in Minnesota where we had our research priorities workshop for high Safe over there.

And Cummins is a fantastic member of the International Association for Hydrogen Safety. Gave us all a tour of that site where they manufacture most of their very large generators their fossil fuel generators there which is, , the bulk of the revenue from that site. The profit comes from eight stations that they build these things on of various different sizes.

But they also build 500, 500 kilowatt and one megawatt electrolysers there. But the number of man hours that need to go in, , still having to hand bend pipes to get that, to get that design right, there's still lots of opportunities to bring the cost down. And I think that that's were, , scale will make a difference.

Will China do it? Well, they're doing it now. There's no doubt about it that, , 80% of the green hydrogen installations in the world are in China. So they are by far in a in a way the leaders in terms of commercializing scale and they will bring the cost down.

I have no doubt about it. 

Joseph Jacobelli: Hmm. I, I, I didn't realize that last time I looked at it was in 2020, and the numbers were not, were not as big as 80%. So obviously things have accelerated since then. 

Nick Smith: Yeah, I, I can't remember the exact numbers, but I think it's something like 4.2 gigawatts and 5.4 globally, so, mm-hmm.

That that's, mm-hmm. And that's been in the last, , few years that they've actually done that. So I think you'll see China, , they've made it as part of their energy plan. It's, in there for the first time. I think that they are absolutely , committed to getting scale and, utilizing it to decarbonize their production of , steel and also transport sectors and, and , how they can add value to their economy so that they continue to trade with carbon products or carbon taxes and, and border adjustment mechanisms.

Joseph Jacobelli: Mm-hmm. Moving on to money , financing and investment. So it's obviously still a relatively new sector, so requires enormous amount of capital, especially for the initial development as we just discussed. So what are the current financing models being used to fund green hydrogen projects in Australia?

Nick Smith: Yeah, look, it's, it's very much around shared risk or syndicated risk if you like right, , there's still a heavy ask on concessional funding and grants from the government mm. To enable that, that scale to come up and take some of that risk.

On behalf of, , the people of Australia who are going to get the benefits of this , we're seeing private equity and funds that are, specifically focused on some of these areas, like, , Copenhagen Infrastructure Fund.

They've got, I've got a number of funds that they're, they're using there. And then, , so we're seeing a lot of private equity and, and superannuation is looking to play in that area. The government has the Clean Energy Finance Corporation, which is, which is also concessional loans and debt and funding that can be provided.

And then, , at the end of it, you're starting to see a little bit of debt come in. But the reality is that a lot of these projects are still in the very early stages in the feed study type arrangements. And , that the, the government was re-elected in, in May just recently.

, Have consistency of policies now for the next three years. And, and arguably you could say with the margin that they won the election by, you could almost put that in for six years in terms of policy consistency, which helps to bring the investors to the table.

But really, I mean, it's consortia based projects where there's a number of people working because, , not only is it the component suppliers and the developers and the wind turbines and solar and the hydrogen electrolysers , the storage of this what's your end use, who's your off taker?

Mm-hmm. Um, All the who's, the engineering, all of those things need , a lot of collaboration. No, no different to building any other project, but it's no good producing a product unless you have an off taker who's prepared to pay the right price for your product. So that's where we're sort of seeing a lot more consortia backed projects.

And offtake is the build biggest challenge for some of these. Getting to FID at the moment, 

Joseph Jacobelli: I'm trying to better understand how governments and the private sector or private investors are collaborating and working together to overcome the, , financial barriers in this sector. Is, are there specific forums or examples that you can talk about in terms of how that's happening?

Nick Smith: Well, I, I guess probably if you, if you want to talk about , government support, , so , they've introduced hydrogen production tax credits. So $2 a kilo for green hydrogen production that they've got the Hydrogen Head Start project, which is a $4 billion fund of capital grants.

Effectively. They'll look to, to commit to advanced projects that can start to build hydrogen scale. , That's really around working with, with industry. In addition, they've got , green Iron and steel fund, which is a $1 billion fund, which is looking to create innovation.

The government has a future made in Australia. Mm. Policy and fund, which is a $22.7 billion fund that has, , clean liquid fuels, renewable energy, battery minerals and, and critical mineral processing. Whole range of different things that fall in underneath that 22.7 billion.

But I think that's where, , you're really sort of seeing that the government coming in and say, right, well, we're prepared to support but you've got to step up to the plate as an industry and commit to building some of this stuff. And I think, , there's a lot of international engagement going on from the Australian government with other governments around the world and trying to link up government policy and industry investment to support getting some of these projects.

To be built and actually starting to see what's the end dollar value of your green hydrogen and where can you sell that to? So there's, there's a lot of programs being set up to, to try and support that. , I think one of the best things that I've seen from pull through just recently is the Japanese government's announcement of a 50,000 yen per vehicle rebate for vehicles that have green steel incorporated into them.

I think that's a really good way of stimulating , uptake of green steel in automotive sector, because I think that's probably where you're going to see green steel roll out first in terms of that , you know, , a ton of steel in a car. If you're paying a $500 premium for that steel well there's your rebate and 50,000 yen.

In Australian dollars, roughly. Mm. So, , that sort of takes that cost componentry out of it. And on a 35, $40,000 car, it's not a big, it's not a big spend really if you have green stick. 

So that creates the demand. Then that creates some opportunities for people to invest in, green iron production and, direct reduced iron using , green hydrogen and electric smelting and other type areas where you can decarbonize that side of things.

So , I think they're probably some of the, the key areas that the thing in Australia that I haven't probably touched on is that the federal government funds cooperative research centres, and they've funded a number of these across the, the hydrogen. Sector more broadly. The future fuels industry, the heavy industry, low carbon transition, CRC and, , amongst others, obviously.

But what they are is they put government funding and industry funding and research and pull it together to and do it over a number of years and say, here's the, here's the problems we've got. Let's do the research, and how do we commercialize that? And I think that that's a really good way of doing things.

Australia is not as well known , as other countries for the integration of government industry , , and research institutions. In terms of leaning into an Australia first, if you like. Mm-hmm. Mm-hmm. Focus because we've been such a large exporting country for many, many years it's often been looking outward, how can we help you?

But it's been raw, raw materials as opposed to some of these other areas. So I think that's where , the governments are playing an important role with industry to try and facilitate that, that learning and, and commercial viability and understanding and de-risking some of these projects.

Joseph Jacobelli: Got it. I was going to ask you about policies and policy comparison, but maybe we should focus more on the actual , technological innovations and the infrastructure in the market. So I was going to first ask what. Technological advancements are crucial for reducing the cost and increasing the efficiency of green hydrogen production.

Nick Smith: Yeah, it's a really good question, isn't it? And I think . We're starting to see just that, that scale come through anyway. , If you think about alkaline electrolysers, they've been around for a very, very long time. They're proved right to technology. There's not much more in terms of learning curves there.

I'm sure there is, but it's harder to get the, the mm-hmm, mm-hmm. The percentages out of it. , Pam Electrolysers have still got a way to go in terms of their efficiency, the, life of their, their cell stack. , Can you, get away from, , platinum group elements as, as the catalyst, , can we find different ways?

There's a great Australian, a company called ADA who are looking to, , they're talking about a significant increase in electrolyser efficiency. Are still, , still very young and very immature as a, as an organization. But the technology's being stepped up, they're part of that merchant and project over in Western Australia that I was talking about.

But I think, , storage is going to be one of the issues that we need to think about. How do we store the amount or how do we produce the amount of hydrogen that we're going to need? , Particularly if we start talking about ammonia as a marine fuel and, , . Talking to some people just recently there, there's no doubt in their mind that marine fuels are moving to ammonia in the bunkering that's going to be required for that.

So , methanol will play a role in there as well, but I, I think hydrogen storage more broadly is going to be really important. , Liquid hydrogen's in it, very energy intensive, and you've got to keep it at minus 253. , There's a lot of research going into liquid hydrogen, but it's still relatively new for us.

Mm-hmm. And I think, as we start to build things at scale, just, just by being proactive and productive and, and looking for, , that, that. Extra opportunity. You see the innovation in design of, equipment and you see that design of facilities and, and how can you do things better.

It's just that ongoing learning side of things. But I think, , even if I bring it back to safety from that perspective, , where do we put sensors? How do we improve the sensor technology? How do we reduce the cost , on compressors , and , equipment , that balance a plant equipment that, runs around everything.

Are there, ways that we can because hydrogen is a very small very light molecule, Causes some issues with embrittlement in, certain types of metals. And . It needs to have very good materials technology, but other areas where we can sort of reduce those costs in the future.

How do we reduce handling costs? How do we improve the knowledge of liquid hydrogen , so that we can store it better , produce better vacuums. All of those sorts of things. And then, , I guess how do we get electricity prices down as well?

Mm-hmm. Then I think where is the novel use of hydrogen? , In terms of technologies , how do we, how do we actually get that to be, , do we need as much hydrogen to do the work? ? So there's all these sorts of areas were, we can actually make gains.

And it's across the broad spectrum , fuel cells , the efficiency of fuel cells in terms of converting hydrogen back to energy. That will improve over time. , and I think, , like anything we sort of need to take little steps and chunk it. , Is it that to overcome the socio psychology of, of engines, we need to just put hydrogen internal combustion engines for a period of time mm-hmm.

Mm-hmm. Before we move to fuel cells and, how do we get used to it? Do we store it in the pipelines underground and , at a hundred percent hydrogen in instead of natural gas? And that becomes your storage mechanism rather than having to build underground storage and line caverns and things like that.

So there's still a lot of work to be done in terms of how we store. Hydrogen at scale, , are there, are there things like metal hydrides and, and , liquid, organic hydrogen compounds that can actually improve the way that we, we store utilize and the economics of, of production. There's, there's a lot to be done still there, 

Joseph Jacobelli: r right.

You, you mentioned a couple of things which I want to follow up on. One is safety and two is kind of infrastructure challenges. So I'll combine the two questions, which is, , how does the work of high safe, which I believe is spelled H-Y-S-A-F-E undertakes. So how does the work how do the work high safe undertakes support the development of hydrogen adoption in the economy?

And after that, I also want to know how Australia is addressing the infrastructure challenges. Related to the production storage and transportation of green hydrogen. 

Nick Smith: Yeah. Look high, safe, correct spelling well done. . Thank you. So I think, , as I sort of said, it's an international community that's come together over the years with, with a focus on sharing knowledge , and learnings and technology research to help governments and industry researchers and communities to safely adopt hydrogen across the economy and the ecosystem.

, As I said, we tend to focus on pre-normative research and technology. That really provides that essential scientific evidence to support the development of efficient and effective regulations and codes and standards. And I'll talk about efficient and effective as a, as a former regulator and working for the government because what you don't want is regulation that's got too much red tape, too much green tape because people don't understand the risk.

And so they put additional levels in there to mitigate risk that aren't necessarily required. So that scientific evidence and that knowledge and understanding and that de-risking of, of certain topics and, and helping people to understand is really essential to enabling hydrogen to be adopted in the ecosystem at the lowest cost for industry.

Which also flows through to consumers because it then becomes more cost effective for consumers whilst they are able to decarbonize at the same time. So it's a very, very important thing. And safety's a no brainer. And I think if you, if you think about Maslow's hierarchy of needs , the, the thing that, that underpins everything in life is your safety.

You can't do anything if you're dead. So, , safe hydrogen safety is, critical. It's, critical in mining, it's critical in handling and electricity. , We embed passive safety systems into vehicles because everyone drives and, and things like that. So, safety's so, so important and I think, , helping to , coordinate and understand where research gaps are to help guide.

Research institutions and governments to fund these types of, of research working with industry to help understand their gaps in their knowledge and what needs to be done. And then taking that information and sharing that broadly across the world with communities. And so, , the main, way that we get a lot of our information out is the International Conference on hydrogen safety, which we hold every two years.

We've got one in September in, in Seoul in, in South Korea, where we've got 152 old presentations on all of the latest technical and, and research into hydrogen safety more broadly. So, , we'll use that as an opportunity to help educate South Korean. The, , community whilst we are there, we're looking to do, , various different things.

I mean, the Koreans are doing it fantastically anyway. They have one of the best education centres I've ever seen. It's very, very dynamic. If you get the opportunity to visit the Korea gas safety and there, their hydrogen education facility, that's where the, the Korean governments developed.

I highly recommend it. It's like going on a rollercoaster. Mm. 

It's really good. But that that's where safety just becomes so important to helping. People feel comfortable , , I mean, you think about we put petrol in a car and how volatile petrol is , but we don't think about it now because it's, it's been developed to such a stage where it's, it's taken for granted almost.

Joseph Jacobelli: Right. And, and the second part of the question was , about Australia addressing infrastructure challenges related to production storage and transportation of green hydrogen? 

Nick Smith: Yeah. So I think , there, there's a recognition in Australia that you need sort of an opportunity really to actually bring.

Industries together. So , the very early on the Australian government talked about producing hydrogen hubs. So there's seven hydrogen hubs that have been announced across Australia. And those hydrogen hubs are really important in terms of being able to produce hydrogen at scale but also be close to potential off-takers export facilities, consumers workforce , all of those types of things.

So I think, , hydrogen hubs are very, very important around that. The infrastructure challenges, from an energy perspective the Australian energy market operator produces an integrated system plan for electricity and gas. , They're looking at it for 2026 at the moment, which is a 20 year sort of look ahead on terms of where the infrastructure needs are going to be.

There's a lot of renewable energy zones that have been created around Australia that are looking at where are the best renewables, where do we need to create , infrastructure to support that. Mm-hmm. What do we need from an export perspective, what do we need from a green iron production perspective?

So there, there's a lot going on in, , in terms of infrastructure. Thinking and how do you get it there at the lowest cost? , I'm completely biased because this was, , one of the last things that my team, or , the department delivered particularly my team, were very heavily involved in developing before I left the South Australian Department of Energy and Mining.

And that was the, the initial version of the Hydrogen and Renewable Energy Act in 2023 that was submitted to Parliament by the minister and the Premier. And what that's done is it, it actually, we knew it was going to. Hold back potential development for a period of time. But what it did was it actually coordinated land release areas for renewable energy.

Mm. And then, , we spoke to the, the landholders that, that, that run the, the facilities, particularly in pastoral areas with Outback Australia, where there's, there's very, very high quality wind and solar resources and, and co-located. So the wind is there, the sun's there obviously in the middle of the day, but the wind tends to pick up in the early afternoon and runs through until the early hours of the morning.

So it's a, it's a very co-located wind solar resource. But then, , indigenous groups have agreed on these environmental groups, have agreed on these release areas , past release. And then you can actually release that and say, right now, go in there and develop it and do those sorts of things.

And by the way, here's a combined. Here's a, or here's an area that we're going to , regulate for infrastructure corridors. And it might be electricity, gas, water rail corridors in the future, who, who knows? But it's, , you can actually do that. And it's actually becoming quite a, an efficient one window to government where, , as a developer you're dealing with one department, and they sort it all out internally within government and come back to you.

So I think, , those are the sorts of things that , that, that you, you 

know. 

Nick Smith: Other states, as I say, have different regulatory environments. And, and there's an overarching look at that. But I think that's where we're starting to see a bit more coordination. Think about how we can improve , the infrastructure and minimize the amount of infrastructure that needs to be built.

Mm. Or create common user infrastructure that will be heavily utilized and, and have a, , very low unit cost of supply. And then of course there's a lot of work going on around skills and workforce capability investments in, in technical colleges and, and upskilling the trades people and the engineers and, and the, the workforce that, , boilermakers and orders that will all be needed to, to do this infrastructure.

Mm-hmm. And then there's a lot going into, , just recently they've announced that the standards Australia has, adopted and mirrored a whole range of, , international standards and adapted them for the Australian environment right. And operating environment.

So that, that's been really good in terms of , that consistency in terms of infrastructure that you can, you can tap into the global supply chain as well. So I think, , that those are the sorts of areas that I sort of see as, , how we're looking at that infrastructure.

And, and of course the, , the Australian government's still got the arena, the Australian Renewable Energy agency, which is there designed to become, they're, they're sort of the VC, the early adopters, they're try there to take a lot more risk from a capital perspective to get some of this innovation up and to make it happen.

And the Clean Energy Finance Corporation is there to also to do that side of things. So those are the areas where I see Australia is addressing, , the infrastructure challenges. And I think, , with that consistency of policy now and the confidence that you'll start to see some of these projects move ahead.

Joseph Jacobelli: Right. So we talked a lot of Nick, about the supply side, including, , the costs, the financing, et cetera. Let's talk a little bit about the demand side. So about the market demand and about the export opportunities. So very briefly who, who are the key international buyers of green hydrogen from Australia and what sectors are driving demand. 

Nick Smith: It's a really good question. And who will be buying green hydrogen from Australia? I don't know, to be perfectly honest with you at the moment. , It will green hydrogen, , be there as a, as a, as an export fuel. I, I suspect it's going to be there. Now will it be ammonia or will it be some other carrier, , liquid hydrogen or, , methanol that they crack back or do something like that?

Or will it be synthetic LNG that they crack back and do the CO2 capture with; I don't know exactly what that carrier's going to be. I, I still think the economics have got to, got to play out on that a little bit more. But I think if you, if you assume, the existing trading partners that Australia has now are likely to become the first off takers and receivers , of products that , are either green hydrogen exports or have green hydrogen embedded in them.

And I, think when you think about that, you think, China, Japan, Korea , Singapore are, are all potential opportunities there. We have good relationship with India , , , from that perspective Indonesia and Vietnam opportunities as well.

Longer term, it's really a matter of which market segment. Probably moves first. As I said, I think the automotive sector initially is the, one of the first places and, and perhaps manufactured white goods the marine adoption and synthetic aviation fuel or synthetic diesel even. , they'll make a big difference, I suspect to, how green hydrogen's produced and, and traded.

And, and where do you bunker and do those sorts of things. Most, most cost effectively. And then of course, Australia is going to be competing with the Middle East and it's going to be competing with Canada and, and Chile and, and Brazil and places like that for other markets for, for the same type of markets as well.

So , there, there's a, it's very, very important to get it right. Where I think Australia has a, a good opportunity is, is in green iron or direct produced iron production where you can embed the green hydrogen and use that in electric arc furnaces with scraped metal. Mm-hmm. I think, , that's a really good way of doing, you can put it into blast oxygen furnaces.

That's a particularly easy way , of decarbonizing a product that, , people use and, and is very, very important to the economy more broadly in terms of jobs creation. 

Joseph Jacobelli: Right, right. I was going to ask you one final question, Nick, if I could.

What, what is your personal outlook? I mean, , I get it that you're obviously bullish, more bullish than bearish, but if you were to kind of map out what is likely to happen over the next 25 years, are you up to 2050? What's your personal outlook on, , green hydrogen in Australia? And also if you could talk a little bit about the rest of Asia as well.

Nick Smith: Yeah, look, I am reasonably bullish because I understand it. But I'm reasonably pragmatic at the same time as well. It's not the panacea for everything. Mm-hmm. , Green hydrogen has a role to play and can play a role, but it has to be economic, and it has to be commercial. So, , if the fundamentals aren't right.

People won't use it. They'll go blue hydrogen, or they'll, , they'll do other things with carbon capture and utilization storage. They'll do electrification. So , it has to be done well, and it has to be done safely, and it has to get the, , the economics of scale and, and technology learning rates improve faster if it's going to compete.

It is a difficult molecule to work with and harness for some sectors, but for others it's, it's well known and well understood. So , I, I think it will definitely play a role in some of these hard to abate sectors. I, I'm an advocate or not an advocate, but I actually truly believe that energy.

And the energy sector is like a transport fleet. You need a little bit of everything because certain technologies will play into certain parts of the economy that other parts won't be able to feel. Solar and wind, solar's capacity is what, 20, 22%? Depending on where you are in the world, sometimes less wind, , probably the best wind in the world.

We're talking 50% utilization. Mm-hmm. Um, you know, There's, still a role for, geothermal nuclear , coal will continue to play a role. Oil and gas will continue to play roles for, for many, many decades to come. Mm-hmm. Mm-hmm. But I think , green hydrogen definitely has a role to play in there.

If you can get , the commercial environment right for it now , it's, a hot topic. There's, those that will just say, yes, we've got everything. Can, we can electrify everything. And then there's those that will say no, you can't, you need to be a little bit more thoughtful around how this works if you want to do it properly.

I, think, it will not be as big as everyone was talking about two or three years ago. Right. But I think if it's, if it's 10% of , the energy mix globally in terms of final demand by 2050, that's probably a pretty good outcome for the rest of the world and Asia in particular.

Joseph Jacobelli: And you've seen, I mean, based on what you saw over the last whatever it is, 10, 20 years in terms of development, that kind of makes you a little bit more positive about. What's likely going to happen in the next 10 to 20 years? Right? Because you've got this kind of momentum, this kind of gradual progressive, but short evolution going on, right?

Nick Smith: Yeah, look, I think so, and, and , as much as I hate to say it, the media have very short time cycles, so oh, yeah. Oh yeah. And, and so do, so do electors electorates in terms of, , if the government hasn't delivered what they said they were going to do, then, they often, , elect, , people will vote them out.

So there's this, there's this compelling reason to get everything done within a, , short period of time. Right. But the reality is it takes 15, 20 years. And, and, and even longer to really develop the industry up and , to, to take it to vastly different uses to what it's been used for previously.

So it just takes time. I, I, I'm reasonably, yeah, I'm reasonably confident that it will be adopted. How, and what, which parts of the economy it gets used in will boil down to how much the, the economies of scale and technology can make it competitive with others. 

Joseph Jacobelli: Mm Great. Nick, do you have any kind of funnel thoughts or some kind of key takeaways?

Nick Smith: Look, I think, , hold firm is, is, , the green hydrogen's. A, it's a good thing for certain parts of the market. Electrification is a really good thing for certain parts of the market. The reality is, it's difficult to produce the critical minerals and the electricity that's going to be needed to supply all of, all of the demands of the world.

So we need to be pragmatic and put it into where it's best used. And I, think that the decarbonization requirement and a socially just transition are really important at the same time. Mm-hmm. So that it doesn't, , push people into further poverty and or impact them by climate risk. So it's a big challenge still in front of us, but I'm pretty confident that with collaboration and persistence, that we're going to see some good outcomes.

Joseph Jacobelli: That's great, Nick, thank you so much for your time and for participating in the Asia Climate Finance podcasts. It was a really great conversation. First time we talk about green hydrogen, so hopefully in a year or so, we can revisit the topic and see where we're at and see what the developments have been.

Nick Smith: Yeah, thanks Joseph. I've really enjoyed chatting with you and it's great to be part of the podcast and I wish you all the best for the future. 

Joseph Jacobelli: Thank you very much, sir. Thank you. 

Nick Smith: Thank you.