The hydrogen boom is already here, somewhere

The Aussies have made their opening gambit: “Queensland unveils “gigawatt” scale green hydrogen plans” reports Renew Economy.

The aim is to turn one of the world’s key natural gas export terminals into a hydrogen-exporting powerhouse. Using renewable energy and electrolysis to produce the hydrogen.

Is it pie in the sky? Will the terminal be staffed by drop bears?

Well, the land has been purchased, the government grants secured and the plans announced. So things are firming up.

What exactly is the plan though?

To export billions of dollars in hydrogen and ammonia, as well as blending the local town’s gas supply with hydrogen.

The $1.61 billion H2-Hub, which is being developed by the company The Hydrogen Utility, will be constructed through a staged process, and could ultimately include electrolyser capacity of up to 3,000MW, producing renewable hydrogen and 5,000 tonnes of daily ammonia production.

And powering the electrolyser will be certified green energy, produced locally. Given the location, I’m assuming that’ll be solar for the most part.

In other words, the hydrogen boom is underway in Queensland, my former home state.

Given how the gas boom played out there in past years, it’s this ramp up phase that should have investors excited. It’s when the gains are made. And it’s starting now.

But what about here in the UK? Are we letting the Aussies get a head start?

Well, by some measures, we’re well ahead of them. Hydrogen is already injected into the gas supply of one town here.

The UK government recently announced that hydrogen energy projects won a £70 million share of £90 million in government funding. That leaves the Queensland government’s $15 million Hydrogen Industry Development Fund in the dust, for now.

Not that Queensland’s project is the only one in Australia. Other trials are underway. As they are in Britain and elsewhere.

What makes the Aussie example so interesting to hydrogen companies everywhere, and thereby investors, is that they’re focusing on exports. Specifically exporting to the “decarbonised products in the energy, chemicals and mobility markets of North Asia”.

Many countries don’t have the right sorts of resources for renewable energy. Importing hydrogen from sunny and windy places is their solution to going carbon neutral.

In other words, the Aussies are punting spectacularly on a boom in demand for hydrogen from specific places. That doesn’t sound like the vague pitches about a hydrogen future we’ve heard about elsewhere.

It also doesn’t sound like a vain effort to reduce pollution in Australia. It sounds like a business proposition. An attempt to sell something to make a profit. Which also implies an international market for hydrogen.

We’re not just saving the planet here. We’re profiting from doing it.

It’s fascinating to think that Japanese taxpayers could soon be sending their taxes overseas in the form of having to buy hydrogen to meet green energy goals. And yet, that’s what the Aussie hydrogen project is banking on.

Shocking, isn’t it? Profiting from saving the environment. “How dare you,” some might say. And yet, as the gas boom showed, cutting emissions can be big business.

Profits aren’t the only thing at stake. Make a list of likely future hydrogen powerhouses and you’ll notice something. They’re developed, wealthy and politically stable places, for the most part.

A radical geopolitical shift could be tied to the hydrogen boom. An outbreak of peace, or an end to Pax Americana, depending on who you ask. More on that soon.

Today, I’d like to propose an alliance. And envision its future…

Welcome to the world of OHEC

It’s 2030 and leaders of the world’s hydrogen-exporting countries are meeting in Keele, Staffordshire, for the latest round of OHEC negotiations.

The Organisation of Hydrogen-Exporting Countries will once again set a global price for hydrogen to provide stability to the volatile hydrogen market.

“Natural fluctuations in renewable energy production require us to co-operate in providing certainty for energy markets” explained British Prime Minister Diane Abbott.

By fixing the price of hydrogen, despite its volatile renewable energy-based production, OHEC members hope to make hydrogen more popular as a power source around the world.

But critics claim the low-cost producers which formed OHEC are preventing competition from entering the market. The unfair advantage of OHEC countries, provided by their vast renewable energy resources, should be shared globally, campaigners say.

Rishi Sunak, founder of hydrogen trading firm Hydroman Sachs, pointed out that the market would fail to reach its equilibrium if OHEC governments interfere. “There will be shortages and surpluses of hydrogen as long as OHEC governments engage in price fixing.” Hydroman Sachs profits from trading volatile hydrogen prices.

Drowned out by protestors from hydrogen-importing nations such as Japan and South Korea, Prime Minister Abbott reminded OHEC attendees that, “It all began here in Keel, in 2020”.

Find out what she’s referring to here.

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Energy

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