Government support will be essential to the creation of a hydrogen economy in the Asia Pacific region while market competition will determine which technologies win out, according to a panel of experts on a PE Live discussion last week.

Government support will be “fundamental to getting the industry going quickly”, according to Australia-based Jeremy Hasnip, head of power and renewables at Japanese bank Sumitomo Mitsui Banking Corporation.

The Australian government declared in its National Hydrogen Strategy that it intends to become a major global player in the industry by 2030. A giant green hydrogen project in Western Australia recently won major project status from the government, which will help facilitate exports from 2028.

“There is certainly a lot of interest at the policy level from government, whether it is the national government or the individual state governments, making grant money available and bringing the government's green bank, the Clean Energy Finance Corporation, to the table with credit facilities,” he says. “Certainly, government is paving the way.”

In any market there are barriers to the scale the industry can achieve without government assistance. This is equally true for supply-side countries, which have the resource endowment to economically produce hydrogen, or in the downstream markets, the countries where there could be large demand but a lack of resources, according to Hasnip.

“To get the industry started, it needs some government assistance both on the supply or production side and on the demand side. And over time, we will get competitive traded markets, where it looks like other established industries like LNG or natural gas… Hopefully government assistance can speed up the journey.”

Support at the early stage is essential to bringing the market to a commercial footing. “Then we get a traded market,” says Hasnip. “I am a great believer in a free market economy, and that is the end goal.”

While hydrogen projects are present in only a handful of Asia Pacific markets, the fuel has had a meteoric rise within the energy transition discourse. 

“What is striking about hydrogen is just how, in the last year or so, it has become such a big part of the conversation,” says Richard Nelson, partner, energy practice at international law firm King & Spalding. “You almost cannot have the [transition] conversation without looking at what is happening in the hydrogen sector” and discussing “some of the developments… and investments that are happening now, on a local and international level”.

Pilot projects

The Singaporean government has announced pilot projects this year and has recently signed a memorandum of understanding with Australia to facilitate cooperation. “Foreign investors signed over the use for research into hydrogen technology and the application of hydrogen as a transportation fuel,” says Singapore-based Nelson. “[Hydrogen] is probably one of the most visible aspects of the energy transition in 2020.”

One of the most important outstanding matters for the regional and global hydrogen trade is the most efficient means of transportation, potentially either liquefied or as ammonia.

“At this stage, you have to be pursuing both technologies and see which one over time, is the more competitive,” says Hasnip. “It is natural to see technologies going head-to-head, as we saw when solar PV went head-to-head with solar thermal.”

There was a lot of investment in the thermal technologies in the early days, but prices did not descend as they did for PV, which followed a steep learning curve. “It will be interesting to see in hydrogen how the technologies play out, how the learning curves play out and where costs can be taken out of the system,” says Hasnip. “So watch this space.”

The PE Live webcast, Asia Pacific energy transition pathways, is available on demand here. 

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Author: Alastair O’Dell<BR>Senior Editor