Andrew Murphy: What makes New Zealand’s hydrogen potential unique?
More than 200 hydrogen projects are planned worldwide, but experts say few of these will become a reality. What makes New Zealand’s green hydrogen ambitions likely to succeed?
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Andrew Murphy has more than a decade of experience in the hydrogen industry. After working as a hydrogen technology engineer at Shell, he started his own consultancy, RHC IMZADI, working with clients ranging from large petrochemical companies and electricity companies to small startups who are trying to commercialise their products.
Murphy explains that green hydrogen has significant potential in helping decarbonise sectors that are problematic to electrify.
Hydrogen becoming cost effective
“There are sectors of the global economy whose greenhouse gas emissions will be hard to eliminate without hydrogen. The steel sector would be very difficult to decarbonise without hydrogen. Hydrogen also complements existing energy storage technology, such as batteries, and can be used for seasonal energy storage.
“We’re already seeing some areas where this is cost competitive now. In some onsite freight loading and warehousing applications, hydrogen is starting to reach cost parity with other energy sources, and I think we’ll see that expanding into other areas relatively soon.
“It’s green hydrogen specifically that’s the key here, because other types of hydrogen still produce CO2. Without green hydrogen, we’re not going to meet the terms of the Paris Agreement.”
Murphy says that the hydrogen industry is known for having “hype cycles”, but that the current interest in the industry doesn’t appear to be decreasing.
“To me, it finally feels like governments, companies and societies have taken the time to think about where hydrogen fits into their energy strategy. And where hydrogen does fit really well is in these hard to abate industries, so that’s quite rightly where most of the focus is.”
If not green hydrogen, what?
Murphy believes that if the green hydrogen opportunity doesn’t become a reality, carbon emissions would need to be mitigated in other ways.
“Some sectors can be electrified, but these harder to abate sectors aren’t ideal for electrification - they’d need a lot more innovation. In some cases, the solution could be substitution of products that can’t be made without burning fossil fuels, using less of product A and more of product B - so it could be that we use less steel and perhaps more composites.
“But there are some areas where, without hydrogen, we’re really going to struggle.”
Global interest ramps up
Murphy explains that 235 large-scale hydrogen projects have been announced globally, but that many of these won’t eventuate.
“I’ve heard some companies say they’re not sure that they want to start their own hydrogen projects when they see how many are already announced, but most of these probably won’t happen. There’s still room in the markets for very good green hydrogen projects.
“And if we look at the projections of how much hydrogen is needed compared to the number of projects right now, it does look like these projects will meet that demand. But in reality, we’re going to see probably 10 per cent of these actually happen.
“A lot of those projects announced are from companies that have never been involved with hydrogen before who've gone fishing for money.
“There are a lot of factors that influence whether these projects will actually happen. Geographic stability will be an important one, especially in terms of trade partnerships, because some countries are more politically unstable and importers won’t want to put all their eggs in those baskets. They’ll want to know that their hydrogen sources are stable for the long term and that they can develop a good relationship with them.”
The realities of hydrogen export
Murphy believes that a convergence of environmental and political factors makes New Zealand uniquely placed to become a green hydrogen leader.
“New Zealand is fantastically well placed for green hydrogen compared to a lot of other countries because it has such an abundance of renewable energy, and has its target of 100 per cent renewable electricity by 2030. The government is very focused on having this just energy transition, which really places it as a leader amongst most major developed economies.
“You have a lot of hydro power baseload, which other countries don't have, which is very consistent compared to things like solar or wind, where the sun doesn’t always shine or the wind doesn’t always blow. This hydro power base load is really a differentiator for running your electrolysers on green power. That brings the cost down significantly when compared to variable power.
Murphy explains that stable, democratic governments are essential for the success of green hydrogen projects.
“I know there's cross-party support in New Zealand for hydrogen, which is very much needed. A lot of countries don't have that.
“Location-wise, New Zealand is well located for exports to parts of Asia, and it’s already a trade partner with these countries too. And, of course, New Zealand is lucky to have so many deepwater ports, which makes it so much easier to export hydrogen that is produced.
“For this project in New Zealand, it’s a matter of being bold. There’s a lot of talk that if we wait for another 10 years, the cost of electrolysers will come down, so the project will be cheaper to do then.
“But the cost doesn’t come down if everybody waits. Going first means you may pay a little bit extra for electrolysers, but you’re building a business for the long-term.”