Commonwealth opens crucial discussion on hydrogen certification

The Australian Department of Industry, Science, Energy and Resources is inviting discussion on its newly proposed Guarantee of Origin certification scheme for hydrogen production. The discussion itself however, which is welcomed by hydrogen industry stakeholders, has a long way to go before its methodology works to accurately differentiate hydrogen produced by renewables from other sources.

The Australian Renewable Energy Agency (ARENA) has invested in the construction of a 10 MW electrolyser to produce renewable hydrogen at the Yara Pilbara Fertilisers ammonia plant in Karratha, Western Australia.

Image: Yara Pilbara

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The Federal Government has released a discussion paper on an Australian hydrogen Guarantee of Origin certification scheme (GO scheme) as part of its National Hydrogen Strategy. A scheme that would seek to measure and track emissions from hydrogen production, which is to say, a scheme that would enable the clear distinction between green, blue, grey and brown hydrogen production. 

At the recent pv magazine Roundtables Europe 2021 event, Aurélie Beauvais, Deputy CEO SolarPower Europe noted one of the most important aspects of the development of green hydrogen at the moment is certification, which is to say, how we can know whether a hydrogen molecule is green or blue or grey or brown. “How can we define and certify renewable hydrogen,” Beauvais said, “and how can we make sure we are not double-counting the electron that’s produced?” 

In a recent forecast which predicted Australia’s low-carbon hydrogen export revenue could reach US$90 billion by 2050, Wood MacKenzie’s head of markets and transitions, Prakesh Sharma, “a stable and reliable source of low-carbon hydrogen supply becomes essential because it is impossible to tell how a given molecule of hydrogen has been produced. A guarantee of origin is therefore crucial to allow for minimal environmental impact, i.e., carbon leakage.” 

“Standards also help with risk assessment and transparent market pricing,” Sharma continued. “Australia stands to benefit as rules of hydrogen shipping, transport, storage and product quality are set and accepted internationally.” 

Government’s proposed approach 

The Government’s approach outlines methodologies related to three main hydrogen production pathways: electrolysis, coal gasification with carbon capture and storage (CCS), and steam methane reforming with CCS. However the paper does mention the scheme’s likely need to evolve in the future to include further pathways and aspects of the hydrogen value chain such as storage, transport, downstream products and energy carriers such as ammonia. 

Of course, as the GO scheme is a product of the National Hydrogen Strategy, it is technology neutral, meaning hydrogen produced with emissions captured and stored is equally as green as hydrogen produced renewably. 

The scheme, which the government is working on as a member of the International Partnership for Hydrogen and Fuel Cells in the Economy’s (IPHE) Hydrogen Production Analysis Taskforce, is looking to build on the European CertifHy approach, which sets a minimum of emissions intensity and is currently in its third phase, EU-wide deployment. 

There are other GO schemes at various levels of advancement including Germany’s TUV SUD, France’s AFHYPAC, and GOs for fuels in general exist in North America, Taiwan and Singapore, although hydrogen is not specifically included. 

As yet, the government’s discussion paper rehearses a short history of stakeholder survey which resulted in its deciding on setting up an initial IPHE aligned domestic scheme (as opposed to a scheme developed with a trade partner or aligned with CertifHy) which would transition to an international scheme over time. 

The GO would be certified based on data reported over a 12-month period and according to a tonne of hydrogen, accounting for emissions (scope 1 and 2), the facility and location, the production technology and the primary fuel source. 

Green Hydrogen production 

The paper proposes to use voluntarily surrendered Large-scale Generation Certificates (LGCs) issued under the Large-scale Renewable Energy Target (LRET) to track and verify renewable electricity claims of hydrogen producers. This proposed usage requires “an agreed understanding of what these certificates represent being 1 MWh of eligible renewable energy generation.” 

The paper uses the example of a grid-connected hydrogen producer in Queensland who voluntarily surrenders an LGC from a wind farm in Victoria. Because the producer is grid-connected, the actual electrons it is consuming would be a mix produced by coal, gas, renewables and other technologies. However, following a market-based method of emissions accounting whereby the percentage of electricity consumption attributed to the LRET is taken from the Renewable Power Percentage (RPP) for the given reporting year. So if the Renewable Power Percentage is 18.5 and the Queensland producer used 1,000 MWh of electricity for that reporting year, it may list 185 MWh as zero emissions. The zero emissions benefit would still be attributed to the Victorian grid. 

The paper concedes long term limitations on the use of Large-scale Generation Certificates in that it would not be internationally adaptable and the certificates cannot be created under the Renewable Energy Target legislation after 2030, when it is scheduled to be exited. So the paper suggests a further approach which would see the establishment of a “renewable GO certificate”, used to track and verify below-baseline renewable electricity. 

“A renewable GO certificate could be voluntarily surrendered using the Renewable Electricity Certificate (REC) Registry which is administered by the Clean Energy Regulator (CER). 

Industry reaction

The Australian Hydrogen Council (AHC) welcomed the government’s discussion paper by saying that hydrogen certification “is crucial to build a credible hydrogen industry”, with AHC CEO Fiona Simon agreeing that the Clean Energy Regulator “is a credible and established body which would be well suited to administering the scheme in Australia.” 

“The AHC is eager to see a certification approach locked down in 2021” continued Simon, “so that producers and consumers can rest assured that Australia has a credible, valuable and differentiated hydrogen product.” 

The Clean Energy Council (CEC) similarly welcomed the consultation on GO scheme, noting that such a scheme “will be critical for Australia’s hydrogen producers to demonstrate to customers that their hydrogen is renewable or zero emissions.” 

“It’s clear that international customers and trading partners have a preference for renewable hydrogen,” said the CEC in a statement, “and we expect that over time customers will also be willing to pay a price premium for this renewable product. It is therefore critical that we can differentiate renewable hydrogen from other fuel-based sources.” 

The CEC is also supportive of the CER’s credibility and “we support the proposal for the CER to lead the administration of this scheme.” 

CEO of the Smart Energy Council, John Grimes, however, voiced concern around the government’s technology agnosticism and embrace of hydrogen made with fossil fuels. “It’s disappointing that the Australian Government is so focused on hydrogen from coal and fossil gas, rather than renewable hydrogen, renewable ammonia and renewable energy [and] the paper provides no certainty for renewable hydrogen, ammonia & metals producers & buyers,” Grimes said in response to the news.

“The discussion paper is a useful, if long-delayed, start by the Australian Government on critical certification issues but it reinforces our view that the Government is failing Australians by refusing to develop a national energy or a national climate change policy or to commit to strong short and long-term emission reductions strategies.”

He added that it was “disappointing” the government did not once mention the Smart Energy Council’s Zero Carbon Certification Scheme, which now has 12 Australian and international founding partner institutions and companies.

Both the Smart Energy Council and the Clean Energy Regulator have said they look forward to cooperating on guaranteeing the origin of Australian hydrogen, with the Regulator seeing its role as providing government-backed certificates, leaving plenty of space for players like the Smart Energy Council to distribute and validate those.

Read the discussion paper and have your say on our consultation hub. Submissions close on 30 July 2021.

 

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