New Zealand is investing millions in a ‘green’ energy solution that some critics dismiss as a fairy tale. By Lawrence Watt.
Robert Holt, a team leader at research agency Callaghan Innovation, is a dab hand on his barbecue in Lower Hutt. This must be the world's highest-tech barbie. It burns hydrogen. It has a zero-carbon footprint. Its energy comes from solar panels and two wind turbines, which feed electricity into a box of similar size to a small fridge.
It's called an electrolyser – a contraption that uses electrolysis to break water down into oxygen and hydrogen, which is burnt in the barbecue. Holt reckons the market for Callaghan's "Hylink" electrolyser device is people who own flash off-grid baches with solar power. Slowly, after the batteries are charged, the hydrogen tank fills up while the owners are back in town, ready for powering the barbie, stove and some hot showers.
A Swedish engineer, Hans-Olof Nilsson, has gone a step further. His Gothenburg off-grid home also makes hydrogen electrolytically, from solar panels. He stores energy in both batteries and hydrogen tanks. Fully self-sufficient, Nilsson's hydrogen home appears in a documentary hosted by environmentalist Greta Thunberg (on Beamafilm and YouTube).
The rise of the hydrogen industry – or the "hydrogen economy" – is a high-tech way of reducing climate change. Its advocates say it will help move us out of the oil age by using renewable electric power to make green hydrogen as a fuel or for use in industrial processes.
Trillions of dollars are being pumped into the hydrogen economy worldwide, says New Zealand Hydrogen Association chief executive Linda Wright. In Asia, the main players are South Korea and Japan, which import much of their energy despite their nuclear power. Both nations aim to become net carbon zero this century, so they plan to import green hydrogen instead of coal and natural gas.
Energy-rich countries such as New Zealand will theoretically be able to export hydrogen, probably liquified or turned into chemicals such as ammonia, to such countries. They would use hydrogen to power trucks, aircraft, trains, rockets and ships; in steel-making; and, one day perhaps, to make synthetic hydrocarbon fuels.
Hydrogen experts say the potential economic benefit to New Zealand is huge. Holt has crunched some numbers on potential hydrogen exports. He calculates that based on significantly increased renewable resources — mostly more wind power — New Zealand could produce $18 billion worth of hydrogen in a year, which is a similar scale to the dairy industry.
With climate change upon us, could humble H2 also help make New Zealand less reliant on carbon fuels? Our carbon footprint is too high – the fifth highest greenhouse gas emitter per capita in the OECD – and when, or if, the Bluff aluminium smelter closes down, there will be a huge surge of renewable power looking for a new home.
Jim Hinkley, a senior lecturer in renewable energy systems at Victoria University of Wellington, is on the hydrogen association's board. His CV includes senior research positions at Rio Tinto, BHP and CSIRO (the Australian Government's scientific research agency).
Many new technologies are being developed in a race to make the hydrogen vision a reality. Hinkley says the best way to export hydrogen is to liquify it, but it needs to be refrigerated to -250°C. Japanese firm Kawasaki has built a small liquid hydrogen ship, so exporting bulk liquid hydrogen may be practical.
Rio Tinto has put off closing the Tiwai Point smelter to only December 2024. If it closes, power company Meridian would need buyers for 13 per cent of the country's power supply. But after a feasibility study by international consultants McKinsey and Co, Meridian is exploring other options – including making hydrogen for both local use and export.
Meridian's general manager of development, Guy Waipara, says a huge hydrogen electrolyser plant (up to 600 megawatts – the world's largest) could replace and use as much power as the smelter. It would take just five years to secure consents and build, he says. Potential customers to have sent expressions of interest include large Asian conglomerates and oil firms that want to go green over time.
The main product could easily be fertiliser. Research shows demand – both local and overseas – could get so high that power companies would eventually have to build more wind farms to meet it. It would be 'green' to the degree that it is made from renewable power.
But what if Rio Tinto decides to stay? Is the hydrogen option just a ruse to force it to pay more for electricity?
Waipara says there will be a big plus if Rio Tinto leaves. "We have thought really hard about what is the best answer for New Zealand," he says. A hydrogen plant can be turned down or even off during dry times – much easier than continuously supplying the smelter's potlines, which would seize up in an electricity outage. This dry-year power saving would be equivalent to about 30% of any power from the proposed Lake Onslow "pumped hydro" station in Otago.
What about the risks? Waipara says Meridian has a strategic advantage over overseas rivals. Its Manapouri power station has been running for decades, whereas overseas competitors would need to finance and build renewable power schemes from scratch.
As it happens, New Zealand is also considering many other green hydrogen projects. Many flow from a 2019 Government Green Paper and subsequent "hydrogen roadmap" – and a separate H2 Roadmap produced by Venture Taranaki.
One of the first to be up and running is Halcyon Power, a partnership between iwi-based Tuaropaki Trust, owner of the Mokai geothermal power station near Taupō, and Japanese firm Obayashi Corporation, which has completed a pilot plant. Obayashi has also partnered with Ports of Auckland, which may use hydrogen to power straddle carriers and other heavy equipment. It has installed a hydrogen refueller, and an early customer is Auckland Transport's hydrogen-powered bus trial.
Taranaki is also hatching ambitious plans. Projects on the H2 Taranaki Roadmap include making hydrogen at an electrolyser plant powered by new wind turbines, a green ammonia plant to augment fertiliser now made from natural gas, a fleet of 1500 hydrogen-powered trucks, and trials on the use of ammonia fuel. The Taranaki roadmap would reuse existing infrastructure – even the Think Big-era Motunui synthetic petrol plant that closed in 1999, which might eventually make methanol from green hydrogen.
Most of these projects are led by New Plymouth-based firm Hiringa Energy, whose co-founder and chief executive is Andrew Clennett, a former Todd Energy executive. His wife, Cathy Clennett, an engineer and manager whose LinkedIn page describes her as an investor, chairs its board.
Andrew Clennett sees a hydrogen future that includes heavy transport, heavy industry, chemicals and even high-temperature heat. "Hydrogen allows renewable energy to be applied to decarbonise parts of our economy that are otherwise very difficult to reach," says Clennett.
A New York-based hydrogen truck manufacturer, Hyzon Motors, said last February that it would deliver the venture's first batch of trucks from its Dutch factory by the end of 2021. This was a bit optimistic – but Clennett insists the parts are coming together. He told the Listener he expects construction of the proposed wind farm to begin in the first half of this year.
In November, Hiringa said it was also "commencing the construction phase of the first four high-capacity green hydrogen refuelling stations" for hydrogen-powered trucks in South Auckland, Tauranga, Hamilton and Palmerston North, at a total cost of $50 million. The first facilities are due to come on stream in the latter half of this year.
A partner, truck-leasing firm TR Group, will buy the first 20 trucks. National sales manager Shane O'Grady says it already plans to lease these to clients including Fletcher, Golden Bay Cement and NZ Post. The H-trucks, when travelling from Auckland to Wellington, will be refuelled at Hiringa's Palmerston North station. The trucks and hydrogen costs come at a price – about three times that of diesels – but O'Grady expects that to fall over time. If it works out, Hiringa also plans to import hydrogen-powered milk trucks.
The company appears to have received more Government loans and grants to advance its plans than anyone else in the sector. The Ministry of Business, Innovation and Employment (MBIE) says it has granted $41.26 million to Hiringa and its partners, including $19.9 million shared with Ballance Agri-Nutrients, a farmers' cooperative that makes fertiliser from natural gas and wants to start using green hydrogen instead.
In a statement, MBIE told the Listener that "individual funding arrangements have a range of checks and balances on the appropriate use of Government funding". Payments were staged, and "in some cases, funding recipients are only part-funded so there is significant motivation for them to see the project through successfully".
Hiringa describes some of its funding as loans on its website. The company also has other investors, including Sir Stephen Tindall's K1W1 fund, and Japanese conglomerate Mitsui.
Another plan in Taranaki is to replace natural gas with green hydrogen. First Gas, owner of New Zealand's main gas pipeline, plans to slowly replace natural gas with hydrogen by upgrading its existing pipeline network. The company says that from 2030, 20% green hydrogen will be blended into the North Island's natural gas network, with conversion to a 100 per cent hydrogen grid by 2050.
Much natural gas is burnt for heating. Holt refers to a study showing about 70 per cent of the energy consumed in New Zealand homes is for heat – cooking, hot water and keeping us warm – and piped natural gas currently meets much of this demand.
But hydrogen corrodes the inside of steel pipes (Holt reckons the process should be no faster than the effect of rust outside). Over time, as the proportion of hydrogen increases, consumers will also have to replace their appliances to work with 100 per cent hydrogen.
Some top engineers seriously doubt if direct burning and even hydrogen transport (except, perhaps, ships) are the best options. Although the energy is green, much energy is wasted, compared to say, electric trains, or bulk transport in ships.
In the UK, transport experts including Cambridge professor of mechanical engineering David Cebon have criticised injecting hydrogen into gas pipes as inefficient. Perhaps two-thirds is lost in making and distributing the hydrogen – Cebon asks why not use the power for say, heat pumps, which, he says, are six times as efficient as burning green hydrogen to make heat, or for electric trucks.
Susan Krumdieck is a professor of energy transition at Edinburgh's Heriot-Watt University – a new post after 17 years at the University of Canterbury. Krumdieck leads a team aiming to transition the Scottish islands' economy away from natural gas. She has written three books on sustainable energy, and says it is about moving from the oil age into a "circular economy" where we burn less carbon, import less junk and make stuff locally.
She describes hydrogen as unsuitable for transport because so much energy is lost and there are huge costs. She reckons using Manapouri's power to make hydrogen would waste at least two-thirds of it.
Krumdieck compares the hydrogen paradigm to the Hans Christian Andersen story The Emperor's New Clothes. In it, the emperor's country "had a good economy – but was taken in by flash tailors".
"He spends all the kingdom's money on clothes, instead of important things like schools, until, realising his error, he wakes up and goes out naked." Krumdieck says the emperor is akin to governments that have overspent on hydrogen rather than on researching more-efficient energy strategies.
When you examine the hydrogen industry's rhetoric, she says, it is mostly about plans rather than concrete achievement. In Europe, governments and some firms are having second thoughts. For example, Volkswagen-owned Scania has pulled the plug on its hydrogen trucks and will make electric trucks instead. The shift is partly due to reliability concerns, but mostly because it found hydrogen trucks use more than three times as much energy as electric trucks. "Hydrogen is a placebo. It gives comfort to some without providing any effect," she says.
Krumdieck says Cebon and six other top European professors have written to British Prime Minister Boris Johnson proposing that green hydrogen should be limited to replacing grey hydrogen (produced using fossil fuels such as natural gas) and used more in industrial processes, but not for transport.
She argues New Zealand should instead complete electrifying its rail system and reinstall the trams that councils ripped out in the 1950s. Trains use up to six times less power than trucks, she says. She estimates 80% of New Zealand's freight could be sent via ships and trains, with trucks – eventually electric – making just the final part of the journey.
New Zealand Steel is one of this country's biggest users of coal, burning 800,000 tonnes a year. Its carbon footprint has recently fallen slightly through the use of green hydrogen in its coatings process. The wind-powered green hydrogen is piped from a nearby plant owned by multinational BOC – probably the first major use for sustainable hydrogen gas in New Zealand.
Could the mill be converted to hydrogen? Hinkley points to a hydrogen process that could one day replace the traditional blast furnace. But it will be decades before such processes are economic, says NZ Steel's Vicky Woodley. A hydrogen-powered steel mill now exists in Sweden – but BOC's business development manager of clean hydrogen, Chris Dolman, agrees the process is not yet economic.
Should New Zealand really export its precious energy? Or would it be better to use our own power in the most efficient possible way for ourselves?
Will we see more green hydrogen used on fleets of trucks and buses? "Transport is the first sector to convert," says Dolman. "It is pretty close to being commercially viable, with some Government 'keeping'. Also, the technology is viable."
He envisages a future mix of battery-electric and hydrogen buses and trucks fuelled by liquid hydrogen, with diesels being phased out. He reckons logging trucks, for instance, will never be battery-electric, because they are so big. BOC is working with Daimler in Europe to fuel its Mercedes-Benz prototype hydrogen trucks.
Four decades ago, New Zealand embarked on its huge Think Big programme. Billions were borrowed and some – not all – of the projects were criticised by academics. They, rather than the Government or the industry concerned, were proved correct. Is it a similar situation with hydrogen today?
There is no simple answer. But before too long, Dolman believes, diesel trucks will be gone. Like steam trains, they will be revved up by grey-haired guys wearing oily overalls at transport museums, to an audience amazed by the quaint old days.