INTERVIEW: Australia's CQ-H2 may look at supplying renewable hydrogen/ammonia to Europe

Australia's Central Queensland Hydrogen Hub (CQ-H2) could look at supplying renewable hydrogen/ammonia to Europe in the wake of a bilateral deal signed between the two nations, CQ-H2's top executive told S&P Global Commodity Insights.

Australia and Germany signed a A$660 million ($440 million) pact under Germany's H2Global subsidy scheme, to facilitate supply of renewable hydrogen and its derivatives to Europe at the Asia-Pacific Hydrogen 2024 Summit and Exhibition in Brisbane Sept.12-13.

"While it is not a part of our current plans, our consortium is committed to making sure that this project gets up and goes ahead and so we certainly wouldn't rule out that opportunity to look at Europe as well," said Philip Richardson, general manager, hydrogen projects at Stanwell, one of the leading developers of CQ-H2.

"The clear message from the Europeans and the Germans is, they don't see that distance as being a barrier."

Richardson said it was possible to meet Europe's additionality and temporal matching rules as specified in the Renewable Fuels of Non-Biological Origin (RFNBO) rules under the European Union's Renewable Energy Directive II (REDII) regulations.

"If we had a customer base that was entirely European, then that would... potentially have a cost impact to move from meeting the current Australian standards," Richardson said referring to the rules under Australia's Hydrogen Headstart subsidy plan and also the currently followed standards of Asian destinations.

CQ-H2 has Japanese companies Marubeni and Iwatani and Singapore's Keppel Infrastructure as project participants who are also seen as potential future offtakers.

Richardson said a "mixed offtake model" or a project supplying to different sources could enable catering to both Europe and Asia.

"Effectively you can achieve time matching for a proportion of your supply and then you could achieve an annual matching for another portion of your supply and you could stack those together probably," he said.

Under the eligibility criteria for Hydrogen Headstart plan, the entire hydrogen production process (including balance of plant) must be from electrolysis and be 100% powered by renewable energy.

The scheme adds, all electricity use must be matched with the surrender of eligible renewable electricity certificates (RECs) or be input directly from eligible behind the meter renewable generation for which no RECs were created.

European delegation

At the hydrogen summit, European delegations represented senior government officials and industry members who indicated early deal engagement between Europe and Australia, Richardson said.

"They're seeing that Australia has particular advantages they want to capitalize on," Richardson said. "That's a vote of confidence in Australia as a hydrogen producer."

The new revised National Hydrogen Strategy, released by Climate Change and Energy Minister Chris Bowen at the summit, would provide a clearer guidance for trade, Richardson added.

"In the medium to long term, the new revamped hydrogen strategy with its production targets is important because it shows that Australia definitely still has an ambition to be a major hydrogen producer and exporter," he said.

CQ-H2 is among six finalists under Hydrogen Headstart and final results are expected later this year. Winners could expect quicker final investment decision and execution.

New Partner

With Incitec Pivot joining the CQ-H2 Sept. 13, the consortium will get a leg up in cost savings as Incitec is seen as a significant offtaker of renewable ammonia from the project, Steve Quilter, executive general manager at Stanwell told Commodity Insights.

"So that's a really significant development towards lowering the cost."

Platts, part of Commodity Insights, assessed Queensland hydrogen produced via alkaline electrolysis (including capex) at $3.41/kg Sept. 11, down 54% on the month.

The Netherlands hydrogen produced via alkaline electrolysis (including capex) with grid only power was assessed at $6.51/kg Sept. 12, down 4.55% from a month ago.