Published name
Policy position proposal 1: The scheme will be covered under new legislation administered by the CER. This proposal relates to pages 13-14 of the GO paper.
As currently proposed, by including brown and blue hydrogen - generated by fossil fuels - there is the prospect of the CER administering a scheme that includes non-clean and non-green hydrogen, which will undermine the CER’s integrity.
Policy position proposal 2: The Product GOs will cover the well-to-user system boundary. This proposal relates to pages 14-15 of the GO paper.
The scheme should cover the well-to-grave scenario. The product doesn’t ‘stop’ or cease to exist after the transport and storage stage. As the stages suggest, the product, hydrogen, will continue to be consumed and potentially recycled and ‘disposed’ of. Nor do the emissions that are supposed to be being tracked simply cease to exist after the transport and storage stage. For this scheme to be as successful as possible, it needs to track the entire supply chain and all submissions, not just half of the journey of hydrogen.
If the Government is serious about a more circluar economy, it should focus on the entire product lifecycle. In particular, it makes little sense to exclude the actual consumption stage of the product, which is surely one of the most critical.
The Albanese Government has recently created a Ministerial Advisory Group on the Circular Economy that will “identify meaningful and direct changes the government and industry can make to drive the transition to a circular economy”. (ref: New expert group to guide Australia's transition to a circular economy | Ministers - https://minister.dcceew.gov.au/plibersek/media-releases/new-expert-group-guide-australias-transition-circular-economy )
Has this new advisory group been consulted on this question? Are they aware of this submission? Will the minister and department seek their advice?
The creation of this advisory group is in line with the Australian Labor Party’s policy commitments in this area. (ref: 2021-alp-national-platform-final-endorsed-platform.pdf - https://alp.org.au/media/2594/2021-alp-national-platform-final-endorsed-platform.pdf )
“Labor will lead a shift towards a circular economy that reduces waste and pollution while creating new productive opportunities and jobs.
Labor will work to ensure that our nation and its people reduce the use of resources, reuse and recycle material wherever possible, and responsibly dispose of any residue.
Labor will work with states and territories, local governments, the resource management sector, industry, and the broader community to ensure National Waste Policy objectives are monitored, reviewed, and achieved through focused measures in the key areas of producer responsibility, product stewardship, material standards and innovative design, labelling, recycling infrastructure, government procurement, the elimination of unnecessary and harmful products, and consumer awareness.
Labor will develop a national framework for a circular economy, aiming to close the loop by minimising waste- generation and increasing the use of and extending the life of recyclable resources.
Labor will enforce tough controls on pollutants and toxins in the environment, minimise the production, import and use of harmful substances, develop alternative technologies and, where possible, eliminate harmful substances.
As well as these policy commitments for a circular economy, the ALP has also committed to support the clean energy transition, including away from fossil fuel use, including non-fossil fuel generated hydrogen:
“Labor acknowledges that new opportunities for Australian ships will emerge as industries transform in response to utilisation of new technologies and as Australia rebuilds its manufacturing industry, as energy transitions away from fossil fuel usage adopting new energy sources such as hydrogen
Labor will support the development of new low pollution forms of energy, including traditional and new renewable energy, clean hydrogen, bioenergy, as well as supporting industrial and research capacity.
Policy position proposal 3: There will be no minimum emissions intensity requirements for Product GOs and participation will be voluntary for both Product GOs and REGOs. This proposal relates to page 15 of the GO paper.
Policy position proposal 4: The GO scheme will be cost recovered in line with Australian Government policy. This proposal relates to page 15 of the GO paper.
There is a risk that fossil fuel companies, already enjoying multi-billion-dollar revenue increases, could qualify for ‘cost recovery’ from the Australian taxpayer. Given the hefty subsidies already provided to the fossil fuel industry, fossil fuel companies should be exempt from cost recovery.
Additionally, cost recovery should only be eligible for small to medium-sized Australian-based companies - as opposed to multinational ones, so that claimed funds don’t simply go offshore. Cost recovery applicants should also justify the basis for their cost recovery application.
Policy position proposal 5: The scheme will be reviewed in 2025 and every five years thereafter to ensure it is fit for purpose and able to support the industry. This proposal relates to page 16 of the GO paper.
Policy position proposal 6: Product GOs and REGOs will be housed on a publicly visible register with general information and the ability to share specific information with other scheme participants. This proposal relates to page 17 of the GO paper.
Policy position proposal 7: Product GOs will use a provenance approach, while REGOs are able to be traded independently of the electricity they were created alongside. This proposal relates to pages 17-18 of the GO paper.
Policy position proposal 8: An upfront data reporting model will be implemented to provide a practical reporting process. This proposal relates to pages 19-20 of the GO paper.
Policy position proposal 9: There will be four scheme participant roles with differing responsibilities and permissions. This proposal relates to pages 20-21 of the GO paper.
Policy position proposal 10: The creation process will be implemented which combines batch data with the upfront profiles to create certificates. The creation period for GOs can range from a single hour to a year. This proposal relates to page 21 of the GO paper.
Policy position proposal 11: Product GOs are proposed to require creation and transport and storage information to be complete. Product GOs can then be surrendered and report consumption information. This proposal relates to page 22 of the GO paper.
Policy position proposal 12: REGOs are proposed to be available to be traded or surrendered after being validly created. This proposal relates to page 22 of the GO paper.
Policy position proposal 13: The CER will undertake compliance monitoring and will have regulatory powers to address non-compliance. This proposal relates to page 22 of the GO paper.
The fact that this and previous consultation papers fail to even consider the use of blockchain technology is a major oversight, especially given that CSIRO and Austrade are involved in the use of blockchain technology and hydrogen.
Policy position proposal 14: LSTRs will provide third-party assurance of the information reported under the GO scheme. The need for LSTRs will be front-loaded requiring less as time goes on and participants demonstrate compliance with the requirements of the scheme. This proposal relates to pages 23-24 of the GO paper.
Policy position proposal 15: Where Product GOs have incorrect information, they will be updated to reflect the most up to date information. After the ARC process, Product GOs will be finalised and not subject to further amendments. This proposal relates to page 25 of the GO paper.
Policy position proposal 16: Where REGOs have incorrect information, they will not be updated and instead will follow an ‘unders’ and ‘overs’ reconciliation process to minimise impacts on the renewable electricity certificate market. This proposal relates to page 26 of the GO paper.
Policy position proposal 17: The Department proposes the GO scheme methodologies will align where possible with the NGER and the Safeguard mechanism. This proposal relates to page 28 of the GO paper.
Policy position proposal 18: The CER will be able to establish formal data sharing arrangements with the administrators of these schemes to streamline the creation process. This proposal relates to page 28 of the GO paper.
Policy position proposal 19: Material emissions sources that must be measured for each product and production pathway will be specified in the methodologies. The sources will be selected based on materiality threshold of 2.5% of total emissions per source. This proposal relates to page 33 of the GO paper.
Policy position proposal 20: ACCUs issued from within the system boundary will need to be surrendered for the emissions reductions to be recognised under the GO scheme. ACCUs or other carbon offsets cannot be used to reduce the emissions intensity of products listed on GO certificates. This proposal relates to pages 34-35 of the GO paper.
Policy position proposal 21: LGCs and REGOs will be used to demonstrate renewable electricity use. Behind the meter or directly supplied renewable electricity will not require certificate surrender if none were created. This proposal relates to pages 35-36 of the GO paper.
Policy position proposal 22: A new RMF will be calculated for use within the GO scheme that is updated frequently and can be accessed by other market-based frameworks. This proposal relates to pages 36-37 of the GO paper.
Policy position proposal 23: RECs used to demonstrate renewable electricity usage in production of a GO product must have been issued within the previous 12 months. Additional information will be captured on REGOs to allow for voluntary time matching at a more granular level. This proposal relates to pages 37-38 of the GO paper.
Policy position proposal 24: The GO scheme will expand over time by incorporating new product-specific methodologies. A prioritisation, development and review process with industry input and international engagement will be established to ensure domestic applicability, international alignment, and continued suitability of legislation. This proposal relates to pages 38-39 of the GO paper.
There is compelling evidence for the need for a Guarantee of Origin in the area of forest products - especially timber, paper, packaging and beef.
Currently, it is impossible for domestic and international consumers to know the origins of forest products including beef (for which thousands of hectares are cleared, particularly in Queensland, with an astounding 2.1 million hectares of woody vegetation cleared in the five years to 2019. Someone buying wood, paper, packaging or beef has no way of knowing, apart from in some instances but in the most general terms, where these products have come from and how they were produced.
A Guarantee of Origin scheme could complement, and is perhaps even necessary, for the Australian Government to make good on its stated aim for the country to be deforestation-free by 2030. (Ref: (ref “Biodiversity and carbon credits: Albanese Labor government set to join 2030 global deforestation ban” - https://www.afr.com/policy/energy-and-climate/labor-set-to-join-global-2030-deforestation-ban-in-carbon-credit-boost-20221103-p5bvcv). The application of these scheme beyond hydrogen guarantee, to potentially these industries too, is a fundamental reason to get the settings right now.
Upload 1
Submission: Guarantee of Origin scheme for hydrogen
Wilderness Society submission to Australia’s Guarantee of Origin Scheme: consultation papers, Department of Climate
Change, Energy, the Environment and Water
For more information please contact Tom Allen - tom.allen@wilderness.org.au, 0434 614 323
February 2023
About us 1
Introduction 1
General comments about hydrogen 2
Comments about the proposed Guarantee of Origin scheme 3
Comments about Blockchain 4
About us
The Wilderness Society is an independent, community-based, not-for-profit environmental advocacy organisation. Our vision is to transform Australia into a society that protects, respects and connects with the natural world that sustains us. We are committed to protecting, promoting and restoring wilderness across the continent for the survival and ongoing evolution of life on
Earth. From community activism to national campaigns, we seek to give nature a voice to support the life that supports us all.
Introductory comments
The Wilderness Society welcomes the opportunity to comment on the Australian Government’s
Guarantee of Origin scheme and the potential for rigour, transparency and emissions accounting and tracking in Australia’s emergent hydrogen industry.
The position paper states that “increasingly, households, business and investors seek robust information to verify claims made in relation to low carbon or green products”. The Australian
Competition and Consumer Commission has responded to increasing levels of greenwashing and public concerns about it by making a priority of clamping down on spurious claims by businesses
1
about false environmental credentials. 1 We also note that the hydrogen and electricity Guarantee of Origin (GO) schemes are proposed to be operated by the Clean Energy Regulator.
General comments about hydrogen
Hydrogen is a greenhouse gas. The US Massachusetts Institute of Technology (MIT) notes that:
“Hydrogen is… an indirect greenhouse gas with a global warming potential
GWP of 5.8 over a 100-year time horizon. A future hydrogen economy would
therefore have greenhouse consequences and would not be free from climate
perturbations.” 2
A study by the UK government found that hydrogen is “twice as powerful a greenhouse gas as previously thought”. 3
A report last year noted that “the effect of hydrogen on the climate is largely unexplored” and included a comment from a scientist from the Environmental Defence Fund that “hydrogen is a potent short-lived indirect greenhouse gas that is 200 times more potent than carbon dioxide at the time it is released, kilogram for kilogram”. 4
It is important for Australia’s Government and industry to keep their feet on the ground and not be swept along by the apparent ‘hydrogen rush’. Equally, the public needs to be aware that hydrogen is not a silver-bullet energy solution. Many environmental variables in the production and use of hydrogen must be considered and are central to the Government's hydrogen policies, including this proposed Guarantee of Origin scheme.
Comments about the proposed Guarantee of Origin scheme
In the previous round of consultation in 2021-22 on the Hydrogen Guarantee of Origin scheme: discussion paper, there were submissions from several transnational fossil fuel majors, many of which are perpetuating and even increasing their exploration, exploitation and combustion of fossil fuels, as well as resisting the transition to renewable energy. There were also submissions from fossil fuel industry bodies. The corporations and industry bodies which made submissions include
● Woodside Energy
● Santos
● The Australian Gas Association
● BP
● Origin Energy
● Shell
1
Businesses told to be prepared to back up their environmental claims | ACCC - https://www.accc.gov.au/media-release/businesses-told-to-be-prepared-to-back-up-their-environmental-claims
2
Global environmental impacts of the hydrogen economy | Advanced Global Atmospheric Gases Experiment - https://agage.mit.edu/publications/global-environmental-impacts-hydrogen-economy#:~:text=Hydrogen%20is%20therefor e%20an%20indirect,be%20free%20from%20climate%20perturbations.
3
Hydrogen ‘twice as powerful a greenhouse gas as previously thought’: UK government study | Recharge - https://www.rechargenews.com/energy-transition/hydrogen-twice-as-powerful-a-greenhouse-gas-as-previously-thought-u k-government-study/2-1-1200115
4
Scientists warn against global warming effect of hydrogen leaks – EURACTIV.com - https://www.euractiv.com/section/energy/news/scientists-warn-against-global-warming-effect-of-hydrogen-leaks/
2
● Australian Gas Infrastructure Group
It is concerning that so many fossil fuel organisations are opposed to the “growing domestic and international demand for verified renewable energy and clean products” and yet these companies have expressed interest in the Government’s hydrogen Guarantee of Origin (GO) scheme.
The policy position paper on the hydrogen GO scheme that the government provided to inform this consultation refers to “steam methane reformation” and “coal gasification” methods to generate hydrogen. These methods are how fossil fuel gas and coal can generate hydrogen. Such hydrogen is referred to as ‘blue hydrogen’ and ‘brown hydrogen’.
Neither constitutes clean or green hydrogen yet the consultation documents do not make this distinction, nor would the GO scheme itself, which is highly problematic regarding the
Government’s stated support for a clean-energy transition. It would be irresponsible and wasteful if in years to come, Australia’s emissions fail to decline because the transition has been deliberately or at least avoidably mishandled, despite good intentions. This GO proposal is one of many opportunities where we can incorporate clean-energy ambitions.
The policy paper is inherently contradictory. While it appears to be designed to set up a hydrogen verification, anti-greenwash and low-emissions framework, it fails to distinguish genuinely clean / green hydrogen—which is generated by renewable energy, from brown and blue hydrogen—which is generated by coal and fossil fuel gas. In fact, it would appear that the policy paper supports the use of brown and blue fossil-fuel generated hydrogen despite supposedly being a scheme designed to ensure hydrogen is low emissions and green.
We recommend at the outset that the Guarantee of Origin scheme for hydrogen only be applicable for hydrogen that is generated by renewable energy, in line with the Green Hydrogen Standard that the paper refers to but fails to use to define hydrogen eligible for inclusion in the GO scheme. The
Green Hydrogen Standard5 defines green hydrogen as
“hydrogen produced through the electrolysis of water with 100% or near 100% renewable
energy with close to zero greenhouse gas emissions”. 6
It is this standard that should be at the heart of the Guarantee of Origin scheme.
The paper states that “These industry initiatives [ie, the Green Hydrogen Standard and the Zero
Carbon Certification Scheme] will be able to leverage the GO scheme once it commences operation to provide additional branding”. But instead of using these industry standards to circumscribe and define the hydrogen that should be allowed to be certified in the GO scheme, what’s proposed allows for higher-emissions, lower-quality, less green hydrogen generated by fossil fuels to be part of the scheme. This is a major failure to ensure what the paper describes as “growing domestic and international demand for verified renewable energy and clean products”. Hydrogen generated by fossil fuels is neither renewable nor clean, yet the risk appears to be that such tainted hydrogen could be greenwashed by this GO scheme. This risks setting up conflict and failure on the international markets, as well as a failure in principle to move away from fossil fuels.
CertifHy is the standard that Europe uses to certify its green hydrogen. This is an example of how
5
The GH2 Green Hydrogen Standard | Green Hydrogen Organisation - https://gh2.org/our-initiatives/gh2-green-hydrogen-standard
6
GH2_Standard_A5_JAN 2023_1.pdf - https://gh2.org/sites/default/files/2023-01/GH2_Standard_A5_JAN%202023_1.pdf
3
Australia could also be certifying its domestic hydrogen industry—but thus far failing to.
The CertifHy scheme says it “has developed high-quality hydrogen certification schemes across
Europe, that will support hydrogen’s market growth as they are a reliable tool for consumers to track hydrogen’s origin and environmental attributes”. Hydrogen generated in Australia using fossil fuels will, according to research by the Australian National University, “struggle to meet even the current voluntary CertifHy standard”. 7
This is an example of how hard-wiring fossil fuel hydrogen into the Australian GO scheme that is centrally about international hydrogen trading will lead to market conflict and market risk, including investor risk, and undermine Australia’s hydrogen industry, especially that hydrogen that is genuinely clean and green because it is made using renewable energy.
If the GO scheme is allowed to include fossil-fuel-generated hydrogen it will have fallen at the first hurdle by failing to guarantee hydrogen is truly clean and green. In addition, if the scheme is intended to provide robustness, credibility and verification of hydrogen generation and emissions but includes fossil-fuel-generated hydrogen, the scheme would itself be guilty of the very greenwashing it claims it wants to avoid.
Unfortunately, that appears to be exactly what appears to be proposed. This would have significant ramifications including
● The Clean Energy Regulator would be forced to regulate fossil-fuel-generated hydrogen,
which would undermine the mission and credibility of the clean energy market’s chief
regulator;
● Hard-wiring fossil fuel-generated hydrogen into the GO provenance scheme could
undermine the credibility, public confidence in and transition to genuinely clean / green
hydrogen;
● As a central intent of this GO scheme is to verify the provenance of hydrogen so that it can
be traded internationally, including blue and black hydrogen in the scheme would
therefore hardwire risk of fossil-fuel generated hydrogen into international markets and
their supply chains from Australia and therefore, also, Australian businesses and
consumers.
Comments about Blockchain
There is a glaring omission in the GO framework - which is lack of reference to blockchain.
Blockchainis likely to be fundamental to future supply chain integrity. It's been proposed by CSIRO and AusTrade - yet it's a no-show in the latest consultation paper and previous rounds of consultation.
This appears to be a major oversight in the proposed GO framework for several reasons - not least cost savings (including of public money), scheme trust and integrity, scheme efficiency and because provenance tracking is a fundamental function of blockchain technology.
This exclusion is even more mystifying given the fact that CSIRO is working on a ‘Hydrogen
Accreditation Project’ using blockchain. This mystery is further compounded by the fact that
7
Periscope-Analysis-Paper-Volume-7-DD08.pdf - https://periscopekasaustralia.com.au/wp-content/uploads/2022/01/Periscope-Analysis-Paper-Volume-7-DD0
8.pdf
4
Austrade led “Australian businesses delegation to the World Hydrogen Summit in Rotterdam” and the delegation promoted “Australian leaders in hydrogen fuel cell technology, blockchain-enabled energy tracking platforms and catalysts”.
To illustrate the gap in the framework, we draw your attention to some additional recent developments in the area of applied use of blockchain to track hydrogen, noting the Wilderness
Society does not necessarily endors these:
● “ACCIONA develops first platform to guarantee renewable origin of green hydrogen”,
ACCIONA
“ACCIONA has developed GreenH2chain®, the world's first platform based on blockchain technology
that guarantees the renewable origin of green hydrogen. This new tool will also allow clients to verify
the transportation and delivery process of this type of clean energy.”
● “The Role of Blockchain in Green Hydrogen Value Chains”, Belfer Center for Science and
International Affairs
“Today, the origin of a commodity is certified through certificates of origin. However, the certification
process can be complex, requiring many intermediaries that add time, labor, and cost burdens.
Furthermore, concerns over whether commodities are accurately counted and traded pose
challenges to scalability. Innovative technologies like blockchain could significantly simplify carbon
accounting and green certification processes.”
● Powerledger already has blockchain-powered hydrogen tracking scheme in place, John
Bulich, its Technical Director & Co-founder, has said:
”Market mechanisms facilitated by blockchain technology can deliver the energy system of the
future without government subsidy.”
Given that this consultation excludes blockchain, but includes the proposed use of government subsidies, we believe that the Department of Climate Change, Energy, Environment and Water must urgently look at this area with a view to including it in the GO framework.
● “Blockchain solution pilot for certification of green hydrogen”, Nubian
“with envia THERM GmbH and Siemens Energy we have started a pilot project to test Siemens
Energy’s Clean Energy Certification solution based on blockchain technology. The pilot is running at
Nobian’s chlor-alkali electrolysis plant in Bitterfeld, Germany, where we have been providing green
hydrogen since 2021, as first certified chlor-alkali electrolysis plant in Germany.”
Conclusion
A full and rapid transition away from fossil fuels is urgently needed to prevent the catastrophic impacts of climate change.
This proposal is an opportunities for the government to incorporate clean-energy ambitions: it is vital that the Guarantee of Origin scheme for hydrogen only be applicable for renewably-generated hydrogen. The use of brown and blue fossil-fuel generated hydrogen risks fundamentally hijacking this area’s domestic and international competitiveness. Ends.
5
