Hydrogen Certification Survey

Hydrogen Engineering Australia (HEA) is responsible for the project coordination of the Hydrogen Energy Supply Chain (HESC) Project undertaken in Victoria. The HESC Project is led by a consortium of experienced industry partners from Japan and Australia: HEA, Kawasaki Heavy Industries, Electric Power Development Co Ltd (J-Power), J-Power Latrobe Valley, Iwatani Corporation, Marubeni Corporation, AGL, and Sumitomo Corporation and is also supported by the Japanese, Commonwealth and Victorian Governments.

The HESC Project is now in the pilot phase until 2021 and the decision to proceed to a commercial phase will be made in the 2020s with operations targeted in the 2030s, depending on the successful completion of the pilot phase, technical readiness, financial viability, regulatory approvals, social licence to operate and hydrogen demand. A guarantee of origin scheme would affect the decision to proceed to a commercial phase as hydrogen off-taker(s) in Japan must be interested in how hydrogen would be certified as ‘clean’ and it would affect the off-taker(s)’ decision. Investors’ decision would be also affected.
Furthermore, the requirements of a hydrogen certificate would inform the carbon capture rate that the market requires for the hydrogen produced from a commercial HESC. This would impact carbon capture technology selection in a commercial phase and our negotiations with a Carbon Capture and Storage (CCS) provider such as the CarbonNet Project.
Depending on the scope of a guarantee of origin scheme, it could also affect other commercialisation considerations (e.g. water usage, hydrogen purity, emissions associated with electricity, transportation and storage of hydrogen, materials to be used for a commercial phase facilities).
As explained above, the scheme would affect many aspects of a commercial phase project. The quicker a framework is developed, the quicker we can build its requirements into our commercialisation plans. In this regards, the ideal date for the HESC is 2022, which is assumed the quickest date.

Given the HESC Project’s prospective commercialisation activities timeframe mentioned above, we strongly believe that it should be in place by 2023 at least.

Ideally there would only be one internationally administered scheme for hydrogen, which could be applied for domestic market. This would best facilitate trade and remove the need for complicated double accounting or conversions as hydrogen crosses international borders.

Consumers in different countries may have different tastes in their hydrogen (normally based on cost or emissions considerations). Countries may have different domestic emissions reductions system depending on institutional capacity, policies, legislation and national circumstances.
So, a greenhouse gas (GHG) threshold for hydrogen production and its classification scheme should be tailored to its national circumstances and should not be stipulated in such international scheme.

Whilst, the calculation methodologies for GHG emissions and factual data such as production location and date, feedstock used and its associated GHG emissions and the system boundary for lifecycle emissions (which emissions to be covered by the certificate) for each pathway of hydrogen production should be the most important and tracked and developed as the international standard to secure its international consistency. So that producers in Australia would be able to interface with global hydrogen markets.

The methodologies for estimating emissions and monitoring National Greenhouse Energy and Reporting (NGER) scheme provides is one of existing schemes that could be align and contribute to collect data for an emission intensity scheme of hydrogen produced in Australia.
In addition, it is noteworthy that International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) announced the establishment of Hydrogen Production Analysis Task Force on 10 March 2020 (refer to https://1fa05528-d4e5-4e84-97c1-ab5587d4aabf.filesusr.com/ugd/45185a_3d98ff47736643c080434e4453058ab0.pdf). This Task Force aims to develop a mutually agreed upon methodology for determining the CO2 equivalent and other pollutants emissions with associated with the production of hydrogen. During its efforts, the European CertifHy project and any other relevant projects in other countries are to be tabled and considered to understand their approaches to determine GHG emissions from processes that produce hydrogen. It is important and worthwhile for Australia to participate in the Task Force and lead a discussion to build the pathway for the internal and international scheme.

Clean Energy Regulator, which is responsible for administrating legislation to reduce carbon emissions and increase the use of clean energy, including the NGER scheme, should be mutually interacted against a hydrogen scheme to ensure consistency. Australian Carbon Credit Units (ACCUs) scheme also could be coupled with to ensure the quality of “clean hydrogen” production, if the scheme provides net mitigation by carbon offsetting (please refer to our response to Question 7.)

Ultimately a guarantee of origin scheme should be technology neutral and inclusive and should not exclude any primary energy nor any different production methods such as production pathway with Carbon Capture and Storage (CCS) and Carbon Capture, Utilisation and Storage (CCUS). Other “carbon-neutral” or “carbon-reduction” activities such as use of biomass for hydrogen production, carbon offsetting and tree-planting should be also taken into account. The HESC Project Partners envisage a scheme where the same emissions thresholds apply to all forms of “clean hydrogen”, without resorting to terminology around different colours of hydrogen.

A certification system, especially methodology for estimation of GHG emissions should be transparent in approach and assumptions to build confidence. Development of transparent and consistent methodology is critical to the international scheme. Australia positions itself to become a leader in exporting hydrogen to the world and it is important to focus on a scheme that is accepted internationally. We strongly encourage that Australia would play a lead role in urgently shaping an international guarantee of origin scheme built for the global hydrogen market.

It is likely that an international body would be best placed to promote a guarantee of origin scheme on a global scale.
Potential international organisations include the International Standardisation Organization (ISO) Indeed, the ISO is already developing standards around hydrogen fuel quality. Finally, the International Energy Agency (IEA) could also play a role, given the amount of ground-breaking thinking already done in this area through various hydrogen advisory panels, reports, etc.
The hydrogen industry could provide their input into these forums through their national government representatives. The Hydrogen Council should also be afforded a seat at any table discussing an international guarantee of origin scheme.

As explained in Question 4, a greenhouse gas (GHG) threshold for hydrogen production and its classification scheme should be tailored to its national circumstances and should not be stipulated in such international scheme.
Classification of hydrogen by colours just because of hydrogen sources should be avoided because it might lead to misunderstanding on the actual GHG emitted from hydrogen production process and incorrect image of ‘clean hydrogen’.

Attention also should be paid to EU Sustainable Finance Taxonomy as it is a classification system with defining what activities are considered in line with sustainable development principles and will be used as a basis for the development of a taxonomy through the Australian Sustainable Finance Initiative (ASFI). This should not be too strict a regulatory burden at the infancy stage of the hydrogen industry development, thus preventing, or limiting, key investment into the hydrogen economy. In turn, this could stifle the realisation of their plans for a hydrogen society by 2050.

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