Australia backs desert project to export green hydrogen to Asia

Canberra has granted “major project” status to a $36bn renewable energy project, which aims to build the world’s biggest power station and export green hydrogen from a remote desert in the outback to Asia.

The designation, which will be announced on Friday, recognises the strategic significance of the Asian Renewable Energy Hub, a project backed by Vestas, Intercontinental Energy, Macquarie Group and CWP Renewables.

It reflects growing recognition from a previously sceptical Conservative government that concerns over climate change mean it has to diversify its economy away from a reliance on fossil fuels, which generated A$103bn ($73bn) in export earnings last year.

Canberra’s backing for the ambitious project aims to fast-track construction of the world’s largest solar and wind farm on a 6,500 sq km site in the Pilbara, a region in Western Australia more typically known as a source of liquefied natural gas.

Green hydrogen is made using electricity from renewable energy to electrolyse water, separating the hydrogen and oxygen atoms. It produces no greenhouse gas emissions when it is burnt as a fuel and can be converted into ammonia for easy storage and shipping.

Angus Taylor, Australia’s minister for energy, said the Asian Renewables Energy Hub would build on Australia’s strengths as an energy exporter while cutting emissions.

“Projects like the Asian Renewable Energy Hub will help us achieve our ‘H2 under $2’ [per kg] goal and position Australia as a world leader in clean hydrogen,” Mr Taylor said.

Until recently hydrogen has struggled to compete with fossil fuels due to the high cost of making it either by utilising renewable energy and electrolysis or by burning fossil fuels and capturing and storing the emissions produced.

But cheaper renewable energy has prompted a surge in interest in developing hydrogen, which can be used in fuel cells or combustion engines to power cars, ships and even spacecraft.

“The falling costs of wind and solar power, our carefully selected locations, and the vast scale of the facility we are building, all mean it’s inevitable that we will be able to produce green fuels that are cost competitive with fossil fuels,” said Alex Hewitt, founder of CWP Renewables.

He said the Asian hub would be built in several stages and that within five years would have erected 1,600 wind turbines and 78 sq km of solar panels to create the largest power station on earth.

The Asian Hub is one of several renewable energy mega-projects in Australia seeking financing, including the neighbouring A$22bn Sun Cable project that aims to export electricity via a giant undersea cable to Singapore.

But Australia faces competition from other fossil fuel producing nations such as Saudi Arabia, Chile and Russia, which also want to create a green hydrogen export market.

In July a consortium led by Air Products, ACWA Power and Neom announced plans for a $5bn green renewables and hydrogen plant in Saudi Arabia, which aims to begin shipping ammonia to global markets by 2025.

Tim Buckley, of the Institute for Energy Economics and Financial Analysis, said there would be a huge global demand for green hydrogen and ammonia products and that Australia would be cost competitive by the end of the decade.

“Australia has one of the world’s largest capital markets — A$2.8tn of pension funds — we have one of the lowest population densities, and the best wind and solar resources in the world. And a history in building the world’s largest energy infrastructure projects,” said Mr Buckley.

“Why would we not be a world leader in this massive export industry of the future?”


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