Australians and Germans earlier this week gathered at the Australian Embassy in Berlin to mark 70 years of diplomatic relations between the two countries under the theme of ‘Shipping the sunshine’.
That was a hat tip to decades of trade between the two countries, mostly involving wine, education and tourism to Australia’s sunny southern climes. But the much larger agenda was the significant opportunity for Australia to position itself as a supplier of actual bottled sunshine, in the form of renewable hydrogen (H2).
A couple of years ago, the idea that Germany would be a major hydrogen export prospect for Australia seemed laughable. The transportation of liquid hydrogen by ship (which involves chilling the molecule to -253°C) is energy intensive and expensive, and Germany is a long way away from Australia.
But over the past year, the business case for exporting hydrogen – even long distance to Europe – has improved.
First, ammonia (NH3) – made from combining hydrogen with nitrogen – is shaping up as a clear frontrunner for transporting hydrogen in a much more accessible and cost-effective way (chilled to -30°C or stored at slightly higher pressure).
Next, recent papers published by a joint Australian-Germany research partnership, known as HySupply, have found that the costs of shipping green ammonia the 20,000 km from Australia to the Port of Rotterdam (the largest and busiest port in Europe) works out at around AUD$0.09-$0.12 per kilogram of ammonia. This is a much smaller and more manageable share of the total costs than many had assumed.
There’s also a lot going for Australian hydrogen. A study by Bloomberg found that in the highly competitive stakes for hydrogen production globally, Australia will be among the top 10 most cost-competitive producers of green hydrogen by 2030 due to the quality of our solar and wind assets.
Combine these economics with the fact that we are a liberal democracy that values human rights and the rule of law, and Australia’s trade partnership credentials climb further, particularly in light of current events.
With gas spot prices jumping over 90 per cent in the last month alone, Germany is in the midst of a deep and sudden energy crisis, in which its high dependence on Russian natural gas has left its citizens, businesses and industry vulnerable to price and supply shocks.
Russia is Germany’s biggest supplier of gas, providing around one-third of the country’s total gas supply. Half of Germany’s homes use gas for heating and it also plays a big role in powering Germany’s world-renowned industrial sector.
Compounding the energy stress, the country’s nuclear sector is due to be closed this year.
Germany is now scrambling to find alternative energy sources and suppliers, and the expectation is that this crisis will turbo-charge what was already one of the world’s most ambitious hydrogen development agendas.
While the advanced German industrial sector will be able to supply the high-quality electrolysers and other equipment needed for hydrogen production (think industrial giants like Siemens and Thyssenkrupp), it does not sport the high-quality renewable resources, nor the land or waters required to meet the energy needs of its economy.
The country therefore expects that it will need to continue to import 80 per cent of its energy over the long term. As the Australian Ambassador to Germany described it this week, we could therefore be on the cusp of “a beautiful, complementary partnership”.
Anna Freeman is a policy director with the Clean Energy Council.
