The role of green hydrogen in business

Many businesses are making the move to become more sustainable, lowering their carbon footprints and changing production methods – and green hydrogen has its part to play in this process.

With plans in place to meet the Renewable Hydrogen Target through green hydrogen production, this energy source is set to influence businesses now and well into the future.

Going green (hydrogen)

The University of Western Australia Business School Marketing and Innovation Senior Lecturer Daniel Schepis said sustainability had become a priority for many businesses, both in Australia and worldwide.

“The overwhelming reason to transition to greener energy is to reduce emissions and meet internationally agreed global warming targets.” 

“Beyond environmental and societal reasons, firms will begin competing on their ability to meet emission reduction targets in the countries they operate in," he said.

“This will impact their ability to raise capital, compete with rivals, secure production or expansion licences and attract employees.”

There are many elements involved in the transition to a greener future, but green hydrogen is one area getting a lot of attention for its sustainable potential.

“Hydrogen is being developed around the world as a low carbon fuel source,” Independent Energy Consultant Jeanette Roberts said.

“Many different hydrogen technologies are being evaluated, which have generally been identified by various colours.

“Green hydrogen is when renewable energy is used to produce hydrogen while blue hydrogen is when gas is used as the energy source.

“The evaluation of the technology option needs to take into account the overall energy usage per kilogram of hydrogen produced, rather than a simplistic evaluation that one technology is better than others.”

The low carbon status of green hydrogen has brought it international attention, with Dr Schepis noting it can play a large role in certain sectors in the future.

“Green hydrogen has been generating a lot of hype for the last few years, as it is seen by many to be a critical component in industrial decarbonisation,” he said.

“It potentially has a lot of future applications, however, there is considerable international debate regarding which uses make environmental or economic sense when taking into account alternatives like electrification or the current hydrogen production or usage challenges.”

The green hydrogen powerhouse

Despite it potentially having a crucial role in the business sector, Dr Schepis said it was unclear what the future hydrogen market would look like and what it would mean for the businesses involved.

He said the influence of green hydrogen would have depended on how well green hydrogen production and usage scaled up, as well as how the domestic and international markets fared.

“This is a critical time for the hydrogen market in Australia and internationally,” he said.

“The Federal Government is updating its National Hydrogen Strategy and has set up a $2 billion revenue support program to compete with some of the large incentives being offered overseas.

“Australia’s competitive advantage in green hydrogen is not guaranteed and a lot will depend on market developments in the coming years.

“Certainly, some industries – like fertiliser production – will transition to green hydrogen, as there are not many alternatives.

“At this stage, almost all companies in the resources industry are exploring green energy, either as a way to decarbonise operations or to identify new product markets.

“Other so-called hard-to-abate sectors like shipping, aviation and aluminium might also adopt hydrogen, as it has compelling advantages if some technological obstacles can be overcome.

“Many other organisations may never touch green hydrogen.”

Ms Roberts agreed that while green hydrogen would likely prove to be a powerful force in some industries, it may not become quite as influential in others.

“Hydrogen produced from renewables – green hydrogen – may be a suitable option for some operations,” she said.

“But many will not have access to suitable renewable energy generation for this to be a viable option.

“And if renewable energy is located nearby, it is likely to be a more energy-efficient and better solution to use the renewable energy directly, rather than using additional energy to convert it to hydrogen.”