On Monday Mr Taylor announced the Clean Energy Finance Corporation had been instructed to open its $300 million Advancing Hydrogen Fund to both renewable and gas-powered hydrogen production.
“Gas and gas transmission networks already play an essential role in energy reliability, but gas has even more potential as a resource to produce and transmit hydrogen,” Mr Taylor said.
There are three methods to extract hydrogen, one is electrolysis that uses electricity to ‘split’ water, which can be powered by renewables in an emissions-free process.
The two other methods require thermochemical reactions. One uses gas and the other uses coal or gas, and for either to be a clean energy source they require carbon capture and storage to prevent the emissions from the fossil fuels getting into the atmosphere.
Dr Finkel said gas-fired hydrogen could reduce the risk associated with total reliance on renewable energy to generate the “massive quantities [of hydrogen] the world will need by 2050” if the Paris target of net zero emissions is achieved.
“We would need a lot of solar and wind to make that amount of hydrogen,” he said, which would create a strong reliance on the raw materials required to build renewable generation plants – such as steel, cobalt and lithium.
Renewable powered hydrogen “can scale up from today with great ease”, Dr Finkel said, which could mean it emerges as “the cost winner”.
The ultimate goal was to reduce emissions, but Dr Finkel said “I can categorically say I don’t have any political considerations on my mind”.
The CEFC’s Advancing Hydrogen Fund is yet to approve any projects. The agency’s governing legislation requires it to fund low emissions initiatives and bars it from funding projects that use carbon capture and storage.
But the CEFC may be able to fund gas powered hydrogen generation that don’t use carbon capture, as well as infrastructure such as pipelines, liquefaction facilities or projects to boost domestic demand for hydrogen such as industrial heating and blending hydrogen into the existing gas network.
Clean Energy Council chief executive Kane Thornton said the “market had already decided the future will be renewables”.
“If you are generating hydrogen with a fuel other than renewables you are making it more expensive,” Mr Thornton said.
“Carbon capture and storage has been around for a decade or more, with massive government funding on the table, and private investors have looked at it too. But we stand here today with huge investment pouring into renewables, and very little into carbon capture.”
Mike is the climate and energy correspondent for The Age and The Sydney Morning Herald.