Green with envy, APAC ups its hydrogen game

Whoever said a little competition never hurt anyone may want to add that it might also be good for the environment. In fact, if recent developments in Asia-Pacific are anything to go by, one may even go so far as to say a bit of healthy competition could go a long way in helping to accelerate the energy transition. And we could all do with more of that.

For proof, look no further than the US’s Inflation Reduction Act, which, since coming into effect last year, has been making waves much further afield than intended. Encouraging investment in green hydrogen in the US and providing as much as $3 per kilogram in subsidy for clean hydrogen production up to 2032, the new legislation is now seeing countries across APAC ramp up their own hydrogen initiatives in an effort to stay competitive and attract some of that private investment themselves.

Australia is a case in point. Its government’s response to potentially being left behind in the hydrogen ‘race’ has been a move to rethink the country’s National Hydrogen Strategy. Written in 2019, the existing strategy was deemed “out of date” by Australia’s minister for climate change and energy Chris Bowen, who in February told a press conference: “It needs to be revised and refreshed, particularly in light of international developments, including the IRA.”

These words were backed up by financial action in this month’s federal budget, as the government committed A$2 billion to a new Hydrogen Headstart programme, which, while still a degree of magnitude smaller than the subsidies available in the US, was widely seen by the industry as the beginnings of an attempt to catch up to the Americans.

Likewise, back in February, Japan’s government approved a basic plan for its Green Transformation Act. Still in its draft stages, the new legislation seeks to drive $1 trillion of investment into low-carbon developments as the country focuses on building up its green hydrogen industry alongside renewables and energy storage facilities.

India has also upped its hydrogen game, approving its National Green Hydrogen Mission earlier this year, with an outlay of $2.4 billion and the aim of making the country a global hub for the export of green hydrogen.

With more than €5 billion approved last year by the European Commission to be put towards supporting the renewable hydrogen sector in Europe – a move that is expected to unlock €7 billion in private investment – it seems efforts by APAC markets to boost their own hydrogen production, usage and storage capabilities couldn’t be more timely.

According to BMI power and renewables analyst David Thoo, the good news is they are also likely to be effective. Based on current developments, Thoo says India, Australia and mainland China all look set to emerge as key hubs for hydrogen production this decade, with Japan and South Korea likely to become main hubs in terms of hydrogen demand.

However, one barrier does loom large, says Thoo: “As [APAC] markets are not as connected over land as European markets are, the main trade medium will be via shipments [and], at the moment, efficiencies of shipping hydrogen remain low… This is a hurdle that Asia will need to overcome if it is to become a key green hydrogen exporting region.”

Still, despite the very fact of the region’s geography also posing its biggest challenge, there’s no denying APAC markets are placing their green hydrogen sectors firmly on the map.