Leading energy companies sign up to trial Australia’s Hydrogen Guarantee of Origin certification scheme

Nick Thomas, Stuart MacGregor, Graeme Dennis and Cloe Jolly
09 Jun 2022 Time to read: 2.5 MIN

Fortescue Future Industries, Santos, BP and Jemena are among the companies participating in a trial of Australia’s Hydrogen Guarantee of Origin certification scheme.

As consensus builds worldwide on the need to achieve net zero, and emerging hydrogen markets indicate an increasing focus on the origin of the hydrogen in those markets, there's broad recognition that a robust, globally recognised certification of origin scheme is critical for all participants in the hydrogen industry.

In June 2021, the Australian Government released a Discussion Paper on the design of Australia's Hydrogen Guarantee of Origin (Hydrogen GO) certification scheme, which dealt with issues including the potential introduction of a new type of renewable energy certificate and the role of carbon offsets.

In December 2021, following consultation on the Discussion Paper, the Australian Government released its “Consultation summary and next steps” paper, and participants with projects that are operating, or in an advanced stage of planning, were invited to participate in these trials to inform the design of Australia’s Hydrogen GO certification scheme.

In this article, we provide an update on the progress of those trials and some comments on next steps.

Trial process

The Clean Energy Regulators has indicated that the Hydrogen GO trial will involve two phases; phase 1 will run from March to July 2022 and phase 2 from July 2022 to June 2023.

Phase 1 will involve the trial project proponents (see below) as well as a broader stakeholder group comprising peak bodies and industry groups with an interest in the trials, international hydrogen groups, State Government representatives, Australian Government agencies and project developers.

The structure and participants for phase 2 have not yet been provided and, presumably, will emerge from phase 1.

Trial projects

Feedback from the consultation process supported progressing to a trial phase to inform the further development of a Guarantee of Origin scheme for hydrogen. The Clean Energy Regulator (CER) will be running the trials collaboratively with the Department of Industry, Science, Energy and Resources (who are responsible for wider consultation).

Active hydrogen production projects and well-advanced projects whose proponents have signed a participation agreement can participate in the Hydrogen GO trials. The companies already signed up to participate represent a range of hydrogen-related products across the entire hydrogen production supply chain.

On 17 May 2022, the CER named the 17 projects initially participating in the trial. Of the 17 projects, 13 are electrolysis projects including by Fortescue Future Industries, Australian Gas Infrastructure Group (including some in partnership with ENGIE or ATCO), Incitec Pivot, BOC Gas and a BP and Macquarie Capital partnership. Three of the other projects – under development by BOC, Jemena, and Santos – will produce hydrogen using conventional gas as a feedstock. The other project involved in the trial is the Hydrogen Energy Supply Chain (HESC) Pilot Project, which will use brown coal as a feedstock (capturing and sequestering the production-related CO2).

Details of the 17 projects are set out in the table at the end of this article.

The June 2021 Discussion Paper contemplated that the Hydrogen GO scheme would initially cover methodologies for guaranteeing the origin of hydrogen for the three main production pathways relevant to Australia:

  • electrolysis with electricity;
  • coal gasification with carbon capture and storage (CCS); and
  • steam methane reforming (SMR) of natural gas with CCS.

Over time, the scheme is likely to evolve to include:

  • additional hydrogen production pathways;
  • additional components of the hydrogen value chain (e.g. storage and transport);
  • certification of hydrogen energy carriers and derivatives (e.g. ammonia and liquid hydrogen); and
  • other related and downstream products (eg. low-emissions/green steel and "green gas" blends like biomethane).

Next steps

Australia’s Hydrogen GO scheme will ultimately be co-designed with industry and key stakeholders and is proposed to align with the methodology being developed by the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE). While it is unclear exactly what information will be included on each GO certificate, they will likely detail the hydrogen supply chain and provide information on the carbon intensity of products. The trial will test and refine methodologies and help to develop the emission accounting approaches suited to each of the certified production techniques.

Current and potential participants in the Australian hydrogen industry should be mindful of the potential for changes to the scope and detail of the proposed Hydrogen GO scheme following these trials. We will provide further updates as the trials progress and the design of Australia’s final GO certification takes shape.

 

Details of the 17 projects

Energy Production table

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.