New modelling suggests green hydrogen will play a very limited role in cutting New Zealand's industrial emissions before 2050.
Green hydrogen could help cut New Zealand's industrial emissions, but University of Auckland modelling suggests it's unlikely to make a dent by 2050, with electrification doing most of the heavy lifting.
This is mainly due to costs, infrastructure, policy and behavioural factors, according to research led by Business School masters student Geordie Reid.
“New Zealand has committed to net-zero greenhouse gas emissions by 2050,” he says. “One of the toughest elements of this commitment is decarbonising industrial process heat; the coal- and gas-fired heat used to produce things like milk powder, steel and cement.”
It's in this area that green hydrogen can play a role, albeit a limited one, according to Reid and the co-authors.
Under realistic assumptions, says Reid, green hydrogen doesn't emerge as a cost-effective option.
“However, if technologies rapidly develop and become more cost-competitive relative to alternatives, such as electrification, our results show a shift towards green hydrogen for supplying high-temperature process heat.”
Even then, the role of green hydrogen would be limited according to the modelling, potentially supplying about 12 percent of industrial process heat energy by 2050 in the most optimistic scenario.
The researchers point out that because green hydrogen is expensive, it becomes more attractive when carbon prices are higher, renewable electricity is cheaper, and hydrogen technology costs decline. In those scenarios, they say hydrogen can play a complementary role in helping New Zealand reach net zero emissions. “But in most other cases, electrification is still the key.”
Co-author and Business School research fellow Selena Sheng says, compared to direct electrification, hydrogen technologies exhibit lower overall efficiency due to energy losses occurring at multiple stages across production, storage, transport, and end use.
“There are three main ways to bring green hydrogen costs down in the future. Firstly, we've got to have cheaper renewables, possibly through increasing wind and solar power.”
The second avenue, says Dr Sheng, is to develop more affordable methods for producing green hydrogen through a process called electrolysis. This can be achieved by scaling up manufacturing, improving efficiency, reducing reliance on rare, costly materials, and sourcing lower-cost renewable electricity.
“Third, we need to achieve greater economies of scale in production; larger projects will further reduce costs.”
Adding to this, energy economist Professor Basil Sharp says the modelling helps clarify what needs to change for hydrogen to grow into a meaningful part of the energy system.
“Green hydrogen is like the new kid on the block in terms of technology, so the unit costs are high relative to other forms of hydrogen.
“Practically, what governments can do is remove the barriers to adoption. One of the barriers early on was the absence of industrial standards regarding the transportation of hydrogen. Providing appropriate industry standards creates room for growth.”
Co-author and senior economics lecturer Le Wen points out that New Zealand's high share of renewable electricity gives it an advantage in producing green hydrogen.
“Green hydrogen is 'green' because it's produced using energy from renewables. New Zealand is well placed in terms of green hydrogen because more than 80 percent of our electricity is already renewable, but cutting national emissions also means tackling industry, which still relies heavily on coal and gas for process heat.”
Dr Wen says that if New Zealand invests in and scales up its green hydrogen production, the country could become a leader in genuinely low-emissions hydrogen.
“It may not solve everything on its own, but it could give the country a strong new export opportunity.”