Without a doubt, energy use forms a large part of a company’s costs, especially in manufacturing where you could be running your facilities in 24-hour production cycles. Working with alternate energy sources will not only create new industries in itself, but it’s an opportunity for manufacturing to fuel a better approach to energy use, cost management and a sustainable future. By Rob Stummer, Asia Pacific CEO at SYSPRO.
The emergence of cleaner energy options, and more ‘energy producers’ in the market, has increased the competition for your green dollar. There is already a clean alternative to fossil fuels that does not emit greenhouse gases and unlike solar and wind energy, can be produced at any time of the day or night, whatever the weather. Green hydrogen is made using clean electricity from renewable energy to electrolyse water (H2O), separating the hydrogen from the oxygen.
Aside from the sustainability factor, one of the benefits of hydrogen is that it can be used immediately or be stored and transported for later use, making it a mobile energy source. It can also be used as a clean fuel for transport, for providing additional electricity to the grid, and to offset the carbon from the manufacturing processes. The historical problem with green hydrogen has been that the cost of making it has priced it out of competition against fossil fuels, because even though it is carbon-free, it is energy-intensive. However, that is changing, because, for the past two years, improvements in sustainable energy technologies have seen renewable electricity costs fall sharply.
Government initiatives
Prime Minister Scott Morrison has announced that the Federal Government has set aside $300m to jumpstart hydrogen projects. Energy and Emissions Reduction Minister Angus Taylor said the Government has a strong commitment to building a hydrogen production industry, as it will create jobs and billions of dollars in economic growth over the next few decades.
Essentially, if hydrogen can be produced here at less than $2 a kilogram, it will be able to play a key role in the manufacturing sector’s energy mix of the future. In 2018, it cost roughly $5 to $7 per kilogram to produce hydrogen, depending on the method used, according to the National Hydrogen Roadmap released in 2019. The roadmap said production costs would have to come down to between $2 and $3 to be more competitive with fossil fuel sources.
Today, cheap and reliable fossil fuels power our manufacturing industry. This is not going to change overnight, but the manufacturing sector must prepare itself for a future where emissions are significantly lower than they are now. The Clean Energy Finance Corporation (CEFC) sees hydrogen as offering the most credible pathway to decarbonisation for high-emitting sectors like manufacturing.
The real opportunity for our nation is to develop a major hydrogen export industry. Studies have shown the growing demand for hydrogen could result in an export industry worth $1.7bn by 2030, creating 2,800 jobs mostly in regional Australia.
The World Energy Council identified Australia as a “giant with potential to become a world key player”, while the International Energy Agency projected that Australia would be able to produce 100 million tonnes of oil equivalent of hydrogen, which could replace 3% of global gas consumption.
Hydrogen in manufacturing
The most important hydrogen-nitrogen compound is ammonia. Almost 90% of ammonia produced goes into fertiliser manufacturing and for the companies producing ammonia and fertiliser, they want to reduce their reliance on gas suppliers. Due to its high energy of evaporation, ammonia is also used where mass refrigeration is required such as in the food & beverage sector, as an environmentally friendly and inexpensively produced refrigerant.
Hydrogen is also used as a raw material in the chemical industry used to make methanol and is also used in the manufacturing of many polymers and petrochemicals. Meanwhile in steel manufacturing, the direct reduction of iron ore could develop into an important industrial process, because using the traditional blast furnace method, large amounts of carbon are emitted. While direct reduction using natural gas is now widely used in steel production, new methods using hydrogen have only been piloted in the steel industry to date.
In the electronics industry, hydrogen is widely employed as a reducing agent and as a carrier gas in the production of semiconductors, of carbon steels and special metals. It is also a reductor agent in the metallurgic industry for metal alloying, for flat glass production and in the electronics industry, where it is used as a protective and carrier gas for cleaning, etching and in reduction processes.
The appetite to explore hydrogen as an energy vector is growing at rapid pace, but pilot projects need to be followed with action to implement it across the manufacturing sector on an increasing scale.
I am not saying that hydrogen is the panacea for the manufacturing sector, but then neither is solar, offshore wind or battery storage. We need several and varied technologies if we are to decarbonise manufacturing successfully, but hydrogen looks highly likely to be playing a major role in manufacturing’s cleaner future.