Hopes for hydrogen and Southland

Hydrogen as a source of energy has been around a long time and promised much.

Perhaps, as a green fuel, its time is coming. Perhaps a tipping point is close where hydrogen’s place in the fight against climate change becomes significant.

Perhaps, too, hydrogen production can take the place of aluminium at Tiwai Point or somewhere else in the South in generating well-paid jobs and using the relatively abundant energy from the Manapouri power scheme.

Hydrogen, however, has its sceptics, and much water will flow through the Manapouri underground tailraces before any plan is in place.

Meridian Energy and Contact Energy recently called for expressions of interest to develop a hydrogen production plant.

They said the project would be mammoth, intergenerational and require an enormous amount of capital. Contact’s chief executive said production would at first be aimed at international markets, but could become important domestically.

A New Zealand Incorporated approach would be needed.

This sounds like the scale of the Muldoon era and ‘‘Think Big’’.

There are also analysts who believe Meridian and Contact are endeavouring to give the appearance of another option for negotiating purposes.

Rio Tinto, the Australian mining giant which owns the smelter, always held the upper hand because the power had nowhere else to go. At each negotiation, it faced down Meridian and the governments with the prospect of closure and devastation to Southland’s economy.

Because of high aluminium prices and the potential demand for production from renewable energy, speculation has arisen that Rio Tinto could keep Tiwai going after all. It could rebuild the plant to use the latest, efficient methods. Transpower is upgrading the ability to send electricity north.

It is widely recognised hydrogen will not be used to power cars on any scale — there are apparently only 13 in New Zealand. It is wise to use electricity directly, because so much energy is lost when electrolysers split water into hydrogen and oxygen. Hydrogen is expensive and difficult to store and transport.

However, the likes of chemical and steel manufacturing, heavy transport, shipping, air travel and heat for buildings are among the possible uses.

This occurs already. A frighteningly high 6% of natural gas and 2% of coal are used to produce industrial hydrogen. While this is terrible environmentally, it has established base uses for the product. Green hydrogen is only a couple of percent of the hydrogen produced.

Meanwhile, change is rapid around the post-pandemic world in hydrogen technologies, markets and policies. The green hydrogen train may be gathering pace.

The Government has been testing the waters with hydrogen, including $19 million last year to a plant in Taranaki.

It has also emerged that another Australian mining giant, Fortescue, is doing more than just sniffing around.

Company representatives met Invercargill City and Environment Southland last year. Recently revealed emails show it had repeated meetings with the Energy Minister, officials at the Ministry of Business, Innovation and Employment and Department of Conservation, Meridian Energy and Transpower.

It had ``rapidly developing plans'' for Southland, the company told MBIE, and dates of 2023 and 2025 have been mentioned.

The BusinessNZ Energy Council has outlined a sensible, balanced and open-minded approach to the issues.

It welcomed calls for expressions of interest while noting, at present, green hydrogen cannot be produced and distributed cost-effectively.

But, while the way was not clear yet, the fact many countries and companies are working towards hydrogen goals gave great hope.