Why Spending $100m On Coal To Hydrogen Project Is Stupid

coal to hydrogen madness

Dumb and Dumber: Federal and Victorian governments spending $50 million each on Japanese coal to hydrogen project.

The Federal and Victorian Governments are spending $100 million building a Japanese coal to hydrogen demonstration plant.  That’s $50 million each.  Before any of you get upset at the cost, I’ll mention I originally thought it was $500 million, so we’re already $400 million better off than I thought we were a few hours ago.  At this rate I’m sure coal to hydrogen will be making money for the average Australian in no time.  And in other news, monkeys may fly out of my butt.

In case you can’t tell on account of how subtlety is my middle name1, I am being a bit sarcastic.  I doubt coal to hydrogen will ever be cost-effective. I expect it will be cheaper to produce hydrogen using renewable energy.  I also doubt Japan will ever import significant amounts of hydrogen.

This makes me confident the $100 million in government funding for a Japanese coal to hydrogen demonstration plant in Victoria’s Latrobe valley will be a waste of money.  The total cost of the Kawasaki Heavy Industries plant will be $496 million, so other people — presumably the Japanese public — will be wasting even more.

Some interesting points about the coal to hydrogen project are:

  • Despite costing $496 million cost it will only run for 12 months.
  • It will produce up to 3 tonnes of hydrogen.
  • 3 tonnes of hydrogen has the energy equivalent of 12,500 litres of petrol.  That’s less than 10 average Australian cars use in a year.
  • If it produces 3 tonnes of hydrogen the total cost will be $165,000 per kilogram, which is around 130,000 times its current price.
  • Generating electricity with hydrogen-from-coal will result in roughly the same greenhouse gas emissions as simply burning coal in a power station.

While the cost of the hydrogen produced is astronomical it is a demonstration plant and not meant to be economically viable.  The goal is to research how to effectively produce hydrogen from coal.  But it looks like they have their work cut out for them because Japan has a goal of getting the cost of hydrogen down around $4.20 a kilogram by 2030.

You Can’t Magically Make Clean Hydrogen From Coal

Producing gas from coal isn’t new technology.  It was first revealed to the public in London in 1807.  That’s the same year the British Empire abolished slavery.  (I guess they didn’t need slaves to pedal the street light generators any more.)  This gas was made by simply heating coal. But after 211 years of development and a $496 million investment we will be able to produce hydrogen gas by complexly heating coal.

Coal to hydrogen is a misleading name because the bulk of the hydrogen comes from water.  Coal has a small amount of hydrogen but it’s mostly carbon.  To produce more hydrogen you can add steam at high temperature.  I can even show you the chemical equations:

coal to hydrogen equation

Don’t worry if you can’t tell the difference between a chemical equation and a cannibal whale nation, just take it from me that coal to hydrogen produces a lot of carbon dioxide.  Kawasaki Heavy Industries — a producer of motorcycles, bulldozers, trains, ships, boilers, turbines, robots, and soon hydrogen — says carbon capture and sequestration will be necessary for an environmentally sustainable process.  Despite saying this, they aren’t actually going to capture and sequester the project’s carbon dioxide.  If they did it would make the demonstration plant even more expensive.

Of course, solving cannibal whale equations is all in a day’s work for Aquaman.

Cost Of Carbon Dioxide Sequestration

If you can follow the chemical equations I put above, they show one carbon dioxide molecule is produced for every two hydrogen molecules.  This may not seem so bad, but because it is so much heavier 11 kilograms of carbon dioxide are produced for every kilogram of hydrogen.  The process also requires energy, which comes from burning coal or various gases given off during the process.  This report says if the hydrogen is used to generate electricity, it would result in emissions as great as if the coal was burned in a power station.  This means it may produce roughly 22 kilograms of carbon dioxide per kilogram of hydrogen.2

Emission intensity values - brown coal

Emissions from Australia’s brown and brownish coal power stations.  Five have already been shut down but Loy Yang A & B and Yallourn are still in operation and are enormous.  Tonnes CO2/MWh is the same as kilograms of CO2 per kilowatt-hour  (Image: Acill Allen Consulting)

Estimates vary on what it will cost to capture carbon dioxide at a power station or coal to hydrogen plant and then liquefy it, transport it, and inject it underground somewhere it will hopefully stay and not cause problems.  A cost of 5 cents per kilogram is what I would call optimistic and would need $1.10 to be spent on sequestration per kilogram of hydrogen produced.3

Currently Japan can produce hydrogen from natural gas for around $14 a kilogram.  Their goal is to get the cost of hydrogen down to around $4.20 a kilogram by 2030 while capturing and sequestering any carbon emissions that result.  To reach that target, hydrogen from coal would have to be very cheap if sequestration is equal to at least one quarter of the target price.

Plants Can Substitute For Coal

Instead of using coal, wood or other plant material can be used to produce hydrogen from coal using the same process.  If it is harvested sustainably the carbon dioxide released into the atmosphere will equal the amount absorbed by the plants grown for this purpose.  Currently coal is cheaper than plant material but this is may change once the cost of sequestering emissions is included.

It Pollutes The Atmosphere

In addition to greenhouse gas emissions, coal to hydrogen will release various toxins into atmosphere including particulates, heavy metals, ozone, and other threats.  Presumably this would be reduced if all the CO2 emissions were sequestered.  But stopping all pollution would not be cheap.

It Creates Dangerous Solid Waste

After making hydrogen from Victorian brown coal what will be left is a low quality soft coke.4  Unlike hard coke it’s not suitable for use in existing iron smelters.  It is potentially dangerous because people might be tempted to burn this low quality coke and this would result in carbon dioxide emissions.  Hopefully Japan would refuse to buy hydrogen produced from coal where the waste coke is burned instead of carefully buried.

Hydrogen From Clean Renewable Energy Is Likely To Be Cheaper

Hydrogen can be produced from water plus electricity with 80% efficiency.  This means it would take 50 kilowatt-hours to produce one kilogram of hydrogen.  This year the average wholesale spot price of electricity in Australia has been over 8 cents a kilowatt-hour and at that price it would need over $4 of electricity to produce 1 kilogram of hydrogen.    But this is not what it will actually cost because:

  • Expanding renewable generating capacity is putting downwards pressure on wholesale electricity prices.
  • It is possible to only produce hydrogen when prices are low.

An electricity generator such as a solar power or wind farm could produce hydrogen when the price of electricity is low.  If the electricity used to create hydrogen could instead have been sold for an average of 2 cents per kilowatt-hour, then the electricity cost per kilogram of hydrogen would come to $1.  That’s less than an optimistic estimate of the cost of carbon dioxide sequestration for coal to hydrogen.

It not quite that straightforward because if hydrogen isn’t being produced all the time it may make sense to use cheaper methods to make it, which are less efficient and so need more energy – but given we can expect renewable energy to continue to fall in cost, I doubt coal to hydrogen will be competitive in the future.

Japan May Not Want Our Hydrogen

I don’t think Australia should invest significant amounts of money into preparing to export hydrogen to Japan because at the moment there is no guarantee Japan will buy any significant amount of hydrogen from us.  Japan’s Prime Minister, Shinzo Abe, has said he wants a hydrogen economy but this doesn’t mean he’ll get one.  It doesn’t even mean he actually wants one.5  It may seem they want a hydrogen economy because Japan has invested around $2 billion in hydrogen research over the past 6 years, but they also spent around about $16 billion on nuclear research in that time and they’re not in a big hurry to build new nuclear reactors.

The main uses touted for hydrogen in Japan are:

  1. Power vehicles
  2. Generate electricity

The problem with hydrogen for road transport is battery electric vehicles have a huge head start over hydrogen ones in terms of numbers sold and price.  In March in Norway 5,322 fully electric cars were sold.  The number of hydrogen cars sold was four.  At the moment I see no prospect of hydrogen cars falling in price faster than battery electric ones.

While hydrogen can be used to generate electricity, this will only make sense if the cost of producing hydrogen in Australia, shipping it to Japan, and then using it to generate electricity is less than the cost of generating electricity in Japan.6  At the target price for 2030 of $4.20 a kilogram, if hydrogen is used to generate electricity with 50% efficiency the cost of hydrogen alone would come to 21 cents per kilowatt-hour.  Given that Germany can now produce solar power from 5.8 to 18 cents per kilowatt-hour and electricity from German solar farms is expected to fall below 3.8 cents per kilowatt-hour by 2030, it is implausible that Japan with its better solar resources could not produce it for less in the future.  If their Prime Minister wants a hydrogen economy I think he would have to be magically talented to get one.

Coal To Hydrogen Is Unlikely To Be A Worthwhile Investment

Victorian brown coal is very cheap.  It only costs a few dollars per tonne to dig it up.  If health or the environment were not considerations, it would probably be a cheap way to create hydrogen from steam.  But if there were no health or environmental considerations no one would produce hydrogen.  We would just use good old coal gas like Conan Doyle used to huff or simply burn coal.

Coal to hydrogen is a bad investment for a number of reasons with three major ones being:

  • Renewable energy is likely to beat it on cost.
  • It’s likely to create harmful pollution.
  • Japan changing to a large-scale hydrogen economy looks next to impossible.

But lets say you are one of the politicians who are forking over a total of $100 million while saying coal to hydrogen is wonderful and will bring large amounts of money into the country.  If that’s true then you’re being bloody stupid.  If it’s as good as you say then the amount of money you need to hand over is $0.  You could easily get industry — or possibly the Japanese Government — to foot the entire bill.

Footnotes

  1. Actually my full name is Ronald Subtlety Danger Brakels.
  2. Assuming the hydrogen is used to produce electricity with a 50% efficient fuel cell or 50% efficient combined cycle power station.  Pelican Point in South Australia is an example of a natural gas combined cycle power station that is just over 50% efficient.
  3. What often isn’t mentioned is low figures for carbon capture and storage are generally for plants that only capture some of their CO2 while releasing most into the atmosphere.  The Japanese Government says in the future all emissions from coal to hydrogen must be captured and sequestered so I would say 5 cents is definitely optimistic.
  4. Coke is coal after it has been heated without being burned.  It is far worse than Pepsi.
  5. For all I know Japan’s push for hydrogen is simply the result of Toyota wanting to discourage electric car purchases before they have perfected their own.
  6. It would also need to be less than the cost of importing natural gas or other fossil fuel and then removing the resulting carbon dioxide emissions from the atmosphere and sequestering it.
About Ronald Brakels

Many years ago now, Ronald Brakels was born in Toowoomba. He first rose to international prominence when his township took up a collection to send him to Japan, which was the furthest they could manage with the money they raised. He became passionately interested in environmental matters upon his return to Australia when the local Mayor met him at the airport and explained it was far too dangerous for him to return to Toowoomba on account of climate change and mutant attack goats. Ronald then moved to a property in the Adelaide Hills where he now lives with his horse, Tonto 23.

Comments

  1. Graham Revill says

    When this project without any obvious merit was announced I spoke to the CSIRO. They said that they were about to release a report on this. That report might have found that currently H2 was cheaper from steam and coal than from renewables and water, even allowing for about 50% extra for CCS. BUT would you expect that to remain the case in 5 years time?

    There must be another reason for doing this. It is hard to believe that such a simple experiment is worth a half billion dollars.

    If this experiment works from Victoria then wouldn’t you set up a renewable powered plant somewhere near the equator where there is more sun and a shorter distance to transport the hydrogen to Japan. How could we compete? You might choose India, Vietnam, PNG or Cairns if we get lucky We know how cheap PV power is in India but there are probably high wind areas closer to Japan.
    The big question is WHY!

  2. Glen Bruton says

    Don’t forget the energy cost to compress the hydrogen to a transportable state.

  3. A shocking waste of money on dirty energy. Carbon capture and storage is a joke, just a phrase used to pretend that we can continue to use fossil fuels.
    Thanks for calling it out, Ronald. I can only presume that there are some political donations involved behind the scenes, as it makes no sense.

  4. Des Scahill says

    According to an article I found on this UK business website : uk.businessinsider.com/scientists-just-made-a-breakthrough-with-hydrogen-powered-cars-2018-8/?r=AU&IR=T the scientists at CSIRO have developed a system that enables the transport of ultra-pure hydrogen in the form of ammonia, which makes it suitable for use in the hydrogen powered cars planned to be produced by Toyota, Hyundai and BMW. These vehicles are claimed to have twice the range of an equivalent electricity powered vehicle, and can be ‘refuelled in minutes’.

    Those 3 car and vehicle manufacturers, who all operate globally ,are taking a mega huge business gamble – that ‘hydrogen’ can be the fuel of the future. Toyota plans to commence imports of its hydrogen powered ‘Mirai’ in 2019 following a ‘3 year trial of 5 vehicles in Australia’.

    The underlying sales pitch seems to be: cheaper than existing oil-based fuels, twice the range of electric vehicles, much faster refuel time compared to battery.

    The ‘carbon storage’ in ‘dried up oil wells’ in Bass Strait seems pretty questionable to my ‘non-technical eye. First, they seem to have no idea at all of just how much ’emptiness’ there actually is, and second, who knows what sort of ‘toxic gunk’ remains in these wells. and whether or not they’ve already partly filled over time with salt water seepage etc.

    The idea of just pumping CO2 into that until you can’t squeeze any more in and then walking away with your fingers crossed hoping it will all turn out well almost forever doesn’t seem a good one because… much to my surprise… there are signs of ‘seismic’ activity not too far away as this link to earthquaketrack.com/p/australia/victoria/recent indicates.

    Further, Bass Strait is on average only 60 metres deep, with quite slow moving tidal flows in general, but there are numerous uninhabited islands around which extensively modify those flows just the same. The whole tidal system is an extremely complex one., and one byproduct of that is the existence of large underwater sand dunes in parts of the strait which slowly move around a bit unseen to the human eye. All of this gives rise to a very complex eco-system different parts of which change location over time, and a varying weight-load on the underlying geology

    At best, the whole project could turn out to be a giant white elephant, but no real harm done, (other than losing the odd billion dollars or so), accompanied by the rather weak excuse of: ‘Oh well, at least we’ve conclusively proved that such projects aren’t really viable’

    At worst well…. there is a chain of supposedly extinct volcanoes the plume of which is directly under Bass Strait ( see this article in theguardian.com/world/2015/sep/15/worlds-longest-continental-volcano-chain-discovered-in-australia ).

    But the existence of a number of thermal springs in both Victoria and Tasmania along the same chain, is 100% proof of ‘something extremely hot’ at some unknown depth underneath. It seems that ‘extinct’ may not be so ‘extinct’ after all, particularly so when there is ‘seismic activity’ (earthquakes) relatively nearby. World-wide there have been a number of volcanic eruptions in recent years, from volcanoes also classified as ‘extinct’.

    There is already offshore oil production (the Exxon oil rig), busily changing the pressure dynamics of the underlying geological structures by pumping out oil.

    Introducing another pressure dynamic (in the form of carbon storage) nearby, in a ‘storage facility’ which, if some ‘unexpected event’ (such as an earthquake) further changes the pressure dynamics, and leads to the sudden injection of a small amount of molten volcanic material with a temperature about 3500 degrees due to new fractures in the surrounding rock structures, and 46% of the CO2, gets converted into available O2, and anything flammable nearby (such as oily gunk) promptly ignites.

    Whether some sort of ‘chain reaction’ would then begin… who knows? I’ve no idea what form such ‘chain reaction’ would take, eg. a 100 metre high tidal wave due to the sudden displacement of water by the virtually instantaneous release of a few million cubic metres of CO2, or a 2 kilometre high pillar of fire fueled by ignited oil mingled with CO, but whatever it is I am sure it will be truly impressive.

    So… ‘white elephant’ or perhaps ‘Led Zeppelin’ proposal
    … I’m still wondering too, what ultimately happens to all the ‘spent’ lignite coal minus its hydrogen which is now waste material. Does it just sit there in massive heaps, getting slowly distributed over the surrounding landscape as wind and rain events occur?

  5. We from Westernport and Peninsula Protection Council, agree. We actually awarded engraved silver plates at our July 2018 rally in Hastings to Daniel Andrews and Malcolm Turnbul for THE STUPIDEST IDEA OF 2018 for the idea of exporting hydrogen out of coal out of Hastings. The worst thing to us about a commercial-scale operation is the necessary amount of dredging to make a large port in Hastings was found by Infrastructure Victoria to be 23 million cubic metres inside the Bay and the same amount outside Westernport Bay. This is unconscionable. That is one reason why they recommended Baywest as a location for a container port not Hastings.

    • Graham Revill says

      Gee its hard to identify the stupidest part of this stupid idea. There are so many nominations.
      Developing a method of making hydrogen from Brown coal using steam
      Build a factory to produce hydrogen from steam.
      Developing a method of making ammonia from hydrogen
      Developing a method of shipping ammonia to Japan from Australia (or Vietnam or PNG or Saudi Arabia or where ever else its cheapest.)
      Producing thousands of tonnes of CO2 to sequester for an experiment that is only going to run for a year or so.
      Building the infra structure to sequester a few thousand tonnes of CO2
      Develop a method of making electricity from brown coal so that we can run an H2 producing plant
      Developing a method to sequester a few billion tonnes of oxygen in the future.
      Prove that a system of making hydrogen using steam will be economically non-competitive with the many factories that are now being built around the world (Norway, Perth) to produce H2 from PV power and electrolysis with zero carbon emissions
      All the above for less than a half billion AUD
      But what are they really doing????

    • Des Scahill says

      Hi Karrie,

      Back in 2006, Bass Strait was acknowledged as being the MOST seismically active region on the entire Australian continent.

      Another issue is that Bass Strait does not get ‘flushed out’ to any real extent by it’s daily tidal inflows and outflows. So ‘spillage’ of any kind is likely to stick around for quite a while (months or years) , even though it might meander around to different spots within the confines of the strait.

      The political motivations at the moment seems to be: ‘We need to be seen ‘doing something’ (anything?) that will ensure we stay in government” Hence, ‘job creation’ regardless of the type of job is seen as a ‘good thing’, especially if it can be linked however tenuously to the word ‘renewables’.

      Out of curiosity I dug up some info about earthquakes in the Canberra region. Much to my surprise, I discovered that there has been an average of one earthquake a year for the last 50 years in that part of the world.

      If you do a search on ‘earthquakes in the Canberra region’ you’ll eventually discover a .pdf book produced by GeoScience with data up to 2007 which has a handy map of earthquakes and their magnitude for the Australian continent.

  6. Ronald,

    I think you may have underestimated our governments’ ability to move nimbly into the past.

    Rumour is that the government wants huge amounts of hydrogen because they are in possession of a secret report that says the future of air travel is in giant, hydrogen-filled zeppelins.

    A gummint factory will be set up to build these behemoths. The name of the first one has already been chosen – it will be called the R101.

    • Ronald Brakels says

      When Prime Minister Abe said, “Listen you gasbags, hydrogen is the future!” this may not have been what he meant.

    • Des Scahill says

      Mark Hughes

      ‘Led Zeppelin’ – is the name adopted by a well known band, who used a phonetic version of the words ‘Lead Zeppelin’ when they first started out. They thought the chances of their newly formed band ever becoming a commercial success were about the same as those balloons filled with lead would have of flying aloft.

      Their initial mental pessimism seemed to persist for quite a while. One of their biggest hits was ‘When the levee breaks’. It’s lyrics were nicked from a 1929 blues song of the same name written about the Great Mississippi Flood of 1927, the most destructive river flooding in United States history at that time, and recorded at Headley Grange, a house in England rumoured to be haunted.

      The story of the R101, and its predecessor the R100 can best be summed up by the following quote from a YouTuber

      ‘The private built R100 was on budget, on schedule, and flew without incident. The British government-build R101 sister ship was way over budget, way over schedule, burdened with countless technical problems, and crashed on her first long distance flight. Somewhere there is a lesson there?’

      The idea of ‘hydrogen filled’ zeppelins as a cheap means of transporting people and materials long distances is resurfacing again. Perhaps its just co-incidence, but ‘it just so happens’ at the moment that supposedly ‘cheap’ hydrogen can be obtained from very low quality coal.

  7. Dear Ronald, There is a rumour that the Victorian Govt and Australian Govt $100 million support for the Kawasaki/AGL coal-to-hydrogen trial is to promote hydrogen at the 2020 Olympics in Tokyo. Maybe there will be expensive hydrogen molecule mascots driving hydrogen cars around the Opening Ceremony? PS – Hi Karri!

    • Ronald Brakels says

      Maybe? It’s all planned out. At the Olympics no expense will be spared to give the impression that Japan is going back to the future as fast as they can. (In military matters weight is at the heart of logistics and I am sure they are well aware that hydrogen wins on that so they are probably confident of having a market for their hydrogen fuel cell products even if it doesn’t turn out to be passenger cars and domestic electricity generation.)

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