2024 Annual NZ Hydrogen Ecosystem Update

This is a GNS Science report published annually by the Aotearoa: Green Hydrogen Technology programme.

Authors: Michelle Cook, Collin Quarrie.

Introduction

Amid escalating concerns about energy resiliency and the urgent need to transition to sustainable energy sources, hydrogen has emerged as a promising contender in the global energy landscape. Its versatility, potential for zero-emission applications, and ability to store and transport energy have sparked a surge of interest and investment worldwide. However, following announcements of a large number of projects in the last few years, 2023 disappointed some industry observers as delays have occurred in making final investment decisions on some projects. New Zealand has seen continued progress in hydrogen production and usage in the heavy transport industry, growing collaborations in aviation and steel production, and successful events around the country including conferences and technology trials.

From corporate partnerships and technological advancements to government initiatives, the hydrogen ecosystem continues to undergo expansion and evolution. In this year’s Hydrogen Ecosystem Update, part of the Aotearoa: Green Hydrogen Technology programme, we delve into the current state of the hydrogen ecosystem globally and locally, exploring key developments, challenges, and the transformative potential it holds for a greener, more sustainable future.

Michelle Cook

Energy Materials Scientist

View bio

Global hydrogen developments

Production

Primarily used as a feedstock in refineries and chemicals industries, hydrogen production on a global scale remains reliant on fossil fuels, particularly natural gas and coal, through processes such as steam methane reforming and coal gasification, known as grey and brown/black hydrogen, respectively. While established and cost-effective, these methods produce significant carbon emissions of up to 12 kilograms of CO₂-equivalent emissions per kilogram of hydrogen (MIT Climate Portal), which undermine the environmental benefits of hydrogen as a clean energy carrier. However, the adoption of low-carbon and renewable methods of hydrogen production, including green hydrogen via electrolysis, have been the focus in many regions including New Zealand. Other forms of low emission hydrogen have gained interest in the last year including yellow hydrogen produced via electrolysis powered by grid electricity with a mixed emissions portfolio (considered low emission hydrogen in countries with a high proportion of renewables on the grid), and white/gold hydrogen which is naturally occurring within the Earth.

As a part of its annual Hydrogen Review, the International Energy Association (IEA), has released a new interactive map that shows operational and announced hydrogen projects around the world. You can find it here and see the global transition as it progresses and filter by type of technology and status:

https://www.iea.org/data-and-statistics/data-tools/hydrogen-production-projects-interactive-map(external link)

Countries like Germany, Japan, and Australia are spearheading efforts to scale up green hydrogen production, investing in large-scale electrolyser projects and establishing hydrogen strategies to drive innovation and infrastructure development. Moreover, collaborations between industry players and governments are fostering research and development initiatives to enhance the efficiency and cost-effectiveness of electrolysers, aiming to unlock the full potential of green hydrogen as a cornerstone of the future energy system. Despite these promising advancements, challenges such as high production costs and limited infrastructure pose significant barriers to widespread adoption, highlighting the need for concerted efforts and strategic investments to accelerate the transition towards a hydrogen-based economy.

Storage

Effective storage of hydrogen is crucial for its widespread implementation as a clean energy carrier. Due to its low density and high reactivity, hydrogen presents unique challenges for storage compared to traditional fuels. However, advancements in storage technologies are addressing these challenges and unlocking new opportunities for hydrogen utilisation across various sectors.

A common approach to hydrogen storage is through compression. Hydrogen gas can be compressed to high pressures (typically 350 or 700 bar) and stored in tanks or cylinders. Compressed hydrogen storage systems offer a compact and relatively simple solution and are being used at hydrogen fuelling stations currently being built by companies such as Hiringa Energy (Hiringa, n.d.). The safety and standards of compressed hydrogen are currently being reviewed by technical groups in New Zealand (Standards New Zealand, 2022).

Another emerging storage method is cryogenic liquefaction. Hydrogen can be cooled to extremely low temperatures (-253°C) to convert it into a liquid, significantly reducing its volume and enabling higher storage densities. Liquid hydrogen storage is particularly advantageous for space-constrained applications, such as aerospace and long-range transportation. However, the energy-intensive nature of liquefaction poses challenges for large-scale implementation. Fabrum, an innovative company based in Christchurch, is a pioneer in cryogenic liquefaction and other hydrogen technology through its HLQ Liquid Hydrogen Plants and boil-off gas management (BOGM) (Fabrum, n.d.). They continue to develop cryogenic storage for hydrogen using their technology.

Furthermore, research into advanced storage technologies, such as solid state hydrogen storage and hydrogen carriers, continues to develop. Solid state storage involves chemically bonding hydrogen within solid compounds such as metal hydrides, through easily reversible reactions, offering high energy densities. Hydrogen carriers, such as liquid organic hydrogen carriers (LOHCs) and ammonia, enable the safe and efficient transport of hydrogen using existing infrastructure. GNS Science has ongoing research into electrochemical green ammonia synthesis utilising its capabilities in developing high performing electrocatalysts (GNS, n.d.).

As research and development efforts continue to focus on improving the efficiency, safety, and scalability of hydrogen storage technologies, the prospects for hydrogen as a clean and sustainable energy solution are becoming increasingly promising.

Natural Hydrogen

Natural hydrogen, occurring naturally underground, is primarily tied to geological processes deep within the Earth's crust. One significant type of geologic hydrogen reservoir is associated with volcanic areas and hydrothermal vents, where high temperatures and pressures facilitate the release of hydrogen gas from minerals and water-bearing rocks. This process, known as serpentinisation, involves the reaction of water with certain types of minerals, resulting in the production of hydrogen gas and other compounds (Science, 2023).

While natural hydrogen is not typically found in abundant quantities compared to other sources, its presence underscores the intricate interplay between geological processes and Earth's subsurface chemistry. Understanding the distribution and dynamics of natural hydrogen is essential for exploring its potential as a natural resource and its role in Earth's biogeochemical cycles.

Recently, naturally occurring hydrogen has become a much-discussed topic as groups look for underground reserves. For example, a recent discovery in France more than 1000 meters underground could hold more than 250 million tonnes of hydrogen, and prospecting has been occurring across Europe, Australia, and the USA (Guardian, 2024). In New Zealand, recent comments from the government suggest that a regulatory framework should be put in place to exploit any natural hydrogen as it moves to create fast track consenting (1News, 2024).

Demand

The demand for hydrogen has experienced a significant surge in recent years, driven by increasing awareness of the need for clean energy solutions and the urgency to mitigate climate change. Various sectors, including transportation, industry, and power generation, are looking to hydrogen as a versatile and low-carbon alternative to fossil fuels. Overall, global hydrogen use reached 95 Mt in 2022, a nearly 3% increase year-on-year, which includes growth in all major regions that use hydrogen except Europe (IEA, 2023). Less than 0.1% of total demand is due to new applications in heavy industry, transport, or power generation. Moreover, low-emission hydrogen is being taken up very slowly in existing applications, accounting for just 0.7% of total hydrogen demand. This shows that growth in clean hydrogen and reducing emissions is still well below what is required to meet climate goals.

Despite the low demand numbers shown above, hydrogen fuel cell vehicles (FCVs) are gaining traction as an emissions-free option in transport, particularly for heavy-duty vehicles and long-distance transport. For example, Ballard Power Systems, a fuel cell manufacturer based in Canada, announced its largest order in company history via a long-term supply agreement of 1000 fuel cells with Solaris Bus and Coach, a European vehicle manufacturer (Ballard, 2024).

Industries such as steel manufacturing, ammonia production, and chemical processing are exploring hydrogen as a feedstock or fuel to reduce emissions and enhance sustainability. In Sweden, H2 Green Steel has begun switching from coal to hydrogen to produce steel and is hoping to begin producing the first batches in 2025 (Mining Technology, 2023). In New Zealand, research into green steel production using hydrogen is led by Dr Chris Bumby at the Robinson Research Institute, with research that could change the by-product of NZ steel production from carbon to simply water (Robinson Research Institute, n.d.).

Governments worldwide are implementing policies and incentives to stimulate hydrogen demand, but there is still a focus on production. According to the IEA, without appropriate government measures in place, low-emission hydrogen will not ensure sufficient off-take agreements to underpin large-scale investments, increasing the risk of delaying the energy transition and missing 2030 emissions reductions targets.

International Markets

Since September 2021, a total of 26 national strategies have been adopted towards achieving net zero emissions (IEA, 2022). Some nations are progressing further by enacting specific policies, notably emphasising support for commercial-scale projects (e.g., the US Inflation Reduction Act and the German H2Global Initiative). Nonetheless, many countries still lack sufficient policy activity to stimulate hydrogen demand, a crucial factor in securing off-take agreements, which could explain the lack of final investment decisions in global projects recently, as previously noted.

In the following section, we examine the hydrogen developments of four influential nations: the United States, China, Japan, and Germany. These countries represent diverse approaches to hydrogen deployment, ranging from ambitious targets to innovative technologies. By exploring their initiatives and strategies, we gain insights into the global momentum behind hydrogen and its potential to reshape the energy landscape.

United States: Pioneering Hydrogen Innovation

The United States stands at the forefront of hydrogen innovation, with significant investments in research, development, and deployment across public and private sectors. Recognising the potential of hydrogen to address climate change and energy security, the US government has launched initiatives such as the Hydrogen Energy Earthshot, which aims to reduce the cost of hydrogen to $1 per kilogram within the decade. The US introduced the Inflation Reduction Act in 2022, which includes the largest hydrogen subsidies in the world (EY, 2022).

America’s national agencies such as the US Department of Energy (DOE) and National Renewable Energy Laboratory (NREL) play a central role in advancing hydrogen technologies. For example, the DOE established the Hydrogen and Fuel Cell Technologies Office (HFTO) to focus on cutting-edge research, development, and demonstration projects. Additionally, NREL focuses on grid integration, and uses techno-economic analysis to accelerate the commercialisation of hydrogen technologies.

Through the US’s Bipartisan Infrastructure Law, $7 Billion USD has been allocated towards the H2Hubs initiative, which is a central driver in helping communities across the country benefit from clean energy investments, good-paying jobs, and improved energy security (energy.gov). The hubs, which were announced in 2023 and span the country, include:

The Appalachian (West Virginia, Ohio, and Pennsylvania)
California
Gulf Coast (Texas)
Heartland (Minnesota, North Dakota, and South Dakota)
Mid-Atlantic (Pennsylvania, Delaware, and New Jersey)
Midwest (Illinois, Indiana, and Michigan)
Pacific Northwest (Washington, Oregon, and Montana)

These hubs are intended to provide a foundation and eventual scale-up for a future clean hydrogen network spanning the entire value chain and decarbonise multiple sectors of the economy, including cement and steel production.

With its vast resources, technological expertise, and collaborative ecosystem, the United States is investing in pioneering hydrogen innovation and driving the transition to a sustainable energy future.

China: Leading the Charge in Hydrogen Deployment

China has emerged as a global leader in hydrogen deployment, driven by ambitious targets to achieve carbon neutrality by 2060 (Energy Policy). The country's hydrogen strategy emphasizes both green and blue hydrogen production, supported by extensive investments in renewable energy and hydrogen infrastructure.

China's robust hydrogen ecosystem spans transportation, industrial applications, and energy storage. The government has outlined specific targets for hydrogen production capacity, aiming to reach 35 million metric tons per year by 2030 and 60 million metric tons per year by 2050, which would represent 10 percent of its total energy supply (CSIS). To achieve these goals, China is investing in large-scale electrolysis projects, renewable energy integration, and hydrogen refuelling infrastructure. Despite the low cost of producing hydrogen from coal, the central government appears committed to sustainable deployment (CSIS).

In September 2023, Sinopec announced plans to become China's biggest hydrogen producer, setting the country on a path to achieving its energy and climate goals (SCMP, 2024). The company said it aims to install a capacity to produce 120,000 tonnes of hydrogen a year by the end of 2025, however it was later announced the project would take an additional two years to complete due to issues related to the implementation of technology (Hydrogen Insight, 2024).

Moreover, China's commitment to hydrogen extends beyond domestic efforts. The country is actively engaging in international collaborations and partnerships to share knowledge, expertise, and resources. Initiatives such as the China Hydrogen Alliance (CSIS,2022) facilitate cooperation on research, development, and deployment of hydrogen technologies across borders.

With its ambitious targets, extensive investments, and collaborative approach, China is leading the charge in advancing the global hydrogen economy and shaping the future of sustainable energy.

Japan: Innovating Towards a Hydrogen Society

Japan envisions a hydrogen society as part of its efforts to achieve a sustainable and resilient energy future. With limited domestic energy resources, Japan is prioritizing hydrogen as a versatile and low-carbon energy carrier.

After releasing the world’s first national hydrogen strategy in 2017, Japan released a revised version in June of 2023 that is defined by S + 3E (Safety, Energy Security, Economic Efficiency, Environment) principles (METI, 2023). The updated strategy identifies core strategic areas it deems as critical to securing a foothold on the global markets, including the commercialisation of domestically produced technology that spans hydrogen production, distribution, and utilisation.

In addition to the current target of expanding consumption of hydrogen to around 3 million tons per year by 2030 and about 20 million tons per year by 2050, the strategy sets new targets of about 12 million tons per year (including ammonia) to 2040 (METI, 2023). To help ensure demand increases, the Japanese government will promote the development and demonstration of technologies for hydrogen/ammonia burners and boilers and the introduction of co-generation systems using hydrogen gas turbines.

Through public-private partnerships and innovation-driven policies, the country's revised commitment sees it projecting generating public and private sector investment worth approximately $165 Billion NZD over 15 years (METI, 2023) and has a strong focus on international cooperation. According to the NZ Ministry of Foreign Affairs and Trade (MFAT), this presents opportunities for businesses to collaborate with Japanese entities, Halcyon Power, which is a Joint Venture between Obayashi Corporation and Tuaropaki Trust is one of numerous examples of such (Halcyon ref).

Germany: The Road to Net-Zero and the Energy Transition

Germany views hydrogen as a crucial component of its energy transition strategy, or Energiewende, aiming to achieve climate neutrality by 2050. The country’s updated National Hydrogen Strategy, released in 2023, focuses on “Accelerated market ramp-up” by expanding hydrogen production capacity, building infrastructure, fostering international cooperation, and creating an enabling policy environment (FMEACA, 2024).

Germany has set ambitious targets for hydrogen deployment, with its new liquified natural gas (LNG) terminals (Reuters, 2023) and 10 GW of gas power plants (Reuters, 2024) to be built ‘Hydrogen-ready’ enabling a switch to hydrogen in the 2030’s. Its aim is to have 10 GW of electrolyser capacity installed by 2030 (doubled from the previously set target). The government is supporting these goals through funding programs, regulatory frameworks, and partnerships with industry stakeholders (FMEACA, 2024). Working with a growing number of countries, Germany has nine hydrogen partnerships globally, and is engaged in discussions in New Zealand.

Furthermore, Germany is investing in research and innovation to drive advancements in hydrogen technologies. The National Innovation Program for Hydrogen and Fuel Cell Technology supports market-ready projects ranging from electrolysis and fuel cell development to hydrogen storage and distribution (IEA, 2017).

As a leader in renewable energy and engineering expertise, Germany is well-positioned to champion hydrogen as a key pillar of the energy transition. By leveraging its strengths in technology, infrastructure, and collaboration, Germany aims to realize its vision of a sustainable and resilient energy future supported by hydrogen.

Aotearoa New Zealand

While innovative and collaborative in its approach to sustainability, New Zealand faces challenges as a technology taker due to constraints in resources and manufacturing capacity. Nevertheless, the country is leveraging its science capabilities to conduct research, and abundant renewable energy sources to explore opportunities in production, storage, and utilisation, contributing to the broader dialogue on sustainable energy solutions.

There is a growing recognition in Aotearoa New Zealand of the potential benefits of hydrogen as a low-carbon energy carrier, and a willingness among industry, government, and research to invest in its development. However, many challenges remain, including the high cost of producing renewable hydrogen at scale, the need for infrastructure to support hydrogen use, policy development, and the limited domestic market for hydrogen-related products and services.

Despite limited hydrogen deployment in 2024, Halcyon, Hiringa Energy, and H.W. Richardson (HWR) have all embarked on ambitious hydrogen initiatives in the heavy transport industry. Halcyon opened New Zealand’s first green hydrogen fast refuelling station in Auckland in April 2024. The hydrogen for this station is produced at Halcyon’s green hydrogen production facility at the Mōkai geothermal power plant. Hiringa Energy is spearheading a network of refuelling stations aimed at scaling up grid-connected hydrogen production and distribution. The first refuelling station of this network was also opened in Auckland in April 2024, with others to follow in Tauranga, Taupo, and Palmerston North later this year. Hiringa Energy also recently announced plans to expand its network into Australia in the coming years (Hiringa). Meanwhile, HWR, a diversified company with interests in agriculture and logistics, has announced its own rollout of refuelling stations using its Allied fuel brand, with its first being built in Gore (HWR) before expanding nationally. In the past year they have successfully converted and trialled the integration of dual-fuel hydrogen and diesel trucks into its operations. HWR states that using dual fuel trucks are the best way to introduce hydrogen when there is limited built infrastructure compared to a 100% hydrogen fleet. These initiatives and their unique approaches underscore New Zealand's position at the forefront of hydrogen implementation, with local companies actively contributing to the country's transition towards a low-carbon future.

Hydrogen is increasingly being explored as a promising alternative fuel for aviation, as New Zealand ranks sixth in the world in per-capita aviation emissions (tandfonline). The New Zealand aviation consortium, which includes Airbus, Air New Zealand, Christchurch Airport, Fortescue, Hiringa Energy and Fabrum, released a report in 2023 outlining their vision for the aviation transition to hydrogen (RNZ). The group says that New Zealand’s high renewable electricity grid and favourable geography mean it is an ideal place to implement. Their report states that up to 100, 000 tonnes of green hydrogen would be needed for aviation and 16% of current electricity supply, providing an important offtake in the country. A second collaborative effort between Air New Zealand, Wellington Airport, Toyota New Zealand, and Hiringa Energy conducted a trial to charge Air New Zealand’s electric tugs and service vehicles from hydrogen over several weeks at Wellington Airport (Wellington airport).

In September 2019, MBIE released the green paper "A vision for hydrogen in New Zealand" to seek feedback about the challenges and opportunities of building a hydrogen economy across the motu, and 2023 saw the release of the Interim Hydrogen Roadmap, including economic modelling of potential future uses of hydrogen in New Zealand. Consultation on these documents will inform the national energy strategy, to be finalised before the end of 2024. This will incorporate various aspects of the energy industry, including hydrogen, which bring together social, environmental, and economic wellbeing. The NZ government is also continuing to develop regulatory settings for the Gas Transition Plan (MBIE, 2023) and offshore renewable energy, focused in the Taranaki region which may include hydrogen produced from renewable energy.

Crown Research Institutes (CRIs), universities, tertiary education, and independent research organisations have continued to contribute to the development of hydrogen technology and the wider ecosystem. New Zealand’s government has established a Science System Advisory Group to provide advice to the government on improving the science, technology and innovation sector in New Zealand (MBIE, 2024). The group will look at the effectiveness, inefficiencies, and poor connections of the current sector, as well as its aspirations and opportunities for growth.

The past year has seen both industry and research focused conferences gain momentum after successful inaugural events in the previous year. The H2 2 Zero Summit was held in September 2023, focused on bringing together key industry players and industry leaders (NZ Hydrogen Council, 2023). The second New Zealand Hydrogen Symposium, hosted by GNS Science from 31 January to 2 February 2024, was the largest event ever to showcase global hydrogen research in New Zealand (GNS, 2024).

What’s next?

The energy transition presents both opportunities and challenges that will significantly influence how we generate, store, and utilise energy. While many within the sector acknowledge hydrogen's potential as part of the solution, it's essential not to view it as a silver bullet. Collaboration is key across the public and private sectors to ensure alignment as regulations and standards are applied to investments in infrastructure in various applications with safety at the forefront. Furthermore, the science, technology and innovation system should facilitate collaborative efforts among researchers, industry players, and other stakeholders to address both national and global energy challenges.