The Potential significance of the Australian hydrogen industry

Abstract

As countries worldwide seek to decarbonise their economies, global interest in hydrogen as a versatile, carbon-free energy solution is strong and growing. Australia has intentions to become a major hydrogen producer and exporter, leveraging its abundant renewable energy resources and strong trade partnerships, especially across Asia. To achieve this ambition, it will be necessary for state and federal governments to justify substantial investment, funding, and policy attention toward scaling up the presently small hydrogen industry in Australia. To inform such justifications, this paper uses an input-output (IO) analysis approach to estimate the economic contributions to GDP and employment resulting from an expanding hydrogen industry out to 2040. This thesis uses scenario-based demand forecasts and proxy IO data to represent the two most important production methods of hydrogen: steam methane reforming (SMR) and electrolysis. The results indicate that the hydrogen industry has the potential to make significant contributions to Australia, with the most optimistic scenario projecting over $14 billion in GDP and support of almost 57,000 jobs by 2040. Another important finding of this paper is that per unit of hydrogen produced, there may be additional gains to GDP and employment through carbon-free, electrolysis-produced hydrogen, over the fossil-fuel based SMR, adding an economic justification to the environmental case for an accelerated transition toward so-called ‘green hydrogen’. As the first academic paper addressing the economic impact of the Australian hydrogen industry, the detailed descriptions of the data and methodology applied offer a foundation which future research will build upon. Future research priorities include detailed surveys of hydrogen industry inputs and uses, along with estimations on the extent to which fossil fuels will be substituted by hydrogen, with intention of calculating the net economic impact of the transition to an Australian hydrogen society.