Green hydrogen has been touted as the next big move to lower carbon emissions and Papua New Guinea is well positioned to develop this resource. Devesh Singh, the International Finance Corporation’s Operations Officer (Climate & Energy) – South Asia and Pacific, tells Business Advantage PNG what green hydrogen could mean for PNG and other developing nations.

This is the Riversimple Hydrogen Refueller, Abergavenny, UK, which was installed in 2019. Vehicles powered by hydrogen can recharge here. Credit: Geography

Business Advantage PNG (BAPNG): There’s a lot of hype about green hydrogen at the moment. How is ‘green’ hydrogen defined?

Devesh Singh: Green hydrogen is produced using renewable-energy powered electrolysis to split hydrogen from oxygen in water (H2O). This zero-carbon alternative is increasingly being used as a key technology to reach net-zero goals by replacing existing fossil fuel-derived hydrogen (blue and grey hydrogen) and by exploring new use cases.

Decarbonizing hydrogen production and increasing its uptake across sectors can help emerging markets meet their climate goals.

BAPNG: What are its proven uses so far, based on current technology?

Singh: Hydrogen has been used for decades as feedstock. However, today, 99 per cent of the annual production of hydrogen is fossil fuel-based, using technologies that emit carbon dioxide (CO2, about 8kg of CO2 per ton of hydrogen).

Green hydrogen has a unique versatility for multiple end-uses. It has significant potential to decarbonise the top three sources of global warming: industry (especially heat-intensive industrial processes and mining), electricity generation and heating (where it can be co-mingled in the gas grid) and transport (shipping, aviation and long-haul).

Hydrogen is expected to play an important role in achieving energy security, by replacing imported oil and ammonia. It will also help to decarbonise hard-to-abate sectors and carbon-based chemical processes in industries such as steel, cement, refinery, transport, shipping and power.

‘PNG has the potential to deploy renewable sources of power, including hydro, solar and wind to meet its energy requirements and to produce green hydrogen.’

BAPNG: How could green hydrogen help reduce our reliance fossil fuels moving forward? How does it compare on price and efficiency with established fuels?

Singh: Green hydrogen can replace natural gas as a fuel and a feedstock to produce steel and other products.

Green hydrogen is generally two to three times more expensive than grey hydrogen and blue hydrogen (both made using the steam methane reforming process from fossil fuels and other materials).

However, analysts expect that green hydrogen costs will fall below US$2 per kg by 2030 in most places to become competitive with current alternatives (fossil fuel-derived hydrogen and ammonia, fossil gas, coal, diesel). To be competitive with these alternatives, green hydrogen needs access to cheap renewable energy, low capital expenditure costs for electrolysers, and a plant load factor over 70 per cent. These inputs range depending on a variety of factors including geography, market conditions, storage and transport.

IFC’s Devesh Singh.

BAPNG: How is the IFC helping to develop this energy source? How does your work on green hydrogen complement the other energy initiatives you have going on in Papua New Guinea and the region?

Singh: IFC is actively working to identify green hydrogen investment opportunities in emerging markets. Investments in green hydrogen projects require expert knowledge in renewable energy assessment, development, financing, and operations; energy markets and power systems; chemicals production and marketing; and fuel storage and transportation.

IFC’s wealth of knowledge in structuring and investing in complex transactions of this nature provides us with a unique advantage. IFC can not only finance suitable investments but also support clients by conducting export or production market assessments, preparing business plans and commercial terms of the offtakes, bringing in technical expertise and knowledge of international best practices from a pool of global sector experts, providing guidance and environmental and social risk screening and management.

IFC has an array of renewable energy initiatives in PNG and the Pacific more broadly, helping countries harness this great opportunity for climate-resilient private sector growth.

In PNG, renewable energy represents a clear opportunity for business and investment. PNG has the potential to deploy renewable sources of power, including hydro, solar and wind to meet its energy requirements and to produce green hydrogen. Indeed, countries with significant renewable energy resources, like PNG, could provide ideal locations for green hydrogen production and the export of green ammonia to markets like Australia, Asia and further afield.

BAPNG: How can the private sector get involved?

Singh: The private sector has been very active, with the formation of several coalitions, including some led by IFC clients, with an overall objective to create critical demand for hydrogen while looking to achieve economies of scale and cost reduction on the supply side.

In 2020, about 48 gigawatts (GW) of green hydrogen projects were announced worldwide for launch by 2030, and several of these projects are on a GW scale. Many private sector-led initiatives are helping to accelerate hydrogen production and deployment of green hydrogen. These include the World Hydrogen Council and the UN Green Hydrogen Catapult—a coalition of seven leading energy companies working towards a 50-fold acceleration in global hydrogen production capacity by 2026.

In PNG, a Hydrogen Association was also recently formed.

Devesh Singh will be speaking at the 2022 Business Advantage Papua New Guinea Investment Conference, which will take place on 15 and 16 August at the Brisbane Convention and Exhibition Centre. Register here.