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Federal Minister for the Environment and Heritage
The Hon Dr David Kemp, MP
International Hydrogen Economy Conference
Broome, Western Australia
Tuesday, 20 May 2003
It is a great pleasure to be here in Broome for Australia's first Hydrogen Economy conference.
Interests and needs up here have their own unique character. Broome is isolated, comparatively small, and forward looking. In world terms, Australia is not dissimilar - we too are remote from much of the planet, we punch above our weight, we have for our national crest a marsupial and a bird that do not take a backward step.
So it is a great honour to be here to speak to and converse with such a highly informed international audience. I congratulate my colleague Ian Macfarlane, his staff and department for the foresight they have shown in organising such a successful and timely conference - and trust that delegates, drawn from places as near as Asia, or as far away as Europe will enjoy the experience in what is, for these few days at least, the hydrogen capital of the world.
The famous author, Jules Verne originally imagined using hydrogen to store and transport energy and the concept has gained momentum over the last decade as the technologies have developed and the need to address the climate change of our planet has become a priority.
To the extent that technical issues can be satisfactorily addressed, hydrogen has the potential to deliver significant environmental benefits, and reduce the environmental impact of energy.
It can displace conventional fossil fuels produced and used in the appliance, transport and distributed generation markets, saving harmful greenhouse gas emissions.
Hydrogen usage in most applications can be regarded as greenhouse neutral, producing only water, and little or no other emissions. Where a fuel cell is used, the hydrogen usage produces no greenhouse gas emissions, so it is not difficult to see the attraction of hydrogen fuels to urban transport authorities.
In terms of hydrogen production, there is a range of potential greenhouse gas outcomes. These range from zero emissions, where the hydrogen is produced by the electrolysis of water using renewable power such as wind or tidal, to significant levels of emissions where the electricity is produced using conventional coal-fired electricity.
However, while further research is needed, and the net outcome depends on range of factors, it seems clear that energy-related emissions in a world using hydrogen would be significantly less than they are today.
At this time it is difficult to predict the exact technological path that we'll take. Like biological evolution, technological evolution and for that matter, revolution, will contain many surprises.
Fossil fuels have been an integral part of our national makeup since European settlement. Their abundance and their cost-effectiveness have contributed mightily to a stronger economy. However, they have not extended their beneficence to our environment.
Hydrogen may well provide us with benefits for both economy and environment. The potential for a fuel that is abundant, emissions free and pollution-free would seem infinite.
HYDROGEN AND CLIMATE CHANGE
From an environmental point of view the prospect of the Hydrogen Economy is inevitably seen in the context of finding a clean technology that will enable us to cut greenhouse gas emissions dramatically, and thereby minimize the human impact on climate.
For the benefit of our international visitors, let me restate Australia's approach to climate change.
Four elements underpin the development of Australia's forward climate change strategy:
Australia is vulnerable to climate change. We can see this by looking at the impact of climate changes which have already occurred. The reduction by over 25 per cent of rainfall over south-west Western Australia since 1975 has already forced a reassessment of the way water is provided to Perth. The warming of the oceans has already had damage impacts on the Great Barrier Reef. The highest average maximum temperatures on record have already delivered the most widespread drought in Australian history over the last two years and brought a natural focus on water as never before. Recent warm years have already been associated with the spread of insect pests, disease and weeds.
A warmer world will mean even greater pressure on our scarce water resources. Dryland wheat cropping in south western Australia, pasture and grazing systems in high rainfall and rangeland areas, and fruit trees requiring winter chilling, will all be under pressure in a hotter world. Urban and coastal communities may face increased storm intensity, sea level rise and flooding.
On the other side of the ledger, some wheat yields may actually increase in regions where rainfall is projected to increase, or where decreases are small, due to the compensatory fertilisation effect of increased carbon dioxide. Appropriate mechanisms for adaptation will allow the costs of climate change impacts to be minimized and any opportunities and benefits to be realized.
In recognition of this, the Government announced in August last year that as a first step research will be undertaken to improve our understanding of likely impacts from climate change, and on adaptation options. These are imperatives.
Although there is much that we still need to learn about the world's climate system, there is general agreement that a principal mechanism leading to global warming is the greenhouse effect, arising from increasing atmospheric concentrations of greenhouse gases - chiefly carbon dioxide, methane, and nitrous oxide.
Most of you will know that Australia has not ratified the Kyoto Protocol and has no current plan to do so. While we are actively engaged in promoting truly global action, we do not believe that the Protocol without a clear pathway for the involvement of developing countries, and without the United States, is in our national interest.
If Australia were to ratify Kyoto, it would create obligations for Australia that are not imposed on many of our regional trading competitors.
This could economically disadvantage Australia, while potentially increasing global greenhouse gas emissions by driving our high-emitting economic sectors offshore to countries that have made no commitment at all to achieving emissions reductions.
In fact, the Kyoto Protocol itself will achieve very little. Around three quarters of global greenhouse emissions are not covered by the Protocol, and estimates are that at by 2012, it will only have brought about a modest 1% reduction in global greenhouse emissions.
Compare this with the need, on the basis of the best current scientific assessment, for a reduction in global emissions by around 60% by the end of this century to stabilize greenhouse gases in the atmosphere.
This government has committed almost one billion dollars to provide incentives for greenhouse gas reductions, and to encourage the development of low emission technologies.
Our short-term aim is to meet the target negotiated for the first Kyoto period. Our longer-term goals are, domestically, to put in place a policy framework that will further cut our greenhouse gas emissions. Internationally, we are working for a new more satisfactory global approach that will lead to effective action by all major emitters and that will reduce the concern of developing countries that their economic growth is threatened.
So what are we doing? Australia is consulting widely with State and Territory Governments, Local Governments, industry and the community to develop a long-term strategy to lower Australia's greenhouse signature.
This strategy seeks to establish a twenty to thirty year framework that will provide the investment security necessary for our future.
Energy Sector Greenhouse Gas Emissions
Central to this strategy will be the adoption of technologies to produce energy in sufficient quantities to power a twenty-first century economy without adding to our greenhouse signature.
Energy makes a major contribution to global greenhouse gas emissions. World energy consumption is predicted to grow by around 60% over the next twenty years. In Australia, it presently contributes about 70% of our national emissions and our consumption is projected to grow at about 2% per year. More efficient and greenhouse friendly systems will play a key role in minimising the environmental impacts of this growth.
Australia, given its large reserves of low cost coal and natural gas, along with much of the world, will continue to depend on fossil fuels for some time. A key direction for research must be cleaner, cost-effective, fossil fuels.
Research into zero-emission coal gasification technologies has gained significant momentum over the past few years.
The Coal21 project aims to accelerate the development of zero emissions coal-based generation and is likely to develop new hydrogen based approaches to reducing greenhouse gas emissions. With coal providing about 85% of Australia's electricity supply, the importance of this sector to future developments should not be underestimated.
The US FutureGen project will see a billion dollars invested into a coal gasification plant where the carbon dioxide produced will be separated out for geo-sequestration and the hydrogen utilised in a large-scale generation plant.
Parallel action to exploit our gas resources is under way and demonstrates Australia's role as a good global greenhouse citizen. Our recent LNG contract will enable China to use a cleaner fossil fuel than coal, and reduce its emissions by 7 million tones per year, at a cost to Australia of an additional one million tones of CO2 - a substantial saving to the world's greenhouse gas emissions.
Renewable Energy Technologies
The Australian continent has some of the best wind and solar resources in the world.
Renewables have the potential to be important as a source of emission-free electricity but can also have a role in providing alternative transport fuels such as biodiesel and ethanol. They can also provide an emission-free source for the production of hydrogen.
Mandatory Renewable Energy Target and Renewable Energy Programs
Australia introduced the world's first Mandatory Renewable Energy Target in 2001. By creating a national market-based system of tradeable certificates backed by legislation, the Howard Government has stimulated a high level of renewable project planning and development, with an expected $6 billion dollars of investment in renewable generation over this decade.
Around 170 renewables-based power stations are being accredited across Australia, covering a wide range of technologies.
Wind power, for example has seen unprecedented growth in Australia - from a base of just a few megawatts four years ago, there are now over 100 megawatts of wind turbines generating power in Australia, with that capacity projected by some to skyrocket to over 2,000 megawatts in the near future.
While the MRET provides the market pull, the Howard Government has also implemented a range of programs with over $300 million in funds to encourage the deployment of existing renewable technologies, the commercialisation of innovative new technologies and industry capacity building.
These programs have provided much needed 'technology push' to develop and deploy renewable technologies and have contributed to a veritable explosion of new investment and construction activity with environmental and also economic benefits, such as employment growth in regional areas.
The interim targets for the first two years have been met comfortably, and significant investments are being made to ensure the growing targets continue to be met.
Renewable Energy Action Agenda
In co-operation with industry, in 2000 the Government launched a Renewable Energy Action Agenda to provide a strategic policy framework for the development of a sustainable and competitive renewable industry in Australia. The Business Council for Sustainable Energy has primary responsibility for implementing this Agenda, which aims to grow annual industry sales to $4 billion by 2010.
In March, Industry Minister Ian Macfarlane and I announced a further $1 million in backing for nine major renewables projects ranging from reviewing available biomass generation options to converting pig waste to electricity. Grants have also been provided for such things as resource assessments, training and accreditation programs, standards and best practice guidelines.
We have also instituted a rebate programme to encourage householders and developers to install photovoltaic arrays for the production of solar power. These rebates have been a strong catalyst for growth in the solar industry. In last week's Budget, we extended them for another two years to encourage greater penetration of this technology among homeowners. We have also set aside $1 million over the next two years to enable residential developers to utilize the technology in their projects.
The opportunity for improved energy self-reliance in regional areas is an important consideration in developing cost-effective policies for Australia.
Australia has many regions where development opportunities are constrained by high costs. We are innovative in our approach to providing power to remote areas and need to build on the expertise we have developed.
We have encouraged isolated households and remote communities in our vast land to use available renewable energy resources rather than diesel fuel.
In the Northern Territory, the Commonwealth will be providing nearly $3.5 million to Solar Systems NT to install 30 concentrating dish photovoltaic generators for three indigenous communities. We expect this to reduce diesel fuel consumption in these communities by about 400,000 litres per year, with a projected annual greenhouse saving of over 1,000 tonnes.
In tandem with this, we have made available an additional $7.5 million for major projects leading to the installation of 4.2 megawatts of wind turbines at Esperance and Rottnest Island in WA; and 280 kilowatts of photovoltaic generation at Bulman and Kings Canyon in the NT.
The potential for remote power systems and distributed generation in Australia is immense and could be one of the key drivers for the uptake of hydrogen in our economy.
FUTURE ROLE OF HYDROGEN
So where in this picture does the Australian government see hydrogen?
As you have heard, the Commonwealth has commissioned the National Hydrogen Study to gain a better understanding of the issues and potential for utilising hydrogen as a energy carrier to improve energy security and reduce environmental impacts.
The study will also assess whether the general optimism for hydrogen is justified and examine strategies and actions that may be appropriate for governments and key stakeholders.
Any shift towards a hydrogen economy will require technical, policy, regulatory, educational and economic issues to be addressed. Australia plans to focus on its competitive advantages and areas of expertise and the Study will inform our forward thinking.
GOVERNMENT SUPPORT FOR HYDROGEN
In order to better assess the potential for the hydrogen economy, Australian governments are involved in a number of research projects and pilot programmes to better assess the practical issues arising in the development of hydrogen as an energy source.
Sustainable Transport Energy for Perth (STEP)
Hydrogen has yet to be used as a major transport fuel in Australia but this is beginning to change in Perth with the construction of our first hydrogen refuelling station.
The Howard Government is providing $2.5 million for the trial of three Mercedes Benz hydrogen fuel cell buses by the West Australian government, with delivery of these buses expected in early 2004.
This is part of a 2 year worldwide project that involves eleven cities trialing hydrogen fuel cell buses under realistic conditions. As Simon Whitehouse has just outlined, the trial will provide information on fuel cell reliability; performance capability and emissions; infrastructure needs for production and distribution of hydrogen; and on appropriate regulations for fuel cell buses.
Bureau of Meteorology
Our world-renowned Bureau of Meteorology is already involved in the production of the hydrogen it uses to inflate weather balloons as part of its atmospheric monitoring. At remote Meteorological Offices, where deliveries of gas in commercial cylinders are costly or impractical, hydrogen is generated on-site.
The Bureau will replace existing hydrogen generation systems with more efficient equipment, based on fuel cell technology, at Norfolk Island next month and Townsville soon thereafter.
These new systems will provide increased safety and improved maintainability over the units they will replace. Further installations throughout the existing network are planned over the next five to ten years.
The Energy Technology Division of the Commonwealth Science and Industrial Research Organisation has had a long interest with hydrogen technologies and has proven experience with steam reforming natural gas at the laboratory scale.
In collaboration with the Australian company, Solar Systems, they are demonstrating the utilisation of solar thermal power to enrich natural gas to a higher value synthesis gas containing hydrogen.
The CSIRO operates a 44 kilowatt thermal facility located near Sydney with the long-term aim of commercially developing this technology to increase the energy content of the gas being transported along pipelines from areas of high solar energy.
Australian Sustainable Energy Centre at Murdoch University
In April, I announced $5.5 million in new funding for an Australian Sustainable Energy Centre to be jointly hosted by Murdoch and Curtin Universities in Perth. Part of the work of this centre will to further develop Australia's experience with hydrogen systems and fuel cells, particularly for operation in remote areas.
Ceramic Fuel Cells
Ceramic Fuel Cells Ltd is an Australian company that has established itself as a global player in the area of solid oxide fuel cells. The company has been the recipient of government grants for commercialisation and development activities. The R&D Start program has provided $15 million to help develop and trial market entry solid oxide fuel cell systems with waste heat recovery.
Australian Antarctic Division
In the last year, the Howard Government has taken a major step to reduce the reliance on diesel fuel for our operations in Antarctica. We have installed two large wind turbines at Mawson Base that will provide up to 80% of the annual electricity and heat requirements of the base.
Today, I am very pleased to announce that the Howard Government is going to accelerate the work, and further reduce reliance on diesel fuel for our Antarctic operations. We will provide up to half a million dollars to the Australian Antarctic Division and the Institute of Antarctic and Southern Ocean Studies at the University of Tasmania to increase the use of hydrogen in our Antarctic operations.
For some parts of the year, the wind turbines will produce excess power and these funds, which will be provided from the Renewable Remote Power Generation Program, will be utilised to investigate increasing hydrogen production and storage at Mawson Base.
This will accelerate plans to utilise this hydrogen in times of low wind with the aim of installing and testing fuel cell technologies as a means of even further reducing diesel reliance. It is hoped that over the long term, with the installation of an additional wind turbine, that this approach will almost eliminate the need to transport diesel fuels to this remote and extreme location.
This initiative will provide major environmental benefits to the pristine Antarctic environment, it will also provide the basis for building Australian expertise in what is regarded internationally as one of the most promising low emission technologies required to reduce greenhouse gas emissions over the long-term.
Given the very high risks in operating facilities in the Australian Antarctic Territory and the consequent need to provide very high security of supply, it will not be feasible to entirely eliminate fossil fuels in the short-term. Much will depend on how quickly hydrogen systems, and specifically fuel cell technologies improve and demonstrate their long-term reliability. We hope to learn much from the extensive experience in the production of hydrogen from the vast wind resources of the Antarctic region.
Climate Action Partnership
Our collaboration with the US through the Climate Action Partnership has an initial program of 19 projects. Renewable energy, with immediate emphasis on remote power, and the hydrogen and fuel cell project, are two key areas of collaboration.
The collaboration is seeing some expansion into multi-lateral action, with the recent announcement by the US Secretary of Energy, Spencer Abraham of his proposal for an International Partnership For The Hydrogen Economy. I am delighted that Australia has been invited to participate in this exciting initiative.
There is also the prospect of Secretary Abraham visiting our shores this year, providing the opportunity to discuss energy policy including sustainability issues which are both critical to the future growth and prosperity of our countries.
Australia is pleased with the progress being made under the Partnership and it has led to the implementation of projects with a number of other countries to expand the bilateral collaboration, with the prospect of more to come.
Export development is likely to flow from this collaboration, and I encourage industry and researchers to engage with this process and take advantage of the benefits.
As the Government reviews progress and develops future directions in its climate change and energy policies, I believe that it is also timely for industry to do the same - to step back, take stock and make some key decisions about its future directions.
The energy industry is at a critical point in its evolution and some hard work needs to be done by the industry itself to lay firm foundations for the future. There will be many challenges, and there are likely to be winners and losers as the world economy shifts to a lower greenhouse intensity.
It is likely that there will be many patches to the energy quilt, but with twin imperatives of security and the reduction of greenhouse intensity, innovation and technological development will shape the way ahead.
The future of renewable energy will depend on the industry's ability to provide reliability and cost-effectiveness, and on how well industry can commercialise innovative technologies from niche markets to broader applications.
The Government will be providing a long-term policy framework, based on a competitive market with clear signals provided to investors.
WHERE TO FROM HERE?
The Prime Minister recently said that Australia's energy policy must continue to support economic growth and development, while also contributing to reduced air pollution and greenhouse gases, and developing new technologies.
He emphasised that the delivery of competitively priced and secure energy sources was an issue for all Australians.
The Howard Government has made this a high priority, and industry has a critical part to play as well. We are at an important time for energy and climate change-related issues, and we must continue to engage on these and work closely together.
We are a market economy, and the significance of hydrogen production and distribution costs cannot be dismissed. There is a significant relative price differential to be addressed, as there has been with many new technologies in the past.
The Howard Government is looking to industry to take up the challenge, work together, and take a leadership role. We want to see it move forward to a point where it can contribute actively to Australia's greenhouse and energy goals.
Indications are that the potential for hydrogen energy systems is significant and it is important that governments cooperate to ensure common codes and standards.
It is often said that you can't predict the future, you must create it. While I acknowledge the global nature of R&D efforts, the Australian Government is playing an active part in these long-term energy policy developments.
Some commentators predict that renewable sources including hydrogen will contribute 50% of our energy requirements by 2050. Australia has an excellent track record in supporting innovation in the energy sector.
With so many remote locations and a very long and thin main-grid, it is not surprising that Australia is a world leader in integrating renewables into remote areas and I hope that we can effectively integrate hydrogen fuel cells into this market.
There is undoubtedly still a long road to travel towards a more sustainable global economy. Europe, Japan and the US have hydrogen development programs to leverage private sector investment and it is timely that Australia also considers its role.
We are prepared to play our part. We look forward to hearing your ideas and to working with you to find the best way forward for Australia.
Catherine Job 02 6277 7640 or 0408 648 400