SEPTEMBER 2019

Green Paper

1

Contents

Messagefrom theMinister

4

11
Executive
Summary

ISBN 978 1 99 000415 5 (online)
ISBN 978 1 99 000416 2 (print)

2

Our vision

Why
Hydrogen?

14

20
19

34

Aim of theGreen Paper

Building Hydrogen
into a Low
Emissions Economy

Ministry of Business, Innovation & Employment
PO Box 1473, Wellington 6140 New Zealand www.mbie.govt.nz

Hydrogen for a
Resilient Energy
System44

Hydrogenfor Industrial
Processes

59

Hydrogenfor Export

Have Your Say

71

80

48

66

76

Hydrogenfor Mobility

Decarbonising
Gas Supplies

Next Steps3

Message from
the Minister

Our reliance on fossil fuels is compromising our climate andthe wellbeing of future generations. The changing climate
is affecting our economy, the environment and our wayof life. New Zealand remains an active participant in theinternational response to the challenge of climate change(through the 2015 Paris Agreement), principally by making
substantial reductions in our greenhouse gas emissions.

Hon. Dr Megan Woods
Minister of Energy and Resources
I am a passionate believer in
the idea of a well-managed
transition: a clear, transparent
and well-managed pathway
to a new economy - a moresustainable economy that isbetter for the environment,
creates jobs and improves
New Zealanders’ lives.

4

The Government has a goal to transform New Zealand intoa more productive, sustainable and inclusive economy.
This includes our goal to reach 100 per cent renewableelectricity by 2035 and to transition to a clean, green andcarbon neutral economy by 2050. The Government has
committed to making this process a ’just transition’– onethat is fair, equitable and inclusive. This is about making
sure the Government carefully plans with iwi, communities,businesses and unions, regions and sectors to manage theimpacts and maximise the opportunities of the changes
brought about by the transition to a low emissions economy.
A major piece of work for the Government this year will be
to develop policies that will facilitate a Renewable Energy
Strategy for New Zealand. We are considering areas where
Government action can make the biggest difference –identifying the incentives that may be needed, the roadblocks
that need to be removed and how we can help newtechnologies come on stream. We also need to ensure ourregulatory and policy settings are fit-for-purpose in order tomake the most of our abundant renewable energy sources.
Leadership from our local Governments, communities,businesses, universities and other organisations, and iwi
is crucial as we build the architecture for the transition
to a productive, sustainable and inclusive economy.

Green hydrogen is a tool thatwill help reduce global emissions

zero

Climate change
2015 Paris
PledgePartneringwith Japanto develophydrogentechnology

netcarbon by 2050

Opportunities tocreate new jobs

Potential
growth forenergytransport
industry
exportJusttransition
that is fair,equitable andinclusive5Message from the Minister

Hydrogen could becomea major differentiator
for New Zealand’s
energy, transport
and industrial sectors
with substantial
export potential.

The establishment of a strong low emissions economy,
to which hydrogen contributes, is a very real opportunity
and within reaching distance. Private sector investment,
facilitated by appropriate Government policies,
will allow New Zealand to benefit from significant
decarbonisation across the entire energy system.
Green hydrogen is a platform that will help reduce global
emissions. New Zealand has an abundance of renewableenergy that could be used to produce hydrogen as anext generation fuel in a sustainable way. With greenhydrogen we have opportunities to create new jobs,
convert heavy transport away from fossil fuels, enhance
our security of electricity supply and even create significant
export revenue. In combination, electricity and hydrogenprovide a robust energy system platform to decarbonise
New Zealand. Their complementary characteristics candeliver benefits that neither can deliver in isolation.
We have seen large and growing international interestin hydrogen. Countries are investing heavily in hydrogen
research, development and demonstration projects, andin some cases, national strategies. New Zealand signed
a Memorandum of Cooperation with Japan in 2018 which
signalled our interest in working in partnership with Japan
to collaborate in the development of hydrogen for the
benefit of both countries. New Zealand aims to transform its
energy and transport sectors as we make the transition toa low emissions economy and this partnership will allow theexchange of knowledge to enhance hydrogen development.
Several firms in New Zealand are seeing the potential
opportunities for hydrogen in our future economy and someare already investing in hydrogen projects and trials. Ports
of Auckland has committed to building a green hydrogenproduction and refuelling facility. The company, along with
its project partners Auckland Council, KiwiRail and Auckland
Transport will invest in hydrogen fuel cell vehicles as part ofthe project.

6

Current Hydrogen Opportunities
in New Zealand
These are the current known green hydrogen projects
being explored by the private sector in New ZealandPorts of Auckland
green hydrogendemonstration project

Refining NZ greenhydrogen study(Marsden Point)

Ballance Agri-Nutrientsand Hiringa Joint Venture(New Plymouth)

Tuaropaki Trust
geothermal
powered hydrogenpilot project(TaupŌ)H2 Taranaki Roadmap

Decarbonisationof touristtransport

The aim of thisGreen Paper is to signal theopportunity that hydrogencan bring to New Zealandand frame discussions fora national strategy

Figure 1: Current Hydrogen Opportunities in New Zealand7

Message from the Minister

Similarly, in Taupō, the Tuaropaki Trust has
partnered with Japanese multinational Obayashi
Corporation to construct a pilot hydrogenproduction facility using geothermal electricity.
Several other local hydrogen projects are being
developed in Southland/Otago and Taranaki.
The Prime Minister, Rt. Hon Jacinda Ardern
launched the H2 Taranaki Roadmap in March
2019. This Roadmap, which was developed by
Venture Taranaki, New Plymouth District Council,
Hiringa Energy and the Provincial Growth Fund,illustrates how the region can use its existingskills and infrastructure to become a leader inhydrogen production. Provincial Growth Fundsupport has also been secured to help develophydrogen fuel infrastructure in Taranaki.
The Government is establishing a National
New Energy Development Centre in Taranaki
to help lead New Zealand’s transition to a low
carbon future. This Centre will help create new
business and jobs while helping New Zealandmove towards clean, affordable, renewableenergy and away from fossil fuels. The Centre
will look at the full range of available clean
energy options such as offshore wind, solar
systems, hydrogen and new forms of energy
storage. The Government will also establish a newscience research fund to facilitate early stage
research into new green energy technologies.
A Vision for Hydrogen in New Zealand wasdeveloped by building on previous research
globally and in New Zealand, including the 2018
Productivity Commission work, the Concept
Consulting studies in 2017 and 2019, andincorporates the knowledge and expertise of
key stakeholders.
8

Through this paper, theGovernment is seeking yourfeedback on the potential forhydrogen production, export
and utilisation of hydrogen in
New Zealand’s economy.
The aim of this Green Paper is tosignal the opportunity that hydrogencan bring to New Zealand and frame
discussions for a national strategy.
While there are many detailed technical sourcesof information on hydrogen, this Green Paper
is provided for wide discussion and feedback
from all New Zealanders on the current andfuture economic opportunities for hydrogen.
Achieving a low emissions economy based aroundgreater electrification and next generation fuelssuch as hydrogen is a formidable challenge.
I believe that New Zealand is well positioned
to tackle it by transitioning our energy system
to renewable energy, and capitalising on theeconomic opportunities that present themselves
along the way. This Government will continue toprovide leadership and impetus so that we develop
a local emission pathway to carbon neutrality.
Hon. Dr Megan Woods
Minister of Energy and Resources
September 2019

New Zealand policy
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Figure 2: New Zealand policy context for hydrogen910

Auckland ©iStock

New Zealand is fortunate to have anabundance of renewable energy potential

Executive
Summary

The Government aims toachieve a net zero carbon
economy by 2050. This
ambitious goal requires thetransition away from an energy
system which relies heavily
on hydrocarbons (oil, coal andgas) to one that is based on
renewable energy sources.

Hydrogen is poised to fulfil it’s potential as a clean
alternative to hydrocarbons in the global pursuit ofdecarbonisation to address climate change.
New Zealand is one of several countries investigating
the most appropriate applications and transition
pathway for hydrogen within their energy system andeconomy, making best use of their existing natural,social, cultural, human and financial resources.
This document presents the New Zealand Government’s
vision to harness the hydrogen opportunity for asustainable and resilient energy future for New Zealand.
It is envisaged that in combination, hydrogen and electricity
could provide a robust energy system platform for the deliveryof deep decarbonisation of our energy and transport.
There are many potential areas of application including
seasonal electricity storage for winter peak demands inelectricity generation, decentralised energy generation for
remote and isolated users, decarbonised gas, intermediateand high temperature industrial process heat, green
industrial chemical feedstocks, and transport and mobility
applications such as for freight, materials handling, return tobase fleet transport, shared mobility and public transport.
While hydrogen produced from fossil fuels and industrial
processes (brown, blue and grey) may play a role in
the transition of New Zealand’s regions and existing
industries, the Government considers there is greater
opportunity for New Zealand in exploring the use of
our renewable energy to produce green hydrogen as
an alternative fuel for domestic use and for export.

11

Executive Summary

Global momentum can be seen in the recent
policy announcements by Governments inSouth Korea, China, Japan, France, Norway,
California, Australia and others – as well as
New Zealand – regarding green hydrogen’s
investigation and use in demonstration
projects in energy, industrial and transport.
Demonstration projects are underway here,with others planned. They include collaborations
and partnerships between iwi, public andprivate sectors with both local and international
players. With the recent establishment of
the New Zealand Hydrogen Association and
Just Transitions work, and learnings fromoverseas, these ventures are advancing the
emerging hydrogen industry and economy.
Hydrogen production, transportation and storage
technologies are advancing rapidly and renewableenergy systems are on the way to cost parity withfossil fuel-based systems. Today, green hydrogenproduction costs are challenging (electricity
costs factor significantly in the economics ofelectrolysis) and higher than brown hydrogenproduced from natural gas which is coupledwith the release of the greenhouse gas CO2.
Predictions vary over exactly when greenhydrogen is expected to reach cost parity withfossil fuel based hydrogen. The IEA, in its 2019
report (20), predicts that the cost of producing
hydrogen from renewable energy could fall by
30 per cent by 2030 as a result of the declining
cost of renewables and scaling up of hydrogenproduction. Others predict green hydrogen costs
will fall faster and NEL (35) noted recently that
renewable hydrogen already beats fossil fueloptions in terms of total cost of ownership.
12

Other challenges to developing hydrogenin the short to medium term could beovercome by technological advances andinvestment, enabled and supported byappropriate Government policy platforms.
These challenges include cost and technologicalmaturity, safety, regulatory and policy
uncertainty and gaps, infrastructuredevelopment, building the hydrogen economy,
utilising additional natural resources such as
water, developing new renewable energy, theperception of inefficient use of energy andlack of understanding of, the need for lifecycle
assessments in investment decisions.
In a transport context, availability and accessto suitable vehicles and the establishment of a
sufficiently dense refuelling infrastructure are
key. However, the greater range of hydrogenvehicles and their shorter refuelling times
will reduce the magnitude of this problem
somewhat compared with electric vehicles (49).
Hydrogen can also provide an economic export
opportunity for the country. Thanks to ourabundant renewable energy, New Zealand can
produce some of the cleanest green hydrogenin the world, and potentially receive a premiumfor it in international markets. This is a strategic
advantage our Government wishes to explore.
Through this Green Paper, the Government
is seeking your feedback on the role ofhydrogen in a more productive, moresustainable and a more inclusive economy
for New Zealand’s future wellbeing.

Hydrogen’s
potential role in
the New ZealandeconomyENERGY GENERATIONENERGY SYSTEMAPPLICATION

Decarbonise mobility

CCU

Menth

Urea

Decarbonise
industrial process

Harness our renewableenergy potential

Energy storage anddistribution

Decarbonise gas forheating and power

Resilient energy system

Energy export opportunity
Figure 3: Hydrogen’s role in the New Zealand economy

13

Our vision14

To harness the hydrogen opportunity fora sustainable and resilient energy future
for New Zealand
New Zealand has a significant
opportunity to decarboniseelectricity, heat and transportsystems and demonstrate global
leadership to other countries also
looking at low carbon pathways.
The life cycle of green hydrogen isa journey from water and back towater. As illustrated in Figure 4, it
is created from water using energy
from the sun or the wind. Whenutilised, there is no pollution
by-product, and the only output
apart from energy is water.

15© ArupWhat ishydrogen?

It is the simplest, lightest and mostabundant element in the universe,making up more than 90% of all matter.
In its normal gaseous state, hydrogen is odourless,tasteless, colourless and non-toxic. It reacts readily
with oxygen, releasing considerable amounts ofenergy as heat and producing only water as exhaust.
It has a high energy content by weight – nearly threetimes that of gasoline.
Hydrogen is generally encountered as molecularhydrogen (H2). It is an energy carrier that can transfer
and store energy: it is not a primary energy sourcesuch as natural gas, coal, biomass or wind. (21).
Hydrogen is not naturally abundant and has to be
produced. Hydrogen produced from natural gas
or coal gasification and the associated release of
the carbon dioxide produced into the atmosphere,is the common method of production termedbrown hydrogen.
If the CO2 emitted can be captured and sequestered(CCS), it becomes blue hydrogen. In addition, greyhydrogen is produced as a co-product during an
industrial process.
Green hydrogen is the focus of this paper: it isproduced by splitting water molecules into theconstituent elements of hydrogen and oxygen, using
renewable electricity to power an electrolyser.

Types of hydrogen?
 Low Carbon Derived (Green) Hydrogen Carbon Fuel Derived (Brown) Hydrogen Industrial Process Derived (Grey) Hydrogen Carbon Fuel Derived with CCS (Blue) Hydrogen
16Seen in this perspective, greenhydrogen is an energy vector thatis in harmony with our vision ofa clean renewable energy futureand net zero carbon economy.

Water

Electrolyser

Hydrogen

Fuel Cell

Water

Figure 4: Hydrogen life cycle – from water to water17

Tongariro alpine crossing ©iStock

18

Aim of theGreen Paper

This Green Paper:
A Vision for Hydrogen inThis paper builds on existing work, identifying the possible
applications, benefits and barriers to uptake for hydrogen in

New Zealand, discusses

our energy, transport and export sectors.

how hydrogen could fit into

It continues the conversation on the role that hydrogen
could play in pathways to decarbonisation, and discussions
around energy resilience and frameworks for a nationalhydrogen strategy.

New Zealand’s wider energy
and transport system.

The insights captured in this vision are the result of
collaborative work across Government agencies, consultation
with industry, academics and other key stakeholders, anddiscussions at workshops in Auckland, New Plymouth,
Wellington and Christchurch in March 2019.
The paper seeks feedback on our vision for hydrogen in
New Zealand and how we can best take advantage ofthe opportunities presented by moving towards a low
emissions economy.

19Why Hydrogen?

Uses and Benefits
In a compressed gas or liquid
form, hydrogen is a chemical
carrier that is energy dense,transportable and flexible,(similar to natural gas) and is
emerging as a clean and versatile
fuel and chemical production
feedstock – a viable transition
and alternative to hydrocarbon
use across many applications.

In an urban setting, using hydrogen is particularly beneficial
because it contributes to air quality improvements.
The use of hydrogen in fuel cells emits only water, with noparticulates, sulphur oxides (SOx) or nitrogen oxides (NOx).
Regardless of the process used to produce it, hydrogencan be either compressed or liquefied, (very similar tonatural gas which is mainly methane) and can be used:• to fuel vehicles or stationary plants which are fitted with fuelcells or internal combustion engines• for heat by direct combustion or fuel cells• to generate electricity in dedicated hydrogen gas turbines• to replace carbon in industrial processes such as steel
production, and• for energy storage.

Can betransported
over long
distances
Can beproduced without
a carbon footprint

Producesclean power
and fuel

Has high
energy density
when compressed

Versatility
as an energy
vector with wide
application
Clean
industrial
feedstock

Safetyconsiderations
similar to natural
gas or petroleum

Figure 5: Why hydrogen?

Figure 5 summarises some of the features of hydrogen andwhy it may be attractive in New Zealand as a decarbonisation
pathway. It complements electrification and can provide
resilience to the energy system in specific aspects that are
not economically or technically amenable to electrification.
These applications include long distance heavy-duty roadtransport, shipping, aviation, iron and steel production,
chemical manufacture and high-temperature industrial heat.
20

when there is greater generation than demand.
It can be stored and used to generate electricity
during periods of low solar or wind generation
and also during dry weather events that limithydroelectric generation. Hydrogen can be
stored for a much longer time and greater
capacity than electricity. It can also respond toseasonal variations in solar irradiance, or windresources or low precipitation in dry years.

Hydrogen fuelled vehicles can be quieter thantheir fossil fuelled equivalent, helping to reducenoise pollution.
As a partial or complete replacement for naturalgas, hydrogen fuel could provide a realisticroute for decarbonisation of heavy industry byproviding heat for industrial processes. Similarly,
combustion of hydrogen could produce heat for
district heating systems or replace natural gas
as a source of domestic heating and cooking. In
bottled or bulk form it could replace LPG (liquefied
petroleum gas). Hydrogen is flexible and canbe used in both combustion and fuel cells.

Cost Trends
Governments around the world have embraced
policies directly supporting hydrogen deployment
by targeting applications for its use. The
number of countries implementing some ofthese policies by type is depicted in Figure 6.

Significantly, hydrogen can also provide anenergy storage medium. It can be produced byelectrolysis using surplus renewable electricity

Global policies directly supporting hydrogen deployment by target application
Passenger cars
Vehicle refuelling stations
Buses
Electrolysers
TrucksBuildings heat and power
Power generation
Industry
Other fleet vehicles
0

2

4

6

8

10

12

14

16

Number of countries
Combined incentives with targets

Targets without incentives

Incentives without targets

Figure 6: Policies directly supporting hydrogen deployment and application (20)21

Why Hydrogen?

As the cost of renewable electricity becomescheaper, the cost to produce green hydrogen
will similarly reduce. Cost reductions may also
result from increased scale-up of the hydrogen
economy internationally. The global designof electrolysers is advancing and in the next
few decades, technological developments
will help to substantially reduce costs. Worldwide development of the hydrogen market
is expected to drive significant decreases
in the cost of electrolysers, compressors
and liquefaction equipment as well as
end use application such as fuel cells.

Concept Consulting (5) modelled hydrogen costs
for various applications in New Zealand (see Figure7). These cost estimates provide useful insight
into the challenges for hydrogen uptake acrossa wide variety of applications. The costs andbenefits of hydrogen are only fully appreciatedwhen the whole energy system, including lifecycle
analysis from cradle to grave, is analysed. Further
lifecycle analysis and cost benefit assessment
are needed to better inform decision makers.
It is also noted that hydrogen costs will varyacross the world, depending on these variables,
as shown in the IEA’s 2019 report (21).

Modelled current hydrogen costs for various use-cases in New Zealand
13

90

12
80

11
10

70

9

$/kgH2

50

7
6

40

5
30

4
3

20
10

1

0
Injection
Injection
into Gas
into Gas
Distribution Transmission
Network
NetworkBulk
storage

ServicestationOff-grid

Grid-gen& gas grid
overlap

Use-case of hydrogen

Figure 7: Modelled hydrogen costs for various use-cases in New Zealand (5)22Service station overhead
Compression losses
Storage
Electrolyser losses
Electricity network
Wholesale electricity

20$ Gigajoule

60

8Electrolyser opex
Electrolyser capex

Energy conversion – a lifecycle perspective
The production, transmission, distribution
and use of heat or electricity inherently
results in energy losses throughout theprocess. This makes hydrogen good forsome uses and less efficient for others.
Lifecycle analysis of all energy system
options, including hydrogen, is vital when
making decisions between them. The goal ofthis analysis is to compare the full range ofeffects assignable to products and services
along the supply chain by quantifying all the
inputs and outputs of material flows andassessing how these affect the environment.
This information is then used to improve
processes, support policy and provide asound basis for informed decisions.
Without such analysis, investment decisions
can be made that address only part ofthe problem and ignore critical external
factors such as, for example, the effecton local electricity distribution assets
caused by widespread adoption of fastelectric vehicle chargers, or the need fora robust process for battery disposal.
All energy carriers, including fossil fuels
and electricity, encounter efficiency losses
each time they are produced, converted

or used. In the case of hydrogen, theselosses can accumulate across each step inthe value chain. After converting electricity
to hydrogen, shipping and storing it, thenconverting it back to electricity in a fuelcell, the delivered energy can be less than
30% of the initial electricity input.
This makes hydrogen more ‘expensive’
than electricity or the natural gas used
to produce it. It also makes a case forminimising the number of conversions
between energy carriers in any value chain.
That said, in the absence of constraints toenergy supply, and as long as CO2 emissions
are valued, efficiency can be largely amatter of economics, to be consideredat the level of the whole value chain.
This is important as hydrogen can be usedwith much higher efficiency in certain
applications and has the potential to be
produced without greenhouse gas emissions.
For example, a hydrogen fuel cell in a vehicle
is around 60% efficient, whereas a gasoline
internal combustion engine is around 20%
efficient and a modern coal-fired power plantis around 45% efficient. Electricity power line
losses account for a further 10% or more. (20).

23Why Hydrogen?

The future of hydrogen is here
Establishing a strong role for hydrogen in theeconomy is a very real opportunity and withinreaching distance. Technology transformation andthe global momentum to decarbonise, improve
air quality and increase energy system resilience,
have refocussed the attention of countries
on alternatives to fossil fuels and nuclear
power, and the potential of green hydrogen.
As the share of variable renewables such as
wind and solar increases, so too does the needfor storage to ‘firm’ the supply and facilitate
diurnal and seasonal shifts in renewableelectricity generation to give grid reliability.
Hydrogen’s characteristics mean it can beused as an intermediate energy vector andcarrier to optimise energy systems and achieveenergy sustainability and practical energy
storage in every sector of the economy (21).
The capacity of new projects for low carbonhydrogen production is increasing substantially(see Figure 8), including investigation ofelectrolysis and CCS projects (20).
Current hydrogen technology already provides
advantages over other energy vectors and manyof its challenges are being actively addressed by

Capacity of new projects world wide for hydrogen production for energy and climate purposes
Fossil fuels with CO2 capture

20

800

Industrial feedstocks

VehiclesGas grid injections

Electricity storage

2018

2016

2014

2012

2002

2018

2016

2014

2012

2010

0
2008

0
2006

200

2004

5

2010

400

2008

10

600

2006

15

2004

MWH2 output

1000

2002

MWH2 output

Electrolytic hydrogen
25

Heat

Figure 8: Capacity of new projects for hydrogen production for energy and climate purposes, by technology andstart date (20)24research and development. Some aspects of thehydrogen supply chain are reasonably mature
while others are still emerging and are not yet atcost parity with other low emission alternatives.

rise, then hydrogen will become more costcompetitive with natural gas and liquid fuels.

Production costs of green hydrogen arehighly dependent on factors such as
electricity costs and taxes, grid fees and thecapacity utilisation rates of electrolysers.

Hydrogen currently appears less competitive
than direct use of electricity for mostapplications but should become competitivein some applications, such as 24/7 on-sitefreight loading operations or meeting energy
demands for remote, off-grid locations (7).

The costs for fossil fuel based hydrogen also
depend on natural gas prices and the availability
and cost of carbon capture use and storage (CCS)
services. The price of hydrogen currently varies
widely between countries and end uses (different
end uses require different volumes, pressuresand purity levels of hydrogen). It also varies
according to the way hydrogen is transported.

The potential development of a new global
commodity market in hydrogen is now also
accelerating interest and investment (38). This
international commodity market in hydrogen isslowly emerging, allowing countries with abundant
renewable energy to export to those with anenergy deficit due to lack of domestic resources
or a need to balance seasonal differences.

There is research and development activity
internationally aimed at enhancing andextending hydrogen technologies and theirreal-world applications. In the medium term,
if production costs fall and carbon prices

This could provide an opportunity for
New Zealand to diversify its economy andcreate new jobs through exporting hydrogento meet increasing global demand for
secure, decarbonised renewable energy.

“There have been false starts for hydrogen in the past; this time could be different.
“The recent successes of solar PV, wind, batteries and electric vehicles have shown that policy andtechnology innovation have the power to build global clean energy industries. With a global energy
sector in flux, the versatility of hydrogen is attracting stronger interest from a diverse group ofGovernments and companies.
“Support is coming from Governments that both import and export energy as well as renewableelectricity suppliers, industrial gas producers, electricity and gas utilities, automakers, oil andgas companies, major engineering firms and cities. Investments in hydrogen can help foster new
technological and industrial development in economies around the world, creating skilled jobs.” (20)25

Why Hydrogen?

Recent hydrogenproject announcements
French Government
has set a target of

10% greenhydrogen inindustrial gas use
by 2021 and 20-40%
by 2027 (52).

China announced
the Yangtze

River Hydrogen
Corridor plan

Japan is hosting the2020 Olympics
showcasinghydrogen energy

use and has set
a target for 80
hydrogen refuelling
stations by 2021 (20).

connecting Shanghai
and neighbouring
cities via hydrogenhighways withrefuelling stations(3).
Australia exported
the first greenhydrogen trial
shipment in April

2019 (34).
Significant advancesin transport include:

The planned roll out of
20 hydrogen fuelleddouble decker busesin London for 2020 (51).
27 Alstom hydrogentrains to replace diesel
in Germany in 2022 (1).
Norled’s world firsthydrogen ferry,transporting cars andpassengers in Norway
in 2021 (12).
SkyNRG / KLM
Royal Dutch Airlines
to build Europe’s first
production facility ofsustainable aviationfuel using greenhydrogen and waste
(48).

26

Hydrogen safety and public perception
As with hydrocarbon fuels like petroleum
or natural gas, hydrogen needs to becarefully managed in appropriately
designed infrastructure, facilities andproducts. Similar to natural gas, safety
considerations are central and standards
need to be developed to ensure wide-scale
adoption of hydrogen can be achieved ina regulated and appropriate manner.
“The health and safety impacts of establishedenergy products – gasoline, diesel, naturalgas, electricity, coal – for consumers arefamiliar and rarely questioned, showing thatrisks – including flammability, presumed
carcinogenicity and toxicity – can be
managed to the satisfaction of users.
Hydrogen is a non-toxic gas and there is norisk of carbon monoxide pollution associatedwith its use, but its high flame velocity, broad
ignition range and low ignition energy makeit highly flammable. This is partly mitigatedby its high buoyancy and diffusivity, whichcauses it to dissipate quickly. It has a flamethat is not visible to the naked eye and it iscolourless and odourless, making it harderfor people to detect fires and leaks.” (20)
It is worth noting that “there are alreadymany decades of experience of usinghydrogen industrially, including inlarge dedicated distribution pipelines.
Protocols for safe handling at these sites
are already in place, and they also exist
for hydrogen refuelling infrastructure
in site-specific forms.” (20)Why New Zealand?
Hydrogen can play acomplementary role tofurther renewable energy
deployment and can help
New Zealand transition to amore productive, sustainable
and inclusive economy.

The Government has a goal to transform New Zealand’s
economy to become more productive, more sustainable
and more inclusive. This includes the goal to reach
100 per cent renewable electricity by 2035 and totransition to a net zero emission economy by 2050.
To achieve this, we need to work together to unlock ourenergy productivity and renewable potential (25). Asa small country we have the advantage of being able
to discuss, decide and mobilise efficiently for robust
outcomes with the appropriate policies and leadership.
New Zealand is acknowledged as one of the best places in
the world for innovation, trials and demonstrations withminimal regulatory impediments. Working in partnershipwith international stakeholders to encourage the use andproduction of hydrogen will be critical in achieving our goals.
Our high renewable electricity level will greatly assist
decarbonisation. Our electricity system currently meets
approximately 40 per cent of our total end-use energy needs(27) and is expected to grow with further electrification of
our transport and energy system. With renewable electricity
currently at around 85 per cent and growing without direct
Government intervention, we are well on our way to meeting
the goal of 100 per cent renewable electricity by 2035.
New Zealand is also well placed to leverage our renewableenergy potential to create green hydrogen. Further studies
will help assess its possibility as an accelerator of domestic
decarbonisation through the associated economy of scale
which would result.
Our proximity to Japan and other potential hydrogen
importing countries such as South Korea means we are in astrong position to develop a new commodity export of greenhydrogen. Further studies should be undertaken to assess theextent to which hydrogen export has a role in New Zealand’s
future by providing a way to utilise our renewable advantages
to provide a new source of export earnings and jobs.
27

Why New Zealand?

100%

renewable electricity
by 2035

Stable and cross party support forH2 government

Carbon neutral by2050

resilienceand mobility
opportunity due to
NZ’s electricity gridand geography
28

New Zealand’s
Founding Document

Treaty of
Waitangi

eco
tourismOne of thebest placesin the world forinnovation,
trials anddemonstrations

Signiﬁcant existing and potential

water, wind andsolar resources85%
renewable
electricity

Home to strong openexport market andtrustedtrade
partner

Multipledeep-water ports
29© ArupWhy Hydrogen?

Māori World view andTreaty of Waitangi

Leveraging off natural resources and investments, accessing
technology, information and skills to grow capability andforming partnerships can assist whānau, hapū and iwi to thrive.

Te Tiriti o Waitangi/The
Treaty of Waitangi forms thefoundation for nationhood in
Aotearoa-New Zealand. Thisaffords hapū and iwi with theability to participate and makedecisions within the energy
system according to their own
cultural norms.

Māori view the energy system from a Te Ao Māori World view
perspective, which is derived from the realm of Ngā Atua.
Natural resources – land, sea, water and people-are descended
from the spiritual realm. As descendants, Māori are the kaitiaki
or stewards of these resources. This relationship between theland, the sea, the water and the people is depicted in Figure 9.
Green hydrogen, as a fuel created from water using the sun or
the wind, has a life cycle that begins and ends with water, andis thus a technology that is consistent with this perspective.
The outcomes of the potential convergence of views andtechnologies in a future New Zealand energy system are shownin Figure 10.

A woven approach
A woven approach

Unity

Assist Māori
to thrive

Figure 10: Convergence in the future New Zealand energy system

30

Provideopportunities
to accesscapital /resources

Partnerships
outcomes

riving culture
Th

Aspirations

BrokerPartnerships

tiakitanga
Kaiticipation
Par

Leverage
Energy Assets
andInvestments

RANGINUISKY FATHER

TE RĀ
SOLAR
TĀWHIRIMĀTEA
WINDTĀNE MAHUTA
FORESTS BIO MASSRŪAUMOKO
GEOTHERMALTANGATA WHENUAPEOPLE OF THE LANDJOBS & EMPLOYMENTTANGATA MOANAPEOPLE OF THE SEASWAVE / CURRENTSPAPAKĀINGA
COMMUNITYWHĀNAUMARAERANGATIRAHONONGAH2

PAPATŪĀNUKU
EARTH MOTHER
Figure 9: Māori energy system perspective© Kingi Gilbert, Ignite Studios Ltd.

WHĀNAUMANAAKITANGAROA
OCEAN

31

Why Hydrogen?

Potential Applications
The 2019 ICCC report (22,47) indicated that
there will be significant challenges ahead if
we are to achieve the last few percentage
points in electricity decarbonisation.
However, the value which can be gainedby embracing the complementarycharacteristics of hydrogen and electricity is
one way to meet the challenge of reaching
100 per cent renewable electricity.

Energy in NZ 2018

For transport, hydrogen is well suited to theheavy-duty logistics, road, rail, marine andultimately aviation applications, while electricity
is a more suitable option for light duty vehicles.

Fossil Fuel Use by sector

Energy supply in New Zealand 2018

Solar
0.07%

Like other countries, road transport will bea particularly significant sector to transition
its energy mix. It comprises 40 per cent of
our fossil fuel energy use (see Figure 11) andcontributes 17.9 per cent of New Zealand’s grossemissions (see Figure 12) (24). Decarbonising
this sector will require a zero-carbon
alternative to hydrocarbon fuel use where
further electrification is not pragmatic.

Fossil fuel use by sector

Bio fuel/biomass
/wood
Heat
Wind
7.04%
0.13%
0.83%

Oil
33.54%
Geothermal
21.94%

Other
29%
Transport
40%

Hydro
9.73%

Coal
5.52%
Natural gas
21.21%

Agriculture
5%
Industrial
27%

Figure 11: Total primary energy supply in New Zealand and source and fossil fuel use by sector (27)32

As a proportion of total New Zealandgross emissions
Road
transport
17.9%

For industrial, commercial and residential heating,hydrogen can be effective from a process, space
and water heating perspective. It can also provide
a low carbon chemical feedstock. Electricity plays
its part where buildings or processes have suitable
attributes or can be effectively retrofitted toaccept hydrogen or reduce energy demand.

Waste
Industrial
5%
processes andproduct use

6%Addressing Challenges
All transport

19.7%

Agriculture

48%

EnergyDomestic
aviation 1.2%

Railways
0.2%

21.3%

Domestic
navigation 0.4%
Figure 12: New Zealand gross emissions by sector 2017(24)

Agriculture contributes 48 per cent of
New Zealand’s gross greenhouse gas (GHG)
emissions including methane, mainly fromlivestock and nitrogenous fertiliser use (24).
There is the potential to reduce the fossil fueldemand of the food supply chain throughfuel switching to hydrogen. Green hydrogen
could be used as feedstock for fertiliser
manufacture (via ammonia), for heat and power
demand for food processing and refrigeration,
heating of greenhouses and for the materials
handling and transport supply chain.

The journey to a net zero economy will not be
without its challenges for New Zealand andindeed globally. The necessary transformation of
our energy, transport, agricultural and industrial
sectors will require us to apply innovative
systems-wide thinking to appreciate the wholeof-life costs and benefits or opportunities.
Hydrogen, alongside increased electrification, isbut one of the tools that will enable us to reachour net zero economy goal. Direct use of electricity
is currently a more logical and efficient choice inmany situations, notably for grid balancing and forshorter distance travel. In the future, hydrogenmay prove to be more suitable than electricalsolutions, particularly where the total life cycle
costs of a solution prove to be lower for hydrogen.
Challenges across the production, delivery andstorage of hydrogen are being addressed byGovernments and industry within New Zealandand around the world, through regulatory
reform, technological R&D, demonstration
projects and early adopter roll out plans.
These actions will help bridge the gap
between hydrogen feasibility and community
acceptance in the near future.

33

Building Hydrogen
into a Low
Emissions Economy
Discovering the potential role ofhydrogen in New Zealand’s low
emissions economy requires allcomponents along the supply
chain to be developed, scaled
and integrated in synchrony.

Many applications of hydrogen have the potential to playa variety of roles in an evolving low emissions economy,complementing electricity and other low emission options as
they come to the fore.
Hydrogen is not new and there are global standards to manage
the generation, transportation and storage of hydrogen.
Like other energy carriers, hydrogen requires careful healthand safety management when used on a large scale.
Safety considerations and incidents can slow, or evenprevent, the deployment of a new energy technology if therisks are not well communicated and managed. Hydrogen is a
non-toxic gas, but highly flammable in the right oxygen mix.
This is partly mitigated by its high buoyancy and diffusivity,
which causes it to dissipate quickly. It has a flame that is not
visible to the naked eye and it is colourless and odourless,making it harder for people to detect fires and leaks. Less heatradiation and a vertical flame profile means hydrogen is lessprone to igniting neighbouring materials or infrastructure.
There are decades of experience of using hydrogen industriallyin New Zealand by organisations like BOC (hydrogen transporter
pictured below) and Refining New Zealand. Protocols for safe
handling are already in place and exist for hydrogen refuelling
infrastructure in site-specific forms.

© BOC

34

Goods and services

DemandUsers and
consumers

Hydrogenappliances

Hydrogentransportation

Hydrogenproduction

SupplyContract payment

Policy and regulation

Figure 13: Balancing supply and demand© Arup

The health and safety impacts of established energy
products – gasoline, diesel, natural gas, electricity, coal
– show that risks, including flammability and toxicity,
can be managed to the satisfaction of users.
To realise the potential of hydrogen, a coordinated andholistic approach is required in building the energy
value chain, from supply to end-use. Enabling policy andregulation are vital components in building the hydrogen
contribution to a low emissions economy and will facilitate
in balancing supply and demand (see Figure 13).

35

ONSHORE
RENEWABLESTIDAL LAGOONOFFSHORE WIND

OFFSHORE ELECTROLYSER(NATURAL GAS PLATFORM
REPURPOSED)ELECTROLYSERS

TRANSMISSIONNETWORK

NATURAL GASEXTRACTIONOTHER SOURCES OF HYDROGEN
E.G. COAL GASIFICATION

EXISTING METHANE
TRANSMISSION NETWORKCARBONSEQUESTRATIONMETHANE REFORMERCCS TRANSPORTINFRASTRUCTURE

Figure 14: Hydrogen in an Integrated Energy System

36

POWER GENERATION
E.G. GAS TURBINES
AND FUEL CELLSHYDROGEN FOR INDUSTRY/HYDROGEN FROM INDUSTRYHYDROGEN FORHEATING

PRESSURE
REDUCTIONSTATIONGAS PEAKING PLANT/POWER GENERATIONHYDROGEN FOR
COOKINGLOW PRESSURE
DISTRIBUTIONNETWORKHYDROGEN FOR
POWER

SHORT TERM
STORAGEINTER-SEASONAL
STORAGE(UNDERGROUNDCAVERNS)HYDROGEN FOR
TRANSPORTHYDROGEN FOR
MATERIAL HANDLINGHYDROGEN FOREXPORT

Sourced blue hydrogen

Sourced green hydrogen

Hydrogen system© Arup37

Building Hydrogen into a
Low Emissions Economy

Our Renewable Potential
While New Zealand currently has the fourth highest renewableelectricity percentage in the OECD (around 85 per cent per
annum) (24) with a goal to extend this to 100 per cent by
2035, there is still significant untapped renewable potential,
particularly in wind, solar and biomass (see Table 1).
For example, New Zealand currently has more than 2,500 MW
of onshore wind generation consented but not built including
the up to 286 turbine, 858 MW Castle Hill Wind Farm (37). Thisconsented onshore wind potential is predominantly in theSouth Island. There is 10,000 MW of potential onshore wind.
This does not include realising the potential for offshore wind.
Additional renewable energy supplies will be needed to meetthe 100 per cent renewable electrical generation goal, in an
average hydrological year, by 2035 given the predicted increasein demand in the future from further electrification of ourenergy and transport systems. Some estimates put additional
electrification needs at 50 per cent increase by 2050 (36).

New Zealand’s Potential Additional Renewable Capacity

GENERATION TYPE

Existing Capacity (MW)

Potential Capacity (MW)

Wind

700

10000

Geothermal

1000

1200

Hydro

5500

1000

Solar

50

2500

Table 1: New Zealand’s potential additional renewable capacity (8)38©iStock

To realise the potential of green hydrogen,sufficient renewable electricity is required togenerate hydrogen by electrolysis. Electrolysers
can range from small systems of 2-3 kW for
mobile use to possible large scale facilities of
500-1000 MW in New Zealand by 2035 (49) which
would likely be sufficient to meet our domestic
requirements with some export potential.
The current demand for fossil fuels is around
60 per cent of our total energy demand of around
675 PJ for heat, power and transport (27).
Further development of our renewables toreplace retiring fossil fuels and meet ourgreen energy demands will require us to
strike the balance between economic, social,
cultural and environmental considerations
and future inter-generational wellbeing.

Hydrogen Production
Hydrogen can be produced, stored andconverted through various processes andusing different chemical feedstocks, each ofwhich represents different levels of carbon
intensity, efficiency and end use functionality.
As outlined in Figure 15, feedstocks include
fossil fuels (oil, natural gas, coal) or industrial
by-products or water. These substances must
undergo one of a number of process technologies
including chemical, biological, electrolytic,
photolytic and thermo-chemical, or steamreformation in order to produce hydrogen (40).
More information about these processes can befound in the glossary at the end of this paper.

39Building Hydrogen into a
Low Emissions Economy

Globally 95 per cent of hydrogen is generated
through methane-reformation of hydrocarbons,producing grey and brown hydrogen. The
remainder is blue or green hydrogen, typically
produced through electrolysis (20).
Currently, more than 99 per cent of hydrogenproduced globally is carbon emitting and is
responsible for total emissions worldwide of
830 MtCO2/yr (20). There is potential for CCS to
be used to capture most of the carbon dioxide
produced during this reformation process,should it prove technically and financially viable.

Hydrogen Storage and Distribution
STORAGE

Hydrogen storage is predominately basedon compression, liquefaction or chemicallyin materials such as metal hydrides. Mostof the hydrogen produced today is stored
as a compressed gas or liquid in tanks; as
the hydrogen supply chain becomes moremature and more complex it is likely that otherstorage options will need to be considered.
The most appropriate storage solutions will
be determined by the volume of hydrogen,how long it needs to be stored for, thelocation and the end use application.
Hydrogen’s low density in a gaseous or liquid
form requires high pressure tanks. Research
into optimising tank size and pressure fordomestic and urban applications is ongoing(20). Gaseous hydrogen can also be stored
underground, in salt caverns or in depleted
natural gas or oil reservoirs, a technology
which has been in use since the 1970s (20).

40

As a liquid, hydrogen has a boiling point at one
atmosphere of pressure of -252.8oC, so must be
stored at cryogenic temperatures in insulatedtanks (20). Liquefaction results in a higher energy
density in comparison to compressed hydrogen,but an energy input of around 10 per cent isrequired (18). The energy input for cooling is muchhigher (around 30 per cent of stored energy) (20).
The method of storage used depends on the enduse, and how the hydrogen will be transported fordomestic or export markets. Line-pack storage
in pressurised pipelines or underground storageis most appropriate for domestic applications.
Storing hydrogen underground as a pressurised
gas facilitates seasonal storage of energy, whilestorage in polyethylene pipelines may enable
repurposing of the existing gas network.
The storage of hydrogen in liquid or organic
materials is still in the early stages ofdevelopment. One example is the Chiyoda
Industries SPERA method which bonds
hydrogen chemically to toluene to create
methylcyclohexane. These technologies are
currently too costly to be effective but are
expected to become more viable in the near
future. They also have the advantage ofbeing able to reuse existing infrastructure.
Hydrogen can also be stored and exported
as a cryogenic liquid. However, there is notechnology currently mature enough tofacilitate the low cost, low loss, high volume
means that will be required by a hydrogenenergy economy, as opposed to those which
suffice for the comparatively modest quantities
currently accommodated for industrial use.

BROWNHYDROGENGREY
HYDROGENBLUE
HYDROGENGREEN
HYDROGEN

Carbon fuelled
derived hydrogen

Industrial process
derived hydrogen

Carbon fuelled
derived hydrogenwith CCS

Low carbon
derived hydrogen

Transport & Storage

Zero-emissions
transport

Industrial
process

Power generationand storage

ExportFigure 15: Types of hydrogen© Arup41

41

Building Hydrogen into a
Low Emissions Economy

TRANSMISSION AND DISTRIBUTION

While most hydrogen produced today
is used at point of production (20), thetransmission and distribution of hydrogen
will need to be considered in regard to therequirements of domestic and export markets
as the hydrogen economy develops.
Given the low energy density of hydrogenby volume, it can be expensive to transport.
As with natural gas, this can be overcome
by compression or liquefaction.
Another option is incorporation into larger
molecules, such as ammonia, methanol or
LOHCs (liquid organic hydrogen carriers)(20) that can more readily be transported
as liquids. Each method has associatedcosts for transmission, distribution,
storage and, if applicable, energy
conversion and reconversion losses.
Locally, hydrogen has the potential to be
distributed by trucks and high-pressure
trailers or in new or existing polyethylene
pipelines, through blending with natural
gas or ultimately full replacement.
Hydrogen export is likely to be as a chemicalcompound or potentially as a cryogenic liquid
as technologies mature. The most effective
method for doing so will depend on geography,
volume, distance and end use as well as thetransition process, including potential repurposing
of existing hydrocarbon infrastructure.

42

New Zealand currently exports approximately
95 per cent of the 2.4 Mt of methanol produced
per annum to Asia, and as a result there are
well established handling procedures, facilities
and shipping routes for this substance(23). New Zealand’s only ammonia-urea
manufacturing plant is in Taranaki, converting
atmospheric nitrogen and hydrogen toammonia and then to urea using natural gas
as its feedstock and power source (2).
While New Zealand does not export ammonia
currently there is a large global market,
predominantly as a fertiliser precursor chemical.
This suggests a valuable potential export
market for New Zealand, using establisheddistribution and handling procedures.
Once the exported chemical reaches its
destination, it is can be converted (hydrogenated)to the hydrogen form (liquid or gas) required for
its end-use application (20).
Depending on the chemical used to transport
the hydrogen, the conversion requires
between 7-40 per cent of the energy
contained in the hydrogen itself (20).

Have yoursay...
1a What is the role of Government
in developing hydrogen forstorage and distribution?
1b What are the challenges
for using hydrogen forstorage and distribution?
1c What are the opportunities
for using hydrogen forstorage and distribution?

Kaikoura Peninsula Walkway ©iStock43

Hydrogen fora Resilient
Energy System
Leveraging New Zealand’s
renewable energy advantage,
further electrification
together with energy saving
and fuel switching fromhydrocarbons, is a primarypathway for decarbonisationof the energy sector in
New Zealand, enabling greater
contribution of renewables
to our energy system.

Energy demand in New Zealand is predicted to increase.
Potential increases of around 50 per cent in electricity
demand by 2050 have been predicted with the further
electrification of our energy and transport systems (36).
As the share of variable renewable electricity, from wind andsolar, increases towards 100 per cent renewable electricity,
we will need to adopt the most cost-efficient way to matchdemand and supply, both daily and over longer durations.
As electricity supply and demand must be balanced in real time,storage is needed to buffer the difference between the two.
This can be provided by various battery technologies,
additional pumped hydro, and potentially other energy vectors
such as hydrogen.
In recent years, New Zealand’s electricity system has been
increasingly challenged by the effects of dry winter seasons
when hydropower generation is low, and generation is
supplemented by natural gas peaker plants which haverelatively low efficiency and therefore impact electricity pricing
and drive up carbon emissions. This risk was highlighted
by Genesis Energy and Transpower in the Electricity Price
Review (28).

In providing this storage
capacity, hydrogen is cheaper
than lithium ion batteries oroverbuilding capacity of otherrenewable sources and is lessenvironmentally impactful than[large scale] pumped-hydrostorage (46).

44

Opportunities•

New Zealand experiences dry winters where
output from existing hydro generation decreases
during the winter months while demand forheating and lighting increases.

Some examples, based on international
trends and developments, include:

Energy storage systems need to be created toaccount for the variability of renewable outputs.
Hydrogen is well-placed to take on this role.
Excess electricity from summer outputs can beused to produce hydrogen which is stored andused in winter when renewable outputs drop
below demand levels.
This provides a carbon-free alternative to current
operations involving natural gas and coal fired
plants to meet this peak demand.
Hydrogen can complement the electricity network
to support the resilience of the New Zealandenergy system by:• Cost effective transition to decarbonisation
through use of existing energy system assets
and skills. Hydrogen can act as a versatile energy
carrier to replace or displace fossil fuel. It canbe used directly as a transport fuel or provide
heat for domestic or industrial processes.

– Hydrogen transfer using the existing
natural gas transmission and distribution
pipeline network– Oil and gas rigs retrofitted with electrolysers
using renewables such as offshore wind (56)
– Flexible power generation gas turbines thatcan run on partial or full power on hydrogenor ammonia (20, 6)– Retention and expansion of existing skills
and experience derived from the processoriented hydrocarbon industry, including
methanol production. The versatility ofhydrogen could avoid stranded resource
and assets for industrial processes. Deliveryof energy system resilience, with fueldiversity, self-sufficiency and security in ahighly developed renewable energy setting,including reducing dry year risk.
• Delivery of energy system resilience, with
fuel diversity, self-sufficiency and security
in a highly developed renewable energy
setting, including reducing dry year risk.
• Buffering medium to long-term (seasonal)
energy transfer through large scale storage.
‘Time-shifting’ to maximise renewablepenetration and mitigate against dry
year risk and for seasonal peak demand(e.g agriculture/ tourism) (20, 49).
• Remote area power solutions by delivering
an efficient and effective distributed energy
resource, including microgrids and local energy
storage, including stationary applications
such as construction sites and port facilities.

45

Hydrogen for a Resilient
Energy System

Challenges
While there are no insurmountable technicalchallenges to prevent deployment of hydrogento improve the resilience of New Zealand’s
energy system, the rate of uptake of theopportunities will be determined by the
economics of adapting the existing infrastructure,facilities and skills. Challenges include:• Developing the policy and regulation framework
to enable a pragmatic approach to the evolutionof our energy system, deploying electricity andhydrogen to their best pragmatic use• Variable maturity of technology and otherbarriers challenging the implementationof hydrogen• The economics and preferred approach to large
scale hydrogen storage, which have yet to besolved in a practical and efficient manner• Public acceptance of fuel-switching to hydrogen.

Looking Ahead
New Zealand’s ambitions for a clean, green, carbon
neutral economy by 2050 require hydrogenand electricity to be deployed in tandem,
deploying the most effective application to eachcircumstance, to maximise opportunity andpositive energy outcomes.
With the right policy signals and support, andengagement, New Zealand can lead the way ingrowing a robust hydrogen industry, creatingskilled jobs, utilising existing resources anddecarbonising industry.

46

Have yoursay...
2a What is the role of Government
in developing the complementaryrole of electricity and hydrogen?
2b What are the challenges forachieving this complementaryrole of electricity and hydrogen?
2c What are the opportunities
for this complementary roleof electricity and hydrogen?
Aoraki Mount Cook ©iStock47

Hydrogenfor Mobility

Internal combustion engines
fuelled by petrol or diesel
have dominated transport
for more than a century.
They are the major cause oftransport emissions in New
Zealand and worldwide.

Currently transport accounts for half of New Zealand’s
energy-related emissions: of these, road transport
contributes 89 per cent of transport emissions and isalso the fastest growing transport emitting sector (5).
The approach over the past decade has been to choose a single
energy pathway to achieve a net zero emission transport
sector. However, when using lifecycle analysis and looking at
energy vectors from a resilient energy system perspective,
there is increasing realisation that there is no one single
energy pathway, but a combination of energy pathways,
which will achieve net zero emissions in the transport sector.
Like battery electric vehicles (BEVs), vehicles hydrogen fuel cellelectric vehicles (FCEV) can provide an opportunity for zerocarbon emissions at the point of use. For green hydrogen,water is electrolysed to generate the hydrogen with oxygen as
the by-product.
The technologies of FCEVs and BEVs are often portrayed ascompeting, but in reality they play complementary roles.
For example:• Battery electric vehicles exhibit higher overall fuel efficiency
if they are not too heavy due to large battery sizes, making
them ideal for short-distance and light vehicles (5).
• Hydrogen can store more energy in less weight, making
fuel cells suitable for vehicles with heavy payloads andlong ranges. Faster refuelling also benefits commercial
fleets and other vehicles in near-continuous use likestraddle carriers, forklifts, taxis and car sharing (20).

48

Similar to battery
electric vehicles (BEVs),
hydrogen fuel cellelectric vehicles (FCEV)
can provide an
opportunity for zerocarbon emissions at the
point of use.
Comparing electric fuel cell vehicles – BEVs
and FCEVs – and conventionally powered carsin terms of vehicle size, travel distance andfuel diversity shows how expected emissions
vary over time for different technologies.
FCEVs have a range advantage comparedto BEVs for a similar emissions profile.
The complementary nature of these technologies
enhances progress in BEVs, plug-in hybrid electricvehicles and FCEVs that benefit each other due totheir many shared components and development
options. How these technologies relate will
depend mostly on how battery technology will
evolve and how quickly cost reductions from
scaling fuel-cell production can be realised.

Key attributes of the FCEV which make it an
attractive transport mode in the transition
to net-zero emission economy are:
• A highly efficient fuel cell that transforms
the hydrogen directly into electricity
to power the electric motor/s• Produce zero harmful tailpipe emissions,with water vapour being the only exhaust• A long-distance driving range, comparable
to conventional petrol and diesel carsand vans while providing a smooth, quiet
and responsive driving experience• Refuelling time comparable to conventional
petrol and diesel vehicles (three to five minutes)• Vehicles are as safe, if not safer, than traditional
gasoline vehicles or BEVs. The carbon-fibre
compressed hydrogen storage tanks of thevehicles have withstood highly demanding
crash, fire and ballistic testing. Vehicles
already meet the strict safety and quality
regulations of the countries where they are
currently being deployed including Japan,
South Korea, USA and throughout Europe.

“From a global future perspective, the Hydrogen Council has estimated that by 2050, hydrogenpowered fuel-cell vehicles could constitute up to 20 per cent of the total vehicle fleet, some
400 million cars, 15 million to 20 million trucks, and around 5 million buses. In their scenario,hydrogen would play a larger role in heavier and long-range segments and hence contributearound 30 percent – higher than its share due to longer distances driven and lower fuel efficiency
in these segments – to the total emission-abatement target for the road transport sector.” (16)49

Hydrogen for Mobility

Potential Applications in
the Transport Sector

Maritime, long distance road-based freight,
buses, coaches and aviation have limited
available low-carbon fuel options and represent
a significant opportunity for hydrogen-based
fuels. Ports, warehousing facilities and freight
handling operations using forklifts and straddle
carriers that run continuously, could also
benefit greatly from the ability to refuel withhydrogen as quickly as with diesel but without
the associated transport emissions (20). The
exact numbers are outlined below in Table 2.

Green hydrogen could play a significant role
in reducing vehicle emissions in New Zealand.
Figure 16 shows the variety of different
vehicles and the different fuel options that
may be best suited to which vehicle type.

Fuel electric cell vehicles
PASSENGER VEHICLESPUBLIC TRANSPORT, FRIEGHT, MATERIALS HANDLINGVEHICLE SIZE

Medium to long distance vehicles
Aviation
Coaches
Straddle
carriers

Passenger cars

Home delivery
vehiclesPersonal
mobility

Buses

Short distancecommon vehicles

Rail
Cargo
ship
Taxis andshare cars
TRAVEL DISTANCE

Fuel

Battery

Gasoline, diesel, biofuels, CNG, synthetic fuels etc

Figure 16: Vehicles that can be powered by hydrogen or electricity (17)50

HydrogenHydrogen vehicles current
and future demand,
opportunities and challenges

Current role
Cars and vanslight-duty vehicles

11,200 vehicles inoperation, mostly
in California, Europe
and Japan

Trucksand buses

Demandperspectives
The global car stock is
expected to continue
to grow; hydrogen
could capture a part ofthis market

Future deployment
OPPORTUNITIESCHALLENGES

Hydrogen: Short
refuelling time, lessweight added for energy
stored and zero tailpipe
emissions. Fuel cells
could have a lower
material footprint thanlithium batteries

Hydrogen: Initial low
utilisation of refuelling
stations raises fuelcost; reductions in fuelcell and storage costs
needed; efficiency losses
on a well-to-wheels
basis

Return-to-home fleets
can help overcome
challenges of low
utilisation of refuelling
stations; long-distanceand heavy-duty are
attractive options

Power-to-liquid:
Large electricity
consumption and highproduction costs

Demonstration andniche markets:
heavy-duty vehicles • 25,000 forklifts• 500 buses• 400 trucks• 100 vans.
Several thousand buses
and trucks expected in
China* by end-2019

Strong growth segment;
long-haul and heavyduty applications are
attractive for hydrogen

Maritime

Maritime freight activity
set to grow by around
45% to 2030. 2020 air
pollution targets and2050 greenhouse gas
targets could promotehydrogen based fuels

Hydrogen and ammonia
are candidates forboth national action
on domestic shipping
decarbonisation, andthe IMO Greenhouse
Gas Reduction Strategy,
given limitations on theuse of other fuels

Limited todemonstration projects
for small ships andon-board power supply
in larger vessels

Ammonia: Caustic andhazardous substanceclose to end users
mean that use is likely
to remain limited toprofessional operators
Hydrogen: Storage costhigher than other fuels
Hydrogen/ammonia:
Cargo volume lost due tostorage (lower density
than current liquid fuels)Rail

Two hydrogen trainsin Germany

Rail is a mainstay oftransport in many
countries

Hydrogen trains canbe most competitivein rail freight (regionallines with low network
utilisation and crossborder freight)

Rail is the mostelectrified transportmode; hydrogenand battery electrictrains with partial line
electrification are both
options to replace
nonelectrified operations,which are substantial inmany regions

Aviation

Limited to small
demonstration projects
and feasibility studies

Fastest-growing
passenger transportmode. Large storage
volume and redesign
would be needed forpure hydrogen, making
power-to-liquid andbio-fuels more
attractive for this mode

Power-to-liquid: Limitedchanges to status quo in
distribution, operations
and facilities; also
maximises biomass use
by boosting yield
Hydrogen: Together withbatteries, can supply onboard energy supply at
ports and during taxiing

Power-to-liquid:
Currently 4 to 6 times
more expensive thankerosene, decreasing
to 1.5–2 times in thelong-term, potentially
increasing prices anddecreasing demand* China = People’s Republic of China.

Table 2: Hydrogen vehicles current and future demand, opportunities and challenges (20)51

Hydrogen for Mobility

Hydrogen vehicles arewell suited to commercial
fleets which travel long
distances or do not havelong periods of downtime
in their duty cycle(e.g. forklifts operating
in a 24hr warehouse,inter-city buses andcoaches travelling morethan 200 km per day) (20).
On-site production of hydrogen from sourcesof renewable distributed generation will beable to accommodate fluctuating power
input or draw off-peak electricity from thegrid. For trucks the priority is to reduce thedelivered price of hydrogen. In early stages of
deployment, building hydrogen stations thatserve return-to-base fleets on hub-and-spoke
missions could help to secure high refuelling
station utilisation and thus could be a way
to encourage infrastructure construction.
Being more suited to heavy-duty transportapplications, there is an opportunity to begin
early deployment of hydrogen infrastructure
throughout New Zealand at key locations
such as freight hubs and ports. At least threedemonstration projects in New Zealand are
actively investigating this opportunity including
planned hydrogen bus trials in several locations.

52

MARITIME

Ports are nodal points in global supply chains andare embedded in local and regional communities.
The World Ports Sustainability programme is
responding to the UN Sustainable Development
Goals and many international ports includingPorts of Auckland, Long Beach and Rotterdam areinvesting in renewable energy systems includinghydrogen. They are using existing industrial
functions to create hubs for lower-cost, lowercarbon hydrogen. Port shore-side industrial
transport like forklifts and straddle carriers,
which require 24-hour operation, are beingtransitioned to hydrogen away from fossil fuels.
The Ports of Auckland hydrogen demonstration
project is indicative of the willingness of the
New Zealand maritime industry to consider thehydrogen opportunity (42). Hydrogen fuel has thepotential to contribute to environmental targets
in shipping, but the current cost of production ishigh relative to fuel-oil that is currently used.
While the Ports of Auckland demonstration
project is initially focussed on onshore
vehicles there is the potential that it, otherPorts, or similar plants, could be scaled up
to generate enough hydrogen to powerother onshore port vehicles, maritime
vessels and trains. This could be facilitatedby using existing retrofitted infrastructure
to help support and fuel these vessels.
On the water, fuel-cell powered ferries, tugs andsmall ships are being developed and demonstrated
in other parts of the world, including in Norway,
the Netherlands and the UK. The first hydrogenshipping routes are being established to kickstart the international hydrogen trade.

RAIL

The World Energy Council (56) stated thathydrogen-powered locomotives could replace
20 per cent of diesel locomotives globallyby 2040 and hydrogen-based synthetic fuelcould power a share of airplanes and freightships. In all, the transportation sector could
consume 20 million fewer barrels of oil per day
if hydrogen was deployed as a substitute (56).
Japan, China and the UK are developinghydrogen trains, and small commercial trials
are underway such as Alstom’s two trains
operating in North Saxony. The growing interestin hydrogen for rail is being driven by a numberof factors, including the rising cost of diesel
fuel, lessening public acceptance of dieselbased transport and the high cost of further
electrification. New Zealand faces many ofthese issues and concerns with its geography
and the unaffordability of electrifying all rail.
There is no single solution to going emission
free; instead, both electrification and hydrogen
will play a complementary role. Battery electrictrains with smaller batteries can be used onpartially electrified lines, enabling electrification
costs to be sharply reduced by missing out
those portions of track that are most difficult
to electrify (such as bridges or tunnels).
Hydrogen fuel cell technology can complement
this and is most competitive for services
requiring long distance movement of large
trains with low-frequency network utilisation,
a common set of conditions in rail freight.

The use of hydrogen in rail could be combined in
the ancillary infrastructure – for forklifts, trucks
and other railyard and logistics hub machinery
to decrease costs and improve flexibility (45).
New Zealand’s national rail services are focussed
on the moving bulk freight, such as logs or coaland the import/export of goods (33). Around
4,000 km of track carry containerised or palletised
products, and the Ministry of Transport predicts
rail freight volumes will increase to 23 million
tonnes per year by 2031 (32). Converting or
replacing existing rolling stock with hydrogenpowered trains, and ancillary hydrogen fuelled
equipment like container handlers, would
significantly reduce rail sector emissions andwould not require future costly 1 electrificationof the network. There is further benefit intransitioning to hydrogen trains in the South
Island where none of the track is electrified.
AVIATION

On the air-side and land-side of airports thereis the opportunity to supplement electrified
operational vehicles with FCEVs for critical
vehicles that need to operate 24/7. Liquidhydrogen fuel provides a potentially attractive
option for aviation but at the expense ofhigher energy consumption and potentiallyhigher costs. While hydrogen planes arestill under development, there is long-term
potential to contribute to greatly reducing
international transport emissions usinghydrogen as some form of decarbonised fuel.

1 Current electrification costs are estimated at 1.5 million euro/km (1).
New Zealand costs are likely to be similar, if not higher.

53

Hydrogen for Mobility

Opportunity
In addition to strong Government policy
direction, there is support from the New
Zealand people to transition to a zero carbon
environment in the longer term to achieve acleaner and healthier environment. This highlevel of community acceptance of the need forchange will help spur Government and private
sector interest in demonstration projects
and trials for hydrogen-fueled vehicles.
The key opportunities for hydrogen in
the New Zealand context include:• Learning from and building on thesignificant array of global experiences,
investment, technological development
and trials into hydrogen fueled-vehicles.
• Government taking a proactive approach topolicy and regulation and encouraging hydrogendemonstration projects to ensure they areenabled, and informing policy and regulation
development through active stakeholder
and demonstration project engagement.
• Sharing hydrogen generation and refuelling
points between heavy industries, such as ports
and rail. Trains frequent the ports as part oftheir freight routes and there is opportunity
for vehicles to be refuelled quickly in theselocations as goods are unloaded and reloaded.
• Being able to generate and store hydrogenon-site. The speed of refueling and thegreater range offered compared to a fully
electric equivalent makes hydrogen ideallysuited to rail, marine and 24/7 operations.
• Ports, warehousing facilities, and freight
operations that run continuously will54

benefit greatly from the ability to refuelas quickly as a diesel vehicle but without
the associated transport emissions.
• Applying the lessons from the local roll-out of
EV charging sites on the state highway networkand from hydrogen infrastructure built in the
US, Japan, South Korea, the UK and Europe toenable New Zealand to be a fast follower.
Also noteworthy is that the technology to safely
refuel and store hydrogen at high pressures invehicles has been fully developed with alignmentof international standards and a strong trackrecord of safety in operating environments.
The safety record for hydrogen globally in mobility
is robust, as strong health and safety standards
have been followed by professional experts.

Challenges
There are no significant technical challenges
in New Zealand to deployment of hydrogenas a transport fuel today, but economics, andperceptions on safety and affordability willneed to be addressed through an open andfactual discussion.
Challenges will include policy and regulation,
economics, infrastructure, hydrogen
availability, vehicles, economics and safety.
Moving to low emissions vehicles will likely be
dictated by external market forces and the shareof available new and used petroleum-fueledvehicles will reduce as the global productionof electric vehicles increases. However, thistransition will happen more slowly than is needed,because of the average life of vehicles and thehigher age of the New Zealand fleet as we importmany used vehicles. New Zealand may need toconsider incentivising and fostering uptake to
avoid locking-in higher emissions for decades
from newly imported diesel and petrol vehicles.
POLICY AND REGULATION

Hydrogen developers face hurdles where
regulations and permit requirements areunclear, unfit for new purposes or inconsistentacross sectors and countries. Sharing
knowledge and harmonising standards is
critical, including for equipment, safety andcertifying emissions from different sources.
Hydrogen’s complex supply chains mean
Governments, companies, communities andcivil society need to consult regularly.

co-ordinated by Governments and supported
by dedicated legislation and funding.
INFRASTRUCTURE

The slow global development of hydrogen
infrastructure is holding back widespread
adoption, mainly due to the economics andavailability of vehicles and the hydrogen fuel.
Hydrogen price depends on the number ofrefuelling stations, how often they are usedand how much hydrogen can be deliveredor locally produced per day. Tackling this is
likely to require planning and coordinationthat brings together national, local andregional councils, industry and investors.

Policy options could be developed to promote theuptake of FCEVs including fuel economy standards,
zero-emission vehicle mandates, feebates (which
tax the worst performing vehicles and subsidise
those that perform best in terms of CO2 or air
pollutant emissions) and purchase subsidies.

Technically, there needs to be improvements in thehydrogen supply chain (e.g. spare parts availability,
number of suppliers). This is a particularly
significant challenge as New Zealand is a small
and less populated country and the demand forhydrogen infrastructure, vehicles and hydrogen
will be less than Australia and other countries.

ECONOMICS

HYDROGEN AVAILABILITY

The primary challenge will be the economics
of supply of hydrogen, infrastructure andvehicles while there is, at least, limited
demand. Further research is needed into
the economics of these factors.

Today, most hydrogen in New Zealand is
produced from the reforming of fossil fuels,
which releases a large amount of CO2. The main
challenge is therefore to leverage New Zealand’s
renewable energy advantage and producehydrogen using renewable energy sources
like wind turbines and solar panels. However,compared with the production of hydrogen fromnatural gas, producing it through renewableenergies is currently very expensive (20).

The emerging FCEV market requires close
value-chain synchronisation to overcome thefirst-mover risk of building hydrogen refuelling
infrastructure. While the initial investment isrelatively low, the risk is high and therefore
greatly reduced if many companies invest,

55

Hydrogen for Mobility

VEHICLES AND HYDROGEN APPLICATIONSSAFETYAs discussed, there is currently a lack of global
supply and availability of hydrogen vehicles andother applications such as trains, planes and ships.
Most FCEVs are light duty vehicles and forklifts.
There is limited availability of buses and heavy
duty vehicles, with long lead times (one year
to 18 months) for delivery to smaller and moredistant markets such as New Zealand as larger
orders may be prioritised over smaller orders.
Moreover, huge investments in lithium-ion battery
technology are rapidly driving down the price ofelectric vehicles. This has caused a decline in theprices of BEVs and PEVs compared to FCEVs.

Like other gases and liquid fuels in common
use, hydrogen can be explosive in certain
conditions. It can be safely stored andtransported under pressure in containers.
Hydrogen has a number of health and safety
challenges for mobility. They are as follows:

Aviation, shipping and maritime applications
are limited with some applications likeferries and ancillary vessels like tug boats
being demonstrated in Europe and Asia.

• It has a wide explosive range, comparedto other fuels, and it ignites moreeasily in the right oxygen mix.
• It burns with an invisible flame.
• It can be difficult to odourise as
an aid for leak detection.
• Requires pressure relief devices anda safe shutdown programme tolock and isolate components.
However, these disadvantages are offset by
the fact that hydrogens, buoyancy meansthat it disperses rapidly and is usually only
able to achieve a flammable mixture withoxygen in a confined environment.
As hydrogen technology becomes moremainstream, further work and safety
standards will need to be adopted.
Long term public acceptance of hydrogen as asafe and reliable energy vector relies on applying
and adhering to established safety fundamentals
and techniques to minimise the risk of harm.

56

Looking Ahead
Hydrogen holds long-term promise intransport if the costs of production andutilisation reduce to a point where they arecompetitive with alternatives. The complex
processes involved in developing and deployinghydrogen, however, mean that carefully
crafted policy support will be critical.
Lifecycle analysis is needed around all transportenergy options including hydrogen to enableeffective decision making. The goal of lifecycle
analysis is to compare the full range of effects
assignable to products and services along the
supply chain by quantifying all inputs and outputsof material flows, use and disposal and assessing
how these material flows affect the environment.
Initially the economics will favour converting
daily ‘return-to-base’ fleets, public transport
fleets or heavy-duty industrial precinct
applications such as the current project at
the Ports of Auckland. Looking ahead the IEA(20) predicts that FCEVs will break even in thelonger-term with BEVs at a range of 400 km
with respect to the total cost of ownership.

Public policy can also play a supportiverole in the initial stages by (20):• Easing regulatory burdens associated withthe transport of hydrogen (e.g. in vehicles on
bridges and tunnels) and with the permitting
and construction of necessary infrastructure.
• Undertaking an in-depth business caseand implementation plan to de-risk thecommercialisation of technology and test
the supply chain for New Zealand.
• Building on existing demonstration
projects like the Ports of Auckland,
Hiringa Energy and Tuaropaki Trust andundertaking further demonstration
projects and trials as soon as possible.
• Engaging with industry stakeholders, forexample through the New Zealand Hydrogen
Association, that can make the required
investments and brokering commitments
among industry partners to support
credible and well-structured business plansand offering a regular critical assessment(e.g. based on audits) of areas to improve.
• Developing and confirming the potential stages
for hydrogen and wider renewable energy
through a roadmap and implementation
plan fit for investment by companies andthe public sector, working backwards from2040 and taking note of New Zealand’s
net-zero carbon emission 2050 target.

57

Have yoursay...
3a What is the role of Government
in supporting hydrogen use
for the transport sector?
3b What are the challenges
when using hydrogen formobility and transport?
3c What are the opportunities
for using hydrogen formobility and transport?

58

South Island ©iStockHydrogenfor Industrial
Processes
Hydrogen can be used as

HYDROGEN FOR INDUSTRIAL PROCESS HEAT

both a feedstock in industrial

The industrial and process sectors consume around18 per cent of New Zealand’s end-use energy throughelectricity, natural gas, wood, coal and diesel (30). In
2016, supplying industrial process heat accounted for
GHG emissions of around 8.3 Mt CO2 equivalent (30).

processes and to produce
process heat. This is heat used
to produce hot water or steam,typically generated on-siteusing a boiler or air heater.
Some sites have cogeneration
facilities that produce bothsteam and electricity; some
may be exported if in surplus
to local demand (29).

Process heat energy demand is approximately 35 per centof total energy used in New Zealand and contributes around
28 per cent of all energy-related emissions (30). The majorityof this was for industrial process heat (80 per cent) including
for kilns in sawmills, pulp and paper mills, petroleum refining,
basic chemical manufacturing and food processing plants (30).
Hydrogen has the potential to displace the use of fossil fuels
over time thereby significantly reducing GHG emissions inprocess heat applications.
Hydrogen production and use is not new to New Zealand,
having been used domestically since the early 1900s.
It can be used as a pre-combustion or post-combustion
feedstock. Like natural gas, hydrogen can be combusted
directly to generate heat with the flame reachingtemperatures over 2,200oC under ideal conditions.
In Europe, hydrogen is considered to offer benefits
over electric boilers for industrial high-grade heat used
for melting metals and chemical manufacture etc,
due to its ability to generate high temperatures using
processing plants similar to present designs (13).
MBIE (30) has classified industrial process heat requirements(See Table 3), indicating some applications potentiallysuitable for hydrogen. This includes a wide range ofheating applications, from relatively low-grade domestic
heat to high-grade industrial process heat (6).

59Hydrogen for
Industrial Processes

Temperature requirements can be classified as low, medium or high:
CATEGORY

Temperature
requirements

Low

Less than 100oC

MediumBetween 100 and 300oC Industrial
processes

Drying wood products
Drying food products, such as milk powder

High

Greater than 300oC

Oil refining
Melting metals
Chemical manufacturing

Uses

ExamplesWater heating
Space heating

Sanitation of equipment in the foodprocessing sector

Industrial
processes

Table 3: Classification of industrial, domestic and commercial heat requirements in New Zealand (30)

Two sub-sectors with high energy use andhigh emissions have significant opportunities
to decarbonise.
The petroleum, basic chemicals and rubber
product manufacturing sector is the largest
user of natural gas. This sector, and the primary
metal and metal products sectors, has a
few large sites, with the use of heat tending
to be tightly integrated to the process.
Process heat is generated on-site using aboiler or furnace, and typically used to produce
steam, hot water, or hot oil. There are 22
process using sites in New Zealand 15 in the
North Island and seven in the South Island.

60

Taranaki (49) is the most advanced region inpursuing opportunities in this sector including:• The development of a renewable hydrogen hub
integrated with the existing Kapuni industrial
complex that provides an excellent co-location
for a number of industrial hydrogen projects
that could leverage the existing facilities.
• Hiringa Energy and Ballance Agri-Nutrients
jointly evaluating integration of renewableelectricity for hydrogen and green ammonia
production using existing ammonia production
infrastructure at Kapuni. This project would
potentially provide renewable electricity topower the plant and generate hydrogen fromexcess electricity generation. The hydrogen
would be used to produce approximately
7,000 tonnes per annum of urea (SeeFigure 18). The hydrogen with high purity
would be able to be diverted for supply to atransport market and could also provide a
supply for future pilot industrial projects.

The dairy manufacturing sector accounts
for around 68 per cent of energy use in food
manufacturing, predominantly using fossil
fuels including coal, to generate process heator from cogeneration or CHP facilities. It is
the largest user of coal for process heat.

Various temperatures are needed for different
processes. Recent media coverage indicatesincreasing pressure on large dairy manufacturers
such as Fonterra to stop using coal-powered
boilers to dry milk into milk powder (43). Fonterraannounced in July 2019 that it would not install any
new coal boilers or increase capacity to burn coal.
The company is trialling alternative, lower emitting
fuels such as wood chips and using electricity to
dry milk at its plant in Stirling in South Otago.

There are 66 dairy manufacturing sites using
process heat in the North Island and 33 in theSouth Island. In the North Island, reticulated
natural gas is available and delivered to 75 percent of the dairy processing heat demand (30).

The key opportunity for Fonterra and otherlarge dairy manufacturers is to work closelywith Government and other industrial
processing sectors on an integrated approach todecarbonise across the manufacturing process.

In the South Island, because coal delivers
89 per cent of fuel demand, dairy processing
is more emissions intensive (30).

Low-carbon
ammonia
production

Petroleum, basic
chemicals,
rubber productmanufacturing

Metal and metal
products

Agriculture
eg off grid
locations andon-farm
application

Dairy
manufacturingsectoreg milk drying

Low-carbon
oil reﬁning

Process heat

Steelproduction

Syntheticgas
production

Figure 17: Industrial uses of hydrogen61Hydrogen for
Industrial Processes

EXAMPLE OF

7000t
urea / annum

Hydrogen Industrial Production Plant
Grid connect

H2 forammonia /urea

4.3 Mw
Plant power

Excess power
4 new windturbines

Electrolysis

H2 for zero
emissiontransport
marketTransport
Market

PROJECT SCOPE

Figure 18: Process for production of green hydrogen and green ammonia using surplus power available fromwind turbines (53)
GREEN INDUSTRIAL FEEDSTOCK SUBSTITUTIONWorld-wide, the top four single uses ofhydrogen (in both pure and mixed forms) are
oil refining (33 per cent), ammonia production(27 per cent), methanol production (11 percent) and steel production via the direct
reduction of iron ore (three per cent) (30).
Replacing existing brown and grey hydrogenwith green hydrogen would help decarbonise
these and other industrial sectors:• Low carbon ammonia production: greenhydrogen feedstock can be used for chemical
reactions to produce ammonia (NH3). World-wide
demand for ammonia and methanol is expected
to increase over the short to medium term
particularly for petrochemical feedstocks (20).
• Low-carbon oil refining: The development ofgreen hydrogen production is being actively
explored at the Marsden Point Oil Refinery. If the
project proceeds, it will materially reduce theemissions from petroleum refining as a result of
introducing green hydrogen into the process.
62• Agriculture: The biggest opportunity will be
storing energy as hydrogen in off-grid locations
and for direct on-farm applications using fuelcell technology to produce electricity, or directhydrogen use in heating such as for hot water.
• Steel production: There are alternative ways
to produce steel with zero-carbon emissions,assuming green hydrogen and renewableelectricity are available. It is possible that in
the future steel could be produced with a low
carbon footprint assuming the technologicalchallenges that currently inhibit the widespread
adoption of hydrogen can be overcome.
• Synthetic gas production: Another promising
application is the possibility to create synthetic
methane gas from off-gases emitted as
the by-product of a chemical process. If thehydrogen is added to carbon monoxide andcarbon dioxide after the combustion processof coking coal, for example, hydrogen canserve as a post-combustion feedstock (57).
Hydrogen can act as an intermediate energy
carrier as well as an input chemical to several

important industrial processes. The transition
includes timely displacement of high-emittingenergy sources used in the current industrial
processes. Hydrogen is a very versatile energy
vector that can complement current industrial
processes in New Zealand and add to them.
In addition, the production of hydrogen could
become a new industrial process activity, requiring
new skills to be developed and allowing an
additional career path for people with experiencein oil refining, LPG and industrial processes
related to ammonia and fertiliser production.

Challenges and Opportunities
Decarbonisation of the industrial sector
through pragmatic electrification andfurther integration of green hydrogen into
process heating, input chemical substitution
and energy storage will be complex.
Key requirements for manufacturers will be
security of energy supply, competitive pricepoints for alternative energy sources, thecosts of transitioning to hydrogen boilers
and certainty in the phasing of large-scalechanges to the energy network or supply tominimise disruption. Successful pilot projects
and lessons learned from them will be criticalfor gaining confidence for the changes.
The take-up of green hydrogen will be determinedby the economics of substituting hydrogen forfossil fuels or electricity as an energy input,
and the potential for growth in export fromthe relevant industry given the realistic scaleof New Zealand’s production, the distancefrom those markets and the costs to deliver
them relative to other potential suppliers.

All these issues will need to be addressed
through an open and factual discussion,
further investigation through research anddemonstration of applicable technologies.
However, there are no insurmountable technicalchallenges to using green hydrogen as afeedstock and energy source for industrial, foodand agricultural processes in New Zealand.
It can burn at higher temperatures than natural
gas making it especially useful for high-grade
heating. For domestic use, up to around 20
per cent hydrogen in a mix of combustible
gases can be used by most existing heating
equipment with no modifications needed (6).
The economics of generating intermediateand high-temperature industrial heatfrom green hydrogen will be determinedby the hydrogen fuel costs and the capitalcosts of the boilers and furnaces.
Most process heat is now generated in older
boilers. Despite their economic life span of 15 to 20
years, boilers are often in use for 20 to 40 years.
This contributes to lock-in of higher emissions.
Research on future capital costs is limited,
although in principle it should be similar toconventional gas boilers. Currently, the total
costs of generating heat with hydrogen are
significantly higher than with natural gas (54).
The rate at which green hydrogen production
can be brought online for New Zealand’s processindustries will be key in determining how quickly
decarbonisation of this sector using hydrogencan occur. Achieving scale with hydrogenproduction should see cost reductions.
63

Hydrogen for
Industrial Processes

Lifecycle analysis of the supply chain forindustrial processes can help determine the best
pathway for introducing hydrogen, either as afeedstock or energy source. Because different
emission impacts and costs will result fromdifferent hydrogen production routes, suchanalysis can be complex and time-consuming.
Introducing green hydrogen, if done incollaboration with existing industries and the
public sector over reasonable time frames,
could allow additional growth in valueadded industrial output, export potential,
reduced costs through process integration,and energy efficiency measures at the sametime as reducing carbon emissions.
This should be possible without negative
impacts on existing jobs, although job reskilling
may be required.

Looking Ahead
There are many avenues for industrial andfood processing industries to substitutehydrogen for existing fuel sources, reducing
the need for hydrocarbon-based fuels
and thereby reducing GHG emissions.
New Zealand has built a reputation as asource of high-quality dairy, livestock andother agricultural products. To support
the agricultural sector, local production of
nitrogenous urea fertiliser occurs using large
volumes of natural gas. The H2 Taranaki
Roadmap (49) and Taranaki Draft Roadmap 2050
(53) identify an opportunity to produce urea
from greener inputs including hydrogen fromelectrolysers powered by renewable energy.

64

There is a potential opportunity to expand
this production and export of ammonia and/or urea derived from green hydrogen.
These and other options could be investigatedfurther at the planned National New Energy
Development Centre including establishmentof demonstration projects funded by industry
with Government support. This could include atechno-economic assessment of the potential
for hydrogen and electrification options forintermediate and high-temperature heat. It could
consider specific circumstances, particularly withrespect to the intermediate and high temperature
heat demands across industrial sectors (54).
Subsequently, or in parallel, hydrogen gas
blending trials such as those carried out
in Australia and the UK could strengthen
the evidence base for the technical andeconomic feasibility of wider deployment.
Government could help to remove barriers
to the early adoption of green hydrogen anddistribution in New Zealand that underpin thechanges possible in the industrial process sector.
Key focus areas include working with iwi, theprivate sector and local authorities to facilitate
investment in renewable energy infrastructure,streamlining approval processes, and examining
existing regulations which may hinder thedevelopment of expanded industrial scale, ortransition to, the use of hydrogen as feedstock orenergy source.

Have yoursay...
4a What is the role of Governmentin encouraging the use ofhydrogen for industrial processes
including process heat supply?
4b What are the challenges for usinghydrogen in industrial processes?
4c What are the opportunities
for the use of hydrogen inindustrial processes?

Waikato Region ©iStock65

Decarbonising
Gas Supplies

In New Zealand, natural gas
currently has a wide range
of applications. These range
from fuelling thermal power
generation plants and providing
heat for large industries –including key export sectorsof meat, dairy and timber
processing as well as steel
manufacture – to providing thefeedstock for petrochemical
production (methanol andammonia/ urea). In homes andin essential services such as
hospitals it is used for cooking
and water and space heating.

There is potential to convert or blend hydrogen into theexisting natural gas network. This gives New Zealand theopportunity to continue to use the national gas transmission
and distribution infrastructure assets (estimated to
be valued at $1.7 bn) (54), supply chains and workforce
as we transition to a low emission energy future.
Currently, natural gas is supplied to about 280,900 industrial,commercial and residential customers in New Zealand (15).
It accounts for 22 per cent of total primary energy supply(27) and 14 per cent of total small consumer energy use (15).
New Zealand’s only operational oil and gas fields in the
Taranaki basin distribute natural gas around the North Island
through 3,400 km of high-pressure gas transmission pipelines
and 11,600 km of intermediate, medium and low-pressure
networks (14). Natural gas is not available in the South Island,
however, LPG, a mix of propane and butane extracted fromnatural gas, is distributed throughout both islands (15).
In the UK, Europe, Australia and New Zealand there has been
considerable recent and ongoing work by Governments andgas utilities to establish a roadmap to decarbonise existing
natural gas networks. First Gas, owner and operator of the
majority of New Zealand’s gas network (11), is proposing a trialof hydrogen pipelines as one of the first projects at the new
National New Energy Development Centre in Taranaki (9).
In this context, the focus has been on establishing the safe
operating level for injecting hydrogen into the existing gas
distribution networks. Current thinking is that hydrogenconcentrations up to 20 per cent by volume could be thelimiting condition for domestic gas (6). This is driven by theperceived ability of end-users to accommodate the hydrogen
blend using existing industrial/ commercial equipment andresidential appliances, rather than pipeline limitations (20).

66However, it is acknowledged hydrogen can accelerate
embrittlement of some metals usually present (in small
amounts) in older and high-pressure networks, usually withinvalves, seals and at pipe joints (See Figure 19). Polyethylene
pipes, which are already used in New Zealand for low pressure
gas delivery, could withstand much higher concentrationsof hydrogen, depending on the materials used in the joining
and control equipment. Trials proposed by First Gas (9)will explore what is needed for the existing transmission
and distribution network to become hydrogen-ready.

Tolerance of selected existing elements of the natural gas
network to hydrogen blend shares by volume

Transmission& distribution

Distribution
Gas meters
Transmission
Compressors
Underground storage

End useBoilers
CookingEngines
Gas turbines
CNG tanks
0%

20%

40%

60%

80%

100%

Figure 19: Tolerance of selected existing elements of a typical natural gas network to hydrogen blend shares(% by volume) (20)67Decarbonising
Gas Supplies

Opportunity
New Zealand could move to partially decarbonise
the gas distribution network using hydrogenas part of the transition to a low emissions andzero-carbon economy.
A short-term opportunity is to use the pipeline
itself to store green hydrogen. This would requireless investment than tank storage of hydrogen.
Learnings from the decarbonisation of gas
distribution networks globally, including in
the UK, Europe and China, will enable First
Gas to have an evidence-based approachto decarbonising natural gas networks.

of electricity by the transmission/distribution
network where energy losses can reach 10
per cent.
A longer-term opportunity is to explore whether
hydrogen can completely displace natural gas in
the network fed from New Zealand’s oil and gas
production sector. This would require considerable
expansion of renewable electricity to create
sufficient hydrogen volumes, and the ability tofeed the hydrogen produced into the existing lowpressure gas distribution network.
Another opportunity in the longer term might befor bottled hydrogen to displace bottled LPG as
distributed throughout both islands. This would
depend on the speed and availability of costcompetitive hydrogen.

Examples of decarbonising the gas distribution
network include HyDeploy, a UK project triallingup to 20 per cent hydrogen blend in the gas
network, and the Leeds City H21 project thathas been successfully trialling and repurposing
the gas distribution network for hydrogen.

Challenges

Blending hydrogen into natural gas would allow
partial decarbonisation of the space heating,cooking and water heating energy needs forresidential and small to medium enterprisecustomers, with limited performance impacts.
This would also enable hydrogen to be producedat larger scales than currently possible, which
could reduce costs.

The safe concentration of hydrogen in
existing New Zealand gas pipelines needs
to be determined. Trials proposed by FirstGas are important steps in understanding
potential issues and solutions.

The option to use hydrogen directly will also
benefit customers located remotely fromthe electricity grid but with access to the gas
network, or those who can create their own
hydrogen from renewable energy sources.
The transmission of gas via the pipeline network
is generally more efficient than the transmission
68

There are a range of challenges to analyse,
address and overcome with hydrogen’s use forindustrial purposes.

Issues associated with up-to-date asset
management information on existing pipelines
will need to be managed so that materials
or infrastructure which cannot withstandincreasing hydrogen concentrations can be
identified and replaced. Work is required to test
examples of existing pipeline infrastructure
and controls to assess their performanceand resilience under such usage.

New or replacement infrastructure which is fit
for this purpose will need to be selected andcommunicated between distribution networks
and energy businesses, Government regulatorsand safety authorities. Leveraging work being
undertaken in the UK and Australia will help New
Zealand to understand whether, and how, existing
infrastructure including consumer installations,appliances and associated equipment can performsafely and reliably with hydrogen rich gases.

Looking Ahead
A possible future is the partial decarbonisationof the New Zealand gas distribution networkwith up to 20 per cent of green hydrogen by2035. Within this time-frame it is likely that
research and development both internationallyand within New Zealand will have establishedthe safe level for hydrogen concentrations in our
existing (or possibly enhanced) gas distribution
networks that can be achieved by 2050.

The IEA 2019 report (20) on the future of hydrogen notes that hydrogen blending faces a numberof challenges.
• “The energy density of hydrogen is around a third of that of natural gas and so a blend reduces
the energy content of the delivered gas: a three per cent hydrogen blend in a natural gas
transmission pipeline would reduce the energy that the pipeline transports by around two percent. End users would need to use greater gas volumes to meet a given energy need. Similarly,
industrial sectors that rely on the carbon contained in natural gas (e.g. for treating metal) would
have to use greater volumes of gas.
• “Hydrogen burns much faster than methane. This increases the risk of flames spreading.
A hydrogen flame is invisible and odourless when burning. New flame detectors would probably
be needed for high-blending ratios.
• “Variability in the volume of hydrogen blended into the natural gas stream would have an adverse
impact on the operation of equipment designed to accommodate only a narrow range of gas
mixtures. It could also affect the product quality of some industrial processes.
• “The upper limit for hydrogen blending in the grid depends on the equipment connected to it,
and this would need to be evaluated on a case-by-case basis. The component with the lowest
tolerance will define the tolerance of the overall network.” (20).

69Have yoursay...
5a What is the role of Governmentin encouraging hydrogen
uptake for decarbonisationof our natural gas uses?
5b What are the challenges forhydrogen to decarbonise theapplications using natural gas?
5c What are the opportunities
for hydrogen to decarbonise
our gas demand?

70

Wairakei Geothermal power station ©iStockHydrogenfor Export

The export industry could
unlock our renewables
potential to support
and accelerate domestic
decarbonisation and a
new export revenue for
New Zealand.
Today, New Zealand has only asmall local market for hydrogen.
The focus is on industrial
products (hydrogen carriers) or
feedstocks used in the chemicaland oil refining industry witharound 3.5 Mt/yr of ammonia
transported by sea globally (20).

New Zealand has an opportunity to take advantage of thehydrogen export market which is still in its infancy at over 70 Mt
annually (20) worldwide, with very limited inter country trade,but expected to grow significantly over the coming decades.
This new demand will come from countries that will needto turn to imported renewable energy to further theirdecarbonisation efforts.
The global market for green hydrogen will be stimulated by
the development of an export industry to countries including
Japan and South Korea, which have limited renewable energy
alternatives. To illustrate, Japan currently imports around
90 per cent of its energy needs and sees hydrogen as asource of diversification and emissions reduction (20). Its
Government has targeted hydrogen (ideally green) imports of
300,000 tonnes annually by 2030, ramping up to 5-10 Mt as thecountry transitions towards a decarbonised and more resilient
energy system, relying less on nuclear and fossil fuels (31).
Beyond this, there are prospective markets for hydrogenthroughout the Asia Pacific region, and further afield
to China and parts of Europe (20). Each potential
importer has different drivers, including its own energy
production capability and capacity, energy security andaffordability, a desire to decarbonise or denuclearise.
The export market would make use of New Zealand’s
abundant renewable resources, effectively transporting ourrenewable wind and solar energy to provide a new sourceof export revenue. The H2 Taranaki Roadmap proposes
exporting around 0.3 MtH2 per annum, around 40 per centof production (49). Hydrogen export is likely to initiallybe as a chemical compound, or as a cryogenic liquid astechnologies mature. The best method for doing so will
depend on geography, volume, distance and end use.

71

Hydrogen for Export

With appropriate policies in place, an export
market for green hydrogen may enable New
Zealand to transition more rapidly to a low
emissions economy with an affordable, resilientand sustainable energy system. Economies
of scale will be created when export facilities
are constructed which may lower the costof hydrogen available domestically.
Some countries have set ambitious hydrogentargets for domestic production, vehicles andinfrastructure. Those with abundant natural
resources (renewables or hydrocarbons) areprospective producers including Chile, Middle
East, North Africa and Australia (20). With thedevelopment of global export industries, New
Zealand may also have the opportunity to importhydrogen as domestic demand necessitates.
Hydrogen is not the only means of exporting
renewable energy. Other technologies
include high-voltage direct current cables,
biofuels and synthetic fuels and embodied
energy in minerals/metals (4).

Opportunity
New Zealand has abundant renewable energy
potential that can be used in part to produce
green hydrogen for domestic and export markets.
The IEA considers that New Zealand has apotential flow of hydrogen of 700 kt H2/yr
in 2030, with 60 per cent used for domestic
purposes and the remainder exported (20).
Excess hydrogen production could be directed toestablishing additional export products to supply
international and domestic products by 2030.2
2 Japan’s Energy strategy calls for higher renewable imports(e.g. hydrogen) by 2030 (30).

72

The H2 Taranaki Roadmap considers that an export
facility with an electricity consumption of around500- 1000 MW could be established by 2030 (49).
On this basis we are well placed to initially
export green hydrogen to Japan, following
the signing of a Memorandum of Cooperationin October 2018 (55) which signalled ourinterest in working in partnership with Japanto develop hydrogen technology. We arealso interested in exporting green hydrogento other countries such as South Korea.
As an energy importer Japan is looking toestablish a resilient, secure source of energy
and has set ambitious targets in its hydrogenroadmap around import, domestic production
and infrastructure (31). Hydrogen will even be
used to power the 2020 Olympic and Paralympic
Games in Tokyo (50). In preparation for this,Australia has carried out the first proof of concept
export of green hydrogen to Japan, as part of acollaboration between Queensland University ofTechnology and the University of Tokyo (44).
Further, New Zealand has the potential to offer
Japan a secure source of green hydrogen that
does not require CCS, produced in a stable
political environment and on a relatively fast,safe and established shipping route (8).
Following the recommendations made in the2019 report The Role of Innovation in Getting
to Carbon Zero (8), New Zealand has theopportunity to work with other countries whoshare interests in developing green hydrogen.
These include Japan, Norway, the Netherlands,
Europe, South Korea and Australia. Throughthese alliances, New Zealand can push forinternational carbon transparency standards

for hydrogen based on environmental principles
while supporting our economic interests.
New Zealand currently exports 2.4 Mt of methanol
annually, 95 per cent of which is exported
to the Asia Pacific region (23). As discussed
earlier in this report, hydrogen can be stored
and transmitted as methanol. Methanol is atransition fuel and contains carbon and NOx
emissions and there will be carbon emissionsat point of use and specific health and safety
requirements which will need to be met.
As a result of this existing large scale production,
New Zealand already has the infrastructure,facilities and skills that would enable theexport of hydrogen gas after conversion toliquid methanol (49). There is potential for thisto support existing jobs and create new ones
along the supply chain, while simultaneously
attracting investment and research in domestic
and export applications and technologies.

Challenges
There are several key challenges that willneed to be considered before establishing anexport supply chain for green hydrogen.
Any form of energy generation will require
additional infrastructure, which is likely to haveassociated economic, cultural, environmental
and social costs. Ideally, we should make themost of the opportunity to retrofit and reuse
existing infrastructure where possible. Generating
volumes of hydrogen greater than required
to meet New Zealand’s domestic demand willneed to ensure there is no adverse effect on
the security of our electricity supply or pricing
levels. The establishment of a large hydrogenplant to meet export demand will require careful
grid and generation planning and investment
to ensure that stability is maintained.
In addition, any impacts resulting from using
our natural capital for export will be felt
primarily by New Zealanders. The scale andtype of indirect benefits that would be received
would need to be considered to determine
their value and significance in relation to
any negative impacts from the further useof our natural capital. Another challenge will
be to ensure local supply and pricing is not
used to subsidise export production to thedisadvantage of domestic consumers.
There is currently no international market
for hydrogen, and no common price. Cost
competitiveness of the market depends
on the scale, distance from the market andcost of electricity. Hydrogen importers may
choose to focus on cheaper, brown hydrogenif the drivers behind the hydrogen market
do not include emissions reductions.
Timing of any investment in a hydrogen
export market will need to be carefully
considered in relation to the developmentof receiving facilities by importing nations
and the securing of purchase agreements in
a competitive global commodity market.
At present there are no identifiable establishedinternational supply chains, logistics orinfrastructure established, and these may
involve significant costs and risks. Although
there has been some progress in establishinginternational standards and codes on hydrogenproduction and transport, these have not73Hydrogen for Export

been universally accepted or adopted in
the energy or transport sectors. Gettinginternational agreement takes time.
New Zealand standards and codes would
also need to be adapted or developed to
fit within current local safety and standard
frameworks and requirements, while at thesame time meeting emerging international
standards and allowing trials and pilots while
standards and codes are being developed.

Looking Ahead
New Zealand is internationally renowned for
The Treaty of Waitangi, its tourism brandand strong agricultural sector. It is respected
as a dynamic early adopter of technologicaland societal change. It is important to use
our reputation to our advantage, leveraging
export opportunities in order to grow asustainable and resilient part of the economy.
Green hydrogen exports, with internationallyrecognised green hydrogen certification,
should be the aspirational goal. With a clear
and stable development path, combinedcollegial but competitive markets, and focussed
investments, this goal should be able to beachieved in the short to medium term.
Other export sectors could also benefit
through the decarbonisation of thedomestic energy and transport system toprovide greener goods and services.
Hydrogen’s contribution to decarbonising the
local transport, process heat and electricity
requirements for the food processing, fertiliser
manufacturing and other industries, could74

further position New Zealand goods as premium
sustainable products, in sectors otherwise
difficult to abate emissions. This would
benefit economic development, growth andemployment, and support our wellbeing targets.
The export of hydrogen could take anumber of forms, including as:• compressed / liquified gas (althoughsome evaporation losses will occur)• in other chemical forms such as methanol,ammonia, or LOHC, which will need to beprocessed on receipt to liberate the hydrogen(thus creating round-trip efficiency loss), unlessthe ammonia is used directly in industrial
processes or as a fuel at the destination.
Māori culture and Te Ao Māori (Māori view of theworld) take a partnership approach to energy froma kaitiakitanga and Māori business perspective.
These factors, in conjunction with our reputation
as dynamic adopters of change, innovation andcreativity form the basis of our global standing.
Hydrogen presents an opportunity to use
this to our advantage, through encouraging
innovation and investment and leveraging export
opportunities. This will contribute to growing asustainable and resilient economy while furthering
these positive aspects of our global image.
At a local level, collaboration with industry, iwi,
community and other stakeholders will foster
support for, and engagement with, hydrogen.
There is also a need to further investigate
how developing an export market for greenhydrogen may support domestic decarbonisationand create a local green hydrogen market.

Have yoursay...
6a What is the role of Government
in producing hydrogen in
sufficient volume for export?
6b What are the challenges forhydrogen if produced for export?
6c What are the opportunities forhydrogen if produced for export?

75
Auckland ©iStockNext Steps

This Green Paper outlines the role hydrogen could potentially play in New Zealand. The previous
chapters examined how hydrogen could contribute to our goal of a net zero carbon economy by 2050.

Decisions about these pathways andtheir implementation will be partof a Government renewable energy
strategy. This will be developed
over the next year, informed by
feedback on this Green Paper.
This wider strategy will
outline the renewable energy
pathway to a net zero future
for New Zealand by 2050.
Hydrogen has great potential to be thecatalyst for decarbonising the New Zealandenergy system and with public and private
collaboration, this aspiration can be transformed
into reality. We need to see rapid progress inthe coming years to meet our legally binding
emission targets, and this vision shows weall have a role to play on this journey.
Figure 14 illustrates the various ways in whichhydrogen can integrate into our economy.
However, for hydrogen to succeed in New Zealandthere are numerous significant challenges
that need to be managed successfully –overcoming economic and policy uncertainty,
attracting demand from a broad range of end
users while technology matures and because
costs are high, addressing investment and76

infrastructure needs, setting policy that
stimulates demand, establishing standards
and regulations, analysing lifecycle costs andchanging public perceptions around safety.
Government has an essential role to play toestablish hydrogen’s place in the New Zealandenergy system. The challenge for Government is toestablish how it can ensure there are no barriers
to hydrogen’s potential being developed while costeffectively stimulating its use in a low emissions
economy, domestically and internationally.
There is opportunity for industry to collaborate
with Government and speak with one voice
about what is needed, utilising the New ZealandHydrogen Association. Ultimately it is consumer
demand that will support and sustain thebusiness case for a future hydrogen economy.
The perception of hydrogen must continue tomature so it is seen as a trusted alternative tocurrent fuels by providing consumers a choice
to transition from one fuel source to a mixtureof renewable energy fuel sources. Continuing tobring together key players and stakeholders in acollaborative way will help push the cause further.
Raising the awareness about the challenges
we face, identifying solutions and establishing
relationships across the supply chain and
Government are essential next steps alongsidedeveloping a hydrogen road map for New Zealand.

S

te

m

F ig ur e

14: Hydrogen in

a n In

teg

r at

ed

En

er

gy

ys

Collaboration between Government, iwi,
industry and stakeholders is key for realising
the hydrogen opportunity for New Zealand. This
includes coordinating research across academia
and industry to determine knowledge gaps andagree a portfolio of evidence gathering research.
There are opportunities to learn and build onbest practice from across the world, fromadvanced blending to repurposing transmission
pipelines. Government and industries must
work together to develop innovative market
structures that provide value for money for tax
payers and offer options to de-risk for industry.
Pilot projects are important in understanding
the role hydrogen can play in New Zealand’s low
emissions economy. New technology often takes
time to reach a commercial level of development,
making its deployment a more risky decision
for company boards. However, these projects
may have critical value when making longterm decisions in a market where technology
is developing rapidly and investments have along life. Internationally many Governments
recognise the value of pilot or demonstration
projects and fund them jointly with industry.
Pilots will help support the development of policy,
business cases, technology, consumer confidence
and build supply chain capacity. Pilots anddemonstration projects will ensure lessons can belearnt and policy can be informed by evidence. This
will inform the public and decision makers about
the role hydrogen could play in decarbonising
New Zealand’s entire energy system.
New Zealand should work with other countries
which share interests in developing and

SEE PAGE

36

receiving green hydrogen including Japan,
South Korea, Norway, Europe and possibly
Australia (where we can agree standardisationof the definition of green hydrogen. Throughthese alliances, New Zealand can push forinternational carbon transparency standards
for hydrogen). As well as being based on
environmental principles, this approach canalso serve New Zealand’s economic interests
by creating a global market for green hydrogen,which we are well positioned to manufacture.
The Roadmap (See Figure 20) outlines anindicative pathway for New Zealand to harness
the potential of hydrogen for a sustainable
and resilient energy system. It illustrates thedifferent aspects of hydrogen’s story that willneed to be developed according to a timeline
and shows how the different pathways integratewith other parts of Government strategy.
Figure 20 provides an indicative hydrogenroadmap as one view of how this pathway
may develop. Many of the work programmes
illustrated in this diagram have yet to commence
and some are several years in the future. This
roadmap should be taken as illustrative of thework that needs to be carried out to achieve
this vision, bearing in mind that the goals andtargets we may set now will evolve as technology
and requirements change in the future.

77

Indicative Hydrogen
Roadmap
Up to 2020

KEY EVENTSPOLICY ANDREGULATIONPARTNERS

2020-2025

Regulatory review process:Electricity price review, Gas Act review,
Resource Management Act review

Regulatory review and amendments process:
Gas Act, NZ Transport Rules and Legislation& Health and Safety legislation

Green H2 vision
Lessons learnt from pilots

Green H2 Strategy
Renewable Energy Strategy

Climate Change Response (Zero Carbon)
Amendment Bill

Zero Carbon Act

Hapū, iwi and Māori Trusts

Hapū, iwi and Māori Trusts

NZ Hydrogen Association
Japanese H2 Memorandum of Cooperation

Other international agreements

CEM Hydrogen Initiative
STAKEHOLDERSENGAGEMENT AND
COMMUNICATIONS

Industry, power generators andnetwork distribution companies
Universities and Research Institutes
Local and Regional Council and Central Government

EXPORTPRODUCTION

DEMONSTRATIONSAND RESEARCH

Improved societal / industry attitudes topollution from vehicles, heating and industry

Stakeholders and community

Public awareness and engagement

Domestic use of H2

International export agreements

Evaluate opportunities for international
investment for H2

H2 proof of concept trials

Green H2 trials

Develop regulations, standards and pricing

Possible brown and grey H2 production

Green H2 and potential blue H2 CCS

Tuaropaki Trust / Ports of Auckland / Hiringa

Forklifts / Buses and Coaches / Car share
Gradual blending in existing gas network

NETWORK AND
INFRASTRUCTURE

International standards agreement

Plan to future proof for H2 blending in gas network

Develop regional hubs surplus togas network

TRANSPORTINDUSTRIALHEATING

STORAGE

Cars / Forklift / Farm bike / Buses

Vans / Trucks / Intercity buses / Coaches

Develop pathways and demonstrations
for decarbonising industry

Demonstrations and trial

Development and safety case approval

Hydrogen for heating trial

Prepare pathway for H2 ready appliances

Appliance development and certification

Consider economics of storage facilities– potential dual use for: export and dry-year energy

78

International proof of concept facility
Consider existing oil gasfields at theend of their lives for CCS storage
Trial storage solutions

STATIONARY ANDRESILIENT ENERGY

Develop H2 regional hub

Develop pathway for storage and resilience

Figure 20: Indicative Hydrogen Roadmap

Small scale distributed storage2025-2030

2030-beyond

Updated regulations and standards
International standards
Energy market for H2 in place

Low emissions economy
Re-purposing infrastructure for H2 including
the NZ coal and gas power plants

UN Sustainable Development
Goals agenda widespread

Net Zero Carbon economy 2050

Hapū, iwi and Māori Trusts

Hapū, iwi and Māori Trusts

see page31

Extend agreements based on surplus of H2
Public normalisation of H2
Public acceptanceH2 production facility
F ig

Trains / Ferries / Trucks / Aviation

ur e

9: Mā
ori energyms ystepe

rs

Cargo ships / Cruise ships
H2 network available in main cities

Regional hubs to supply industrial demand

Network extensions
Gas network replacement
Ferries / Cruise ships

Trains and H2 available at motorway service stations

200 refueling stations available across NZ
Zero emission transport

Regional hubs complete & operational

Decarbonising industrial zones and decarbonising
dairy industry
Zero emission industry

Appliance delivery
Commence property conversion

Property conversion
Widespread property conversion

Develop large scale facility operational
for export and dry-year energy

Expand number of facilities based on
demand / cost / comparative advantage

Large Fuel Cell applications
suitable for Local Government
and emergency services applications

Implement fuel cells in all applicable remote locations
Grid stabilisation

79

c
pe

ti v

e

Have Your Say

We welcome your feedback on the questions outlined in this Green Paper.
To help us analyse of your feedback, we would appreciate clear written
submissions that indicate the number and question being addressed.
1a What is the role of Government in developing hydrogen for storage and distribution?
1b What are the challenges for using hydrogen for storage and distribution?
1c What are the opportunities for using hydrogen for storage and distribution?
2a What is the role of Government in developing the complementary role of electricity and hydrogen?
2b What are the challenges for achieving this complementary role of electricity and hydrogen?
2c What are the opportunities for this complementary role of electricity and hydrogen?
3a What is the role of Government in supporting hydrogen use for the transport sector?
3b What are the challenges when using hydrogen for mobility and transport?
3c What are the opportunities for using hydrogen for mobility and transport?
4a What is the role of Government in encouraging the use of hydrogen for industrial processes
		 including process heat supply?
4b What are the challenges for using hydrogen in industrial processes?
4c What are the opportunities for the use of hydrogen in industrial processes?
5a What is the role of Government in encouraging hydrogen uptake for decarbonisation of our		 natural gas uses?
5b What are the challenges for hydrogen to decarbonise the applications using natural gas?
5c What are the opportunities for hydrogen to decarbonise our gas demand?
6a What is the role of Government in producing hydrogen in sufficient volume for export?
6b What are the challenges for hydrogen if produced for export?
6c What are the opportunities for hydrogen if produced for export?
In addition, we welcome your feedback about the opportunities of hydrogen to Māori and how thiswill support their aspirations for social and economic development.
80You can make a formal submission by filling in our new online
submission form on the MBIE webpage
https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-strategies-for-new-zealandThis online form is compatible with your computer,laptop, tablet and smartphone. Please note,
you will need to fill this online form out in one
session as there is no save or pause function.
If you have difficulty using the online form, or wish to
make a confidential submission (in either word .doc or.pdf format), please email us on hydrogen@mbie.govt.nz
If you submit via email, please clearly indicate
which feedback area you are commenting on.

nz
v t.
go

www
.m
bie
.

thank youtēnā koutou

for taking the time to read ourGreen Paper. We look forward
to reading your submissions.

All submissions are due by
Friday 25 October 2019 at 5pm.
Submissions received after
this time are unlikely to beconsidered. Unless marked
confidential, submissions will be
published on the MBIE website,in compliance with the Official
Information Request 1982 andthe Privacy Act 1993.
81

Glossary

TERM

DEFINITION

SOURCE

Autothermal
Reformation (ATR)

Similar to steam methane reforming (SMR), although it uses oxygen together withsteam or carbon dioxide and is exothermic. Output temperature of 950-1100ºC. Smaller,
but less efficient than SMR.

Five Minute Guide
to Hydrogenwww.arup.com/perspectives/publications/promotional-materials/section/five-minute-guide-tohydrogen

BEV

Battery Electric Vehicle

BiofuelA generic term to describe liquid (or gaseous) fuels produced from biomass.
www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/energy-generation-andmarkets/liquid-fuel-market/biofuels/

Biomass

Blue Hydrogen

Organic material that comes from plants and animals, and a renewable source of energy.

Ministry ofBusiness,Innovation and
Employment (MBIE)

www.eia.gov/energyexplained/?page=biomass_home

US Energy
Information
Administration

Production of hydrogen from fossil fuels with CO2 emissions reduced by the use ofcarbon capture underground storage.

International
Energy Agency

www.iea.org/hydrogen2019/

Brown Hydrogen

Hydrogen produced from fossil fuels.

Carbon capturestorage (CCS)CCS technologies involve the capture of carbon dioxide (CO2) from fuel combustion
or industrial processes, the transport of CO2 via ship or pipeline, and either its use
as a resource to create valuable products or services or its permanent storage deep
underground in geological formations.

International
Energy Agency

www.iea.org/topics/carbon-capture-and-storage/

CHP

Combined Heat and PowerEECA

Energy Efficiency and Conservation Agency

Electrolysis

Water electrolysis is the process in which hydrogen is produced from splitting water
through the application of electrical energy into hydrogen and oxygen.

IEA HIAwww.ieahydrogen.org/Resources/FAQs-and-H2-Primer-(1).aspx

The carbon footprint of the hydrogen depends upon the carbon footprint of the source
electricity and electrolysis efficiency. Polymer Electrolyte Membrane is based on a solid
polymer electrolyte operating at 70-90ºC, while an Alkaline Electrolyser uses a Sodium
or Potassium Hydroxide or solid alkaline electrolyte at 100-150ºC and the Solid Oxide
Electrolyser uses a solid ceramic electrolyte operating at about 700-800ºC.

Five Minute Guide
to Hydrogenwww.arup.com/perspectives/publications/promotional-materials/section/five-minute-guide-tohydrogen

Energy Carrier

Either a substance or a phenomenon that can be used to produce mechanical work orheat or to operate chemical or physical processes.

International
Organisation forStandardisation

Energy intensity

Compares production in the economy, as measured by real GDP, with total energy
demand, as measured by total consumer energy. It determines whether our reliance onenergy to generate economic growth is increasing or decreasing.

MBIE

www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

82

TERM

DEFINITION

SOURCE

Energy efficiency

Something is more energy efficient if it delivers more services for the same energy
input, or the same services for less energy input.

MBIE

www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

Energy emissions

Greenhouse gas emissions from the energy sector, including the production and useof energy. www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

MBIE

Energy productivity

The value we get from our energy, defined as Gross Domestic Product per unit of energy
used. www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

MBIE

FCEV

Fuel Cell Electric Vehicle.

Feedstock

Any renewable material that can be used directly as a fuel, or converted to another formof fuel or energy product. www.energy.gov/eere/bioenergy/biomass-feedstocks

Office of Energy
Efficiency and
Renewable Energy

Fossil fuels

Energy sources formed in the Earth’s crust from decayed organic material.
The common fossil fuels are petroleum, coal, and natural gas.

EnergyInformation
Administrationwww.ieahydrogen.org/Resources/FAQs-and-H2-Primer-(1).aspx

Fuel switching

Fuel switching replaces inefficient fuels with cleaner and economical alternatives, suchas substituting coal or kerosene for natural gas. Complimented by modern equipment
upgrades, fuel switching is a simple approach to reducing energy consumption andcosts for end-users, while also curbing carbon emissions. www.ifc.org/

GHG

Greenhouse Gas

Green Hydrogen

Low carbon hydrogen produced from renewable energy sources.
www.iea.org/hydrogen2019/

IFC

International
Energy Agency

Grey Hydrogen

Hydrogen derived from industrial processes.

Gross emissions

Gross emissions come from agriculture, energy, industrial processes and product use,
and waste sectors. They do not include emissions and removals from land use, land-use
change and forestry. www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

MBIE

HTE + Concentrated
Solar PowerHigh Temperature Electrolysis works on the basis that electrolysis of water can be
more efficiently achieved at high electrolyte temperatures in the range of ~100-850ºC.
In a CSP or parabolic solar system the electricity generated can be more effectively
converted into hydrogen by sequestering some of the process heat.

Five Minute Guide
to Hydrogenwww.arup.com/perspectives/publications/promotional-materials/section/five-minute-guide-tohydrogen

HydrogenThe simplest, lightest and most abundant element in the universe, making up >90%of all matter. In its normal gaseous state, hydrogen is odourless, tasteless, colourlessand non-toxic. Hydrogen burns readily with oxygen, releasing considerable amountsof energy as heat and producing only water as exhaust. It has a high energy content
by weight – nearly three times that of gasoline. Today, the commercial production ofhydrogen worldwide amounts to about 40 million tons, corresponding to about 1% of
the world’s primary energy needs.

EnergyInformation
Administrationwww.ieahydrogen.org/Resources/FAQs-and-H2-Primer-(1).aspx

83

Glossary

TERM

DEFINITION

SOURCE

Industrial processes
and product use

A category used for UNFCCC reporting, this refers to emissions from industrial activities(eg, from steelmaking) that are not a direct result of consuming energy, and emissions
from using greenhouse gases in products (eg, from the use of refrigeration systems).

Productivity
Commissionwww.productivity.govt.nz/sites/default/files/Productivity%20Commission_Lowemissions%20
economy_Final%20Report_FINAL_2.pdf

Low Temperature
Plasma Reformation

Partial oxidation plasma pyrolysis of methane. This process is at an early technology
readiness level but is showing promising low energy reformation potential.

LNG

Liquified natural gas.

LPG

Liquified petroleum gas.

Microbial Biomass
Conversion

Dark fermentation of biomass using micro-organisms produces hydrogen andcarbon dioxide. Alternatively, Microbial Electrolysis Cells (MECs) combine biomass,
micro-organisms and a small electrical input to increase hydrogen yield. This approach
has long-term potential to use wastewater.

Five Minute Guide
to Hydrogen

Net emissions

The total of a country’s emissions across all sources, minus offsets from land use, l
and-use change and forestry.

Productivity
Commission

Five Minute Guide
to Hydrogenwww.productivity.govt.nz/sites/default/files/Productivity%20Commission_Lowemissions%20
economy_Final%20Report_FINAL_2.pdf

Net-zeroNet-zero emissions describes a situation whereby the amount of greenhouse gases
emitted into the atmosphere is equal to the amount sequestered or offset (eg,by forestry).

Productivity
Commissionwww.productivity.govt.nz/sites/default/files/Productivity%20Commission_Lowemissions%20
economy_Final%20Report_FINAL_2.pdf

Partial Oxidisation(POX)

Endothermic partial oxidisation of natural gas followed by ‘Water-Gas-Shift’.
Faster and smaller than SMR, but produces less hydrogen per unit of gas feedstock.

Five Minute Guide
to Hydrogen

Photobiological

Micro-organisms such as micro-algae or cyano-bacteria absorb sunlight to producehydrogen. Alternatively, photo-synthetic microbes photo-ferment biomass to producehydrogen. These processes currently have a low hydrogen yield and are inhibited by
concurrent oxygen generation. Further research is anticipated to increase effectiveness.

Five Minute Guide
to Hydrogen

Photo Electro
Chemical

The PEC process uses semiconductors immersed in a water based electrolyte or a photo- Five Minute Guide
reactive slurry to convert solar energy into chemical energy in the form of hydrogen and to Hydrogen
oxygen as a by-product. This developing technology can be applied in a similar mannerto photovoltaic panels at various scales, both centralised and distributed.

Process Heat

Process heat is energy used for commercial purposes, manufacturing or heating; itis often generated by boilers. The heat is then used by businesses for a wide variety
of applications such as timber processing and paper making, food processing or milk
drying. Emissions from heat energy are direct emissions from combustion of fuel(eg, coal used in a boiler). www.mbie.govt.nz/assets/346278aab2/nzeecs-2017-2022.pdf

84

MBIE

TERM

DEFINITION

SOURCE

ReformerElectrolyser Purifier

A developing technology which reforms and purifies in one step, combining electrolysis
and using waste heat to support an efficient endothermic conversion. More efficientthan SMR and scalable for centralised of distributed use.

Five Minute Guide
to Hydrogen

Steam Methane
Reforming

Steam methane reforming is a process in which methane is reacted with hightemperature steam (700oC-1000oC) under 3-25bar pressure, in the presence of a catalyst
to produce hydrogen, carbon monoxide and some carbon dioxide.

Office of Energy
Efficiency and
Renewable Energy

www.energy.gov/eere/fuelcells/hydrogen-production-natural-gas-reforming

Thermo Chemical
Water Splitting

Using high temperatures generated from solar (Solar Thermochemical Hydrogen)or nuclear energy, water splitting cycles produce hydrogen and oxygen from water.
Typically, dual stage cerium oxide (2000/400ºC) or copper chloride hybrid (500/400ºC),
but ~300 process variants are at various technology readiness levels.

Five Minute Guide
to Hydrogen

Māori terms
Atua

Māori Gods of the spiritual and natural realm

Hapū

Subtribe

Hononga

Union, connection, relationship, bond

Iwi

Tribe

Kaitiaki,Kaitiakitanga

Custodian, caregiver, steward, guardian. To express kaitiakitanga.

Papakāinga

Home, communal ancestral land

Papatūānuku

Earth, earth mother, wife of Ranginui

Rā

Sun

Rangatira,rangatiratanga

Leader, authority, sovereignty, self determination

Ranginui

Sky Father

Rūaumoko

God of Earthquakes

Tāne Mahuta

God of the Forests and Birds

Tangata whenua,tangata moana

People of the Land, People of the Water

Tangaroa

God of the Seas and FishTāwhirimātea

God of Winds, Weather, Cloud, Storms

WhānauExtended family

85

Figure andtable list

FIGURE 1

Current Hydrogen Opportunities in New Zealand

FIGURE 2

New Zealand policy context for hydrogen

FIGURE 3

Hydrogen’s potential role in the New Zealand economy

FIGURE 4

Hydrogen life cycle – from water to water

FIGURE 5

Why Hydrogen?

FIGURE 6

Policies directly supporting hydrogen deployment and application (20)

FIGURE 7

Modelled hydrogen costs for various use-cases in New Zealand

FIGURE 8

Capacity of new projects for hydrogen production for energy and climate purposes, by technology and start date

FIGURE 9

Māori energy system perspective

FIGURE 10

Convergence in the future New Zealand energy system

FIGURE 11

Total primary energy supply in New Zealand and source and fossil fuel use by sector

FIGURE 12

New Zealand gross emissions by sector 2017

FIGURE 13

Balancing supply and demand

FIGURE 14

Hydrogen in an integrated energy system

FIGURE 15

Types of hydrogen

FIGURE 16

Vehicles that can be powered by hydrogen or electricity

FIGURE 17

Industrial uses of hydrogen

FIGURE 18

Process for production of green hydrogen and green ammonia using surplus power available from wind turbines

FIGURE 19

Tolerance of selected existing elements of a typical natural gas network to hydrogen blend shares (% by volume)

FIGURE 20

Indicative Hydrogen Roadmap

TABLE 1New Zealand’s potential additional renewable capacity

TABLE 2

Hydrogen vehicles current and future demand, opportunities and challenges

TABLE 3

Classification of industrial, domestic and commercial heat requirements in New Zealand86

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89

Moeraki ©iStockAcknowledgements
This Green Paper was prepared by a cross-agencyhydrogen working group drawn from offices of the
New Zealand Government, with the assistance of
global advisory consultancy Arup. We appreciate
the contributions of Tui Gilling and our reviewers –Professor Ralph Sims, with the assistance of Dr Linda
Wright and the input from stakeholder engagement
which has helped shape the Green Paper.
Special thanks to all those who participated in thevarious workshops to explore the future of hydrogenin New Zealand..

www.mbie.govt.nz