Focus areas
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Commercial viability of hydrogen and policy implications
44 submissions commented directly on commercial viability for hydrogen. There were a wide range of comments and views on the current commercial viability of green hydrogen, in particular what might be needed for green hydrogen to become commercially-feasible, and what role government could or should play in support of this. These comments ranged from those in support of a greater role for government to help stimulate investment confidence and certainty, to those that either do not support a role for government in hydrogen deployment and those that consider further analysis and assessment would be needed first.
Among submitters that expressed support for a commercial market for hydrogen, there was general agreement with the issues set out in the Interim Roadmap, such as high upfront costs for capital equipment, the current higher cost of hydrogen compared to fossil fuels and the ‘chicken-and-egg’ issue around first mover investment risk and certainty of future supply to ensure confidence in investment decisions.
Infrastructure availability was raised as a common issue, particularly by submitters active in or considering transport use cases. These submitters noted the need for an accessible and reliable supply of hydrogen and refuelling infrastructure to underpin a wider rollout of hydrogen fuel cell and diesel-hydrogen combustion vehicles than the existing demonstration vehicles currently operating in New Zealand.
Comments that saw a role for government in this space included:
- clear government signals to underpin investment decisions
- streamlined and fit-for-purpose regulatory and consenting mechanisms
- ensuring electricity prices are compatible with hydrogen production costs and user willingness to pay
- government investment or ownership of core hydrogen infrastructure
- financial support mechanisms similar to those being implemented in other countries
- promoting regional hydrogen hubs
- using government procurement to enter into long-term offtake contracts
- reflecting the true cost of climate change in existing fuel pricing to make it closer in true cost to hydrogen production.
Comments that either did not support hydrogen deployment and/or a role for government in enabling it, or considered further technical analysis was needed included:
- general comments about the versatility, practicality and cost of hydrogen
- questions around assumptions in the hydrogen economic scenario modelling around electricity prices, declining capital costs for electrolysers and related equipment, whether hydrogen producers will actually curtail production when demand for electricity is high, and the need for green hydrogen production to be supported by at least some firmed grid capacity
- the view that hydrogen not being currently commercially viable is a market signal of how viable it is likely to be into the future.
Several other submitters saw the need for further assessment before coming to conclusions about whether to support or encourage a commercial hydrogen market. This included more robust technological and cost assessment analysis of the benefits of hydrogen alongside potential alternative fuel options.
Regional Hydrogen Transition Rebate
11 submissions commented directly on the Regional Hydrogen Transition (RHT) rebate scheme. There were a range of perspectives on support for the scheme, its design and other considerations.
Several of these submitters supported the scheme as a way to bridge the current price gap between green hydrogen and fossil fuels that would be displaced using hydrogen. These submitters saw the scheme as a key measure to de-risk investment and provide confidence for the sector to scale up. Some commented that the announcement of the RHT had already generated considerable interest in hydrogen infrastructure investment.
Others either did not support the scheme, or suggested design changes. The main reason given for not supporting the scheme was that it would support hydrogen use cases that would not be otherwise viable, and lead to economically stranded assets once support ended.
Suggested design changes included expanding its core focus beyond the Taranaki and Southland regions given that reducing emissions is required nationally. Several submitters thought that the scheme should be open to consumption of other types of hydrogen production beyond green hydrogen. This was seen as a transitional measure to help build scale and demand in hydrogen use cases, while green hydrogen remained an expensive production method.
Clean Heavy Vehicle Grant scheme
6 submitters commented directly on the Clean Heavy Vehicle Grant Scheme, which was also announced in Budget 2023. These submissions were evenly split in their agreement or disagreement for the scheme for similar reasons as the Regional Hydrogen Transition. One submitter suggested scope changes to allow dual hydrogen-diesel combustion vehicles as well as hydrogen fuel cell heavy vehicles.
Governance and monitoring
16 submitters commented directly on matters relating to the coordination of government activity in hydrogen, and the action to establish a government and sector body to guide activity.
Submitters that were generally supportive of hydrogen deployment considered that it was important for the government to set clear targets, milestones and timeframes relating to the actions signalled in the Interim Roadmap, to give greater confidence to early movers and investors. There was general support for a coordinated approach from government to consider the views and input of a broad range of stakeholders who have quite specific but interconnected interests and areas of focus relating to hydrogen.
The action to establish a government and sector body was generally supported by submitters who had a commercial or operational interest in hydrogen production and use. Hiringa Energy suggested it be made a ‘taskforce’, with clear accountabilities and a responsibility to report to the Minister directly on progress. The National Energy Research Institute considered that a government and sector body based on a technology like hydrogen was less suited to this approach, compared to a sector-specific group like Sustainable Aviation Aotearoa. Some submitters who generally did not support hydrogen deployment considered the proposed structure was too focused on industry views. There was also support from some submitters (GNS, University of Auckland) to include representatives from research and academic backgrounds in the membership of such a body, along with sector representatives.
Research, development and deployment
14 submitters across several different submitter categories commented directly on research, development and deployment (RD&D). These submitters said it would be important for building in-country skills and learning curves, reducing costs, addressing global supply chain risks by building domestic capability to produce and use equipment and the opportunity for New Zealand to become a technology exporter.
In terms of the focus of research, Arup noted that the capital cost of hydrogen production technology is likely to be driven by global developments and therefore RD&D efforts should be specifically targeted to a New Zealand context. Research into hydrogen conversion, storage, and transportation had support from academia. with two submitters commenting on the value of research that can clarify hydrogen’s role and integration into the future energy system (J Haas et al., National Energy Research Institute).
Commercial submitters suggested there was a role for government to stimulate investment in RD&D (whether public or private). Kakariki advocated for the creation of a dedicated fund (more than $1 billion) supporting both research and deployment of energy technologies at commercial scale. One submitter recommended a “top down” investment approach which first considers New Zealand’s energy sector priorities and the RD&D supports needed for those, in place of the current competitive funding system which can leave gaps in comprehensive coverage of research.
Workforce availability and capability
13 submitters from across the submitter categories commented directly on workforce and skill needs to support hydrogen deployment. Among these submitters, there was broad recognition of the need for a suitably skilled workforce to enable hydrogen deployment, the opportunities to utilise transferrable skills within existing workforces and the need to understand potential workforce and skill gaps.
There were differing views among submitters on how and when to address these issues, and what the role of government should be. Hydrogen project leaders generally supported the proposed government and sector body helping to lead a coordinated approach to workforce needs. One suggested surveying the sector and training providers on industry workforce requirements. There was also recognition that the transferability of skills from the oil and gas sector, with complementary training to ‘top up’ existing qualifications, could be well suited to hydrogen workforce needs. Other submitters preferred a more industry-led approach. Energy Resources Aotearoa highlighting the work it had done in this area to date. The National Energy Research Institute considered a more realistic assessment of the need for hydrogen was required before considering workforce and skills needs.
Several submitters commented on the international dynamics of hydrogen workforce requirements, noting both the potential to source suitably skilled workers from other countries and enabling this through the immigration system, as well as the risks of losing skilled workers to other countries with ambitious hydrogen plans such as Australia. Some submitters noted risks in relying on internationally sourced workers, on the basis that this would be much more expensive than training or upskilling domestic workers.
Infrastructure and planning
32 submitters commented directly on infrastructure and planning issues. Several submitters commented on the need for infrastructure deployment ahead of demand to underpin investment decisions. Some submitters highlighted the network effects needed for infrastructure like hydrogen refuelling stations before potential users could commit to using hydrogen.
There was support from several industry/sector submitters with a direct interest in hydrogen deployment in establishing regional hydrogen hubs. Reasons stated included the ability to share costs by aggregating production and consumption across different use cases, attracting investors, acting as a test bed for viability and deployment, and focusing effort to understand and resolve health and safety matters. The hub model was seen by these submitters as a practical way to overcome challenges. Several industry submitters with an interest in developing New Zealand’s hydrogen sector also highlighted or drew comparisons to renewable energy zones (REZs) and other spatial planning tools, where renewable generation builders coordinate to sequence and co-locate generation to share network connection costs.
Submitters commented on other infrastructure requirements, including the desirability of locating hydrogen production close to renewable electricity generation and points of use to minimise the need to transport hydrogen. These submitters also mentioned coordinating development of infrastructure that would enable lower cost hydrogen transport, such as newly-built or repurposed pipelines to carry hydrogen-natural gas blends or 100% hydrogen.
There were a range of comments on the role of the resource management planning system, what the government could do to speed up planning consideration of hydrogen projects and how environmental effects of hydrogen infrastructure should be considered and mitigated. Those leading hydrogen projects or with an indirect interest in hydrogen deployment generally supported the government taking action to reduce the time, cost and level of complexity involved in consenting for hydrogen projects. Suggestions for government action included considering hydrogen infrastructure in any fast-track rules for renewable energy infrastructure and developing a national policy statement for hydrogen.
Three submitters highlighted the significant infrastructure build-out that would be required, based on the estimates provided by the scenario modelling. These submitters either did not support hydrogen deployment to this extent for that reason or noted further considerations or actions for government. GNS supported more consideration of the additional critical minerals that would be required for the electricity generation needed to support this, while Transpower noted the need to allow investment test rules to enable anticipatory investment in infrastructure.
Health and safety regulations and standards
24 submitters commented directly on health and safety regulatory settings and standards. Submitters with a direct interest in hydrogen activities considered that addressing or removing regulatory barriers now would enable faster development of the hydrogen sector and provide increased transparency and greater certainty for investors. However, some of these submitters had differing opinions on which uses should be prioritised over others in a regulatory work programme.
Several submitters, including environmental groups, considered that the Interim Roadmap did not go far enough to discuss and address the health and safety risks relating to hydrogen, including flammability, high storage pressures and inadequacy of existing regulatory regimes. These concerns included the unique risks an emerging hydrogen industry posed to emergency responders, particularly in transport settings. Some of these submitters called for the development of industry-specific training as a mitigation. There were also concerns shared by several submitters that hydrogen refuelling stations could pose dangers to surrounding communities. Most of these submitters supported urgently prioritising work to develop or update health and safety regulations and greater clarity over what the work programme would entail.
Certification
11 submitters commented directly on certification for green hydrogen, almost all of which were from organisations with an interest in hydrogen deployment. There was general agreement on the need to certify the emissions intensity of hydrogen production. The reasons given were: to ensure consumer trust and confidence in hydrogen; allow producers to capture the ‘green premium’ associated with green hydrogen production; and enable compatibility and recognition with certification schemes in other jurisdictions, to support future international hydrogen or derivative trade.
Some submitters noted that governments have typically developed or endorsed certification schemes, which provides a level of credibility to underpin trading markets. Certified Energy highlighted its New Zealand Energy Certificate Scheme, which is already in operation, and considered it could be endorsed by the Government rather than creating a new scheme. Hiringa Energy supported a certification approach based on the average renewable electricity generation share per annum. It considered that more complex approaches that tracked the emissions intensity of the electricity system at time-based intervals and limiting certification of renewable hydrogen to electricity from new renewable generation would add unnecessary cost and complexity.
International partnerships
13 submitters made comments directly relating to the role of international partnerships in hydrogen activities. These were primarily submitters with a direct role in hydrogen production and use.
There was general agreement on the importance of international partnerships and relationships for New Zealand. Reasons given included: connecting to countries that are likely to be future importers of hydrogen such as Japan; staying connected to international developments that could see cost reductions in key equipment; collaborating with and learning from other countries that are further ahead in their hydrogen strategies; and sharing information on common issues such as establishing safety rules and regulations. Some submitters noted that New Zealand is likely to draw on technology from other countries in many parts of the hydrogen supply chain, which will make international connections important.
Hyundai New Zealand noted Australia’s positioning to become a major hydrogen exporter, and that New Zealand might import hydrogen from Australia in some capacity. Hyundai saw this as having potential energy security benefits that differed from those set out in the Interim Roadmap, which largely assumed energy security through domestic production.
Public perception
10 submitters made statements relating to public perception of hydrogen, noting that the inclusion of hydrogen as part of New Zealand’s energy mix ultimately depended on community acceptance, understanding and support.
Submitters who generally supported hydrogen deployment considered that public acceptance of hydrogen deployment is crucial. These submitters noted the similar considerations with public consent across many parts of the energy transition, including offshore wind and increased transmission and distribution infrastructure to support electrification. Some submitters also noted that projects might not be commercially viable without public acceptance, due to the costs that challenges and objections in the resource management system could add.
Some submitters saw a role for government in building greater understanding and acceptance of hydrogen uses by setting clear strategies, leading public education campaigns and carrying out consumer perception studies to better understand levels of community concern. Fortescue Future Industries suggested that benefit-sharing arrangements need to be a central part of hydrogen deployment, either directly through community participation in projects, or indirectly through compensation or recognition. One example given was to lower electricity prices for communities directly impacted by the resulting infrastructure required to support hydrogen production, such as electricity transmission lines.
Submitters who were generally less supportive of hydrogen deployment considered that communities would object to refuelling stations or production/storage facilities, due to safety concerns around high storage pressures, explosion risk and flammability. There were also concerns about potential wider social, economic and environmental effects on communities that would affect public support. This included affordability challenges from increased electricity prices for other users due to hydrogen production, the environmental effects of water intake requirements and water discharge.