Summary of submissions by theme
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Key messages and strategic case
Submitters that expressed support for the Interim Roadmap, whether in part or overall, indicated a final hydrogen roadmap should provide clear direction and certainty to existing and potential suppliers and consumers of hydrogen. This certainty would guide or underpin investment decisions in the private sector. For example:
- Hiringa Energy advocated for a strong, clear pathway for hydrogen deployment to attract investment, and for in-depth industry consultation on any future demand modelling.
- Taranaki Offshore Partnership indicated that the final Hydrogen Roadmap needs to contain enough detail to give clarity to industry participants, increase investor confidence, identify opportunities and ideally highlight timelines for developing the renewable electricity generation needed to produce hydrogen.
Submitters who supported the Interim Roadmap generally made positive statements regarding coverage of the strategic issues relating to hydrogen within New Zealand’s energy transition and the presentation of the current hydrogen industry landscape internationally and in New Zealand.
Several submitters, including private individuals, environmental groups and an academic organisation, thought that the positioning and statements in the Interim Roadmap were too closely aligned with industry views and that the Interim Roadmap needed to be more balanced in its consideration of both benefits and disbenefits of supporting a developing hydrogen economy. Some of the concerns raised included:
- the global warming potential of hydrogen itself due to emerging research about how it interacts with other gases in the atmosphere, and potential risks around leakage of hydrogen to the atmosphere through equipment during production, storage and distribution
- concerns about the safety of compressed and liquefied hydrogen, particularly in transport uses
- water usage implications of producing green hydrogen, when many existing freshwater sources are already under pressure and may be to a greater extent in the future from the effects of climate change
- the energy efficiency of hydrogen production from renewable electricity, compared to using electricity directly in other applications (like battery electric vehicles and electric building heating), due to the energy losses associated with production, storage and transportation/distribution
- the potential for hydrogen production to place upward pressure on electricity prices from being an additional source of demand
- whether ambitions around green hydrogen, and in some cases renewable energy, are compatible with a need to reduce demand for energy, consumption and change patterns of behaviour in order to effectively reduce emissions and address climate change.
Several submissions questioned the sequencing of the Interim Roadmap ahead of other work signalled at the same time, like the New Zealand Energy Strategy. Many submitters supported an initial technology-neutral approach, with consideration of all types of alternative fuels before signalling support for hydrogen in particular.
Others set out proposed priority areas for how the Government should consider potential uses for hydrogen, starting with replacing existing emissions-intensive hydrogen produced from natural gas with hydrogen produced using 100% renewable energy.
Hydrogen use cases
61 submitters commented directly on one or more hydrogen use cases outlined in the Interim Roadmap or discussed the appropriateness of hydrogen for particular uses. The majority of submitters agreed with the Interim Roadmap’s focus on hard-to-electrify applications in heavy transport, heavy industry and power generation, noting the technological and economic uncertainty around whether all of these use cases will eventuate.
Heavy industry applications were most commonly supported. Some submitters (predominantly private individuals and environmental groups) supported hydrogen use only where there is little or no alternative, such as replacing grey hydrogen feedstocks and in steelmaking. Two environmental groups explicitly opposed using green hydrogen to produce urea-based fertilisers due to concerns it would be used to ‘greenwash’ other environmental effects of fertiliser use. Some submitters viewed the production of synthetic fuels favourably, recognising the strategic importance of domestic fuel security.
Heavy transport applications attracted divided opinion. Some submitters considered that hydrogen was unviable or even wasteful in heavy land transport applications. These submitters mentioned hydrogen’s low energy efficiency, high space requirements for storage, the wide variety of alternatives to hydrogen in clean fuel applications and ongoing improvements to battery technologies which they suggested posed better alternatives.
Z Energy and the National Energy Research Institute noted that most road transport will be electrified in New Zealand, and that only 3 to 5% of heavy vehicle kilometres travelled in New Zealand are long-haul (much less than Australia, Europe and North America).
Air New Zealand and the New Zealand Hydrogen Aviation Consortium commented on the potential for hydrogen aviation applications to grow faster than our modelling suggested. Environmental groups signalled a preference for alternatives to aviation, such as passenger rail and coastal shipping. One private submitter suggested that while hydrogen may not play a significant role in the overall rail network, there may be opportunities in pollutant-heavy parts of the network, starting with hydrogen shunting engines at primary freight terminals, similar to the Polish Rail Network.
Support for power and energy system applications was also divided. Some submitters advocated for hydrogen’s use as energy storage, particularly when renewables are over-producing, while others considered this impractical. Some submitters suggested hydrogen may have an important role in providing back-up power generation for an emergency response, particularly in light of the disruptions caused by Cyclone Gabrielle.
Most submitters who commented explicitly on gas blending opposed it, considering it technically or economically unviable, or opposing its potential role to perpetuate gas production, or both.
Hydrogen’s impact on emissions reduction, economic development and energy security and resilience outcomes
45 submitters commented directly on 1 or more of the outcome areas discussed in the Interim Roadmap, and many made a point of raising broader environmental issues associated with hydrogen production beyond direct emissions reduction.
Submitters had mixed views on hydrogen’s likely decarbonisation or emissions reduction outcomes. In general, these aligned with their views on likely use cases, with commercial entities in the hydrogen economy the most positive versus environmental groups and private individuals expressing more negative views. Some indicated decarbonisation benefits are disproportionately important in some industries. For example, Horticulture New Zealand noted that only 6% of kiwifruit lifecycle emissions occur on the orchard, while 43% come from shipping.
Some submitters also noted the indirect warming potential of hydrogen from atmospheric leakage (particularly when transported and stored). These submitters suggested that government has a role in outlining how greenhouse gas emissions from leakage should be accounted for and how this relates to the Emissions Trading Scheme, as well as investigating the risk and extent of leakage. Some expressed a view that there may be emissions reductions opportunities available at lower economic, environmental and social costs than those offered by hydrogen use cases.
Submitters generally supported a focus on energy security and resilience. For example, Auckland Transport noted the risks of relying too heavily on one source of energy across the economy as we electrify more applications, and noted a potential solution is a mixed fleet of electric and hydrogen buses. Some submitters noted hydrogen’s potential regional back-up power benefits. Submitters placed a high degree of importance on ensuring the electricity grid can meet the demands of both electrification and hydrogen deployment, particularly in relation to hydrogen production for export. Some submitters saw a role for hydrogen in short and/or long-term energy storage to balance intermittent renewables and address dry-year risk (i.e. one submitter proposed a hydrogen strategic reserve), while others considered hydrogen unviable or wasteful in these applications.
Most submitters saw economic benefits for a hydrogen economy. Some submitters mentioned opportunities for economic growth, particularly through export, as well as job creation and diversification. Some submitters noted there may be economic disbenefits if hydrogen increases electricity bills.
Submitters considered the Roadmap should more clearly articulate hydrogen’s environmental impacts, particularly around water use. Submitters noted impacts would need to be managed from both water demand (which is limited at national level but may be more significant at local levels and is under pressure from climate change impacts) and wastewater disposal (i.e. if toxic and corrosive chlorine ions are discharged into the sea or if water is treated with alkali or acid). Some submitters supported exploration of non-freshwater sources like process water or grey water to manage pressures on freshwater.
Feedback concerning iwi and Māori perspectives
Several submitters commented that the Interim Roadmap lacked a te āo Māori perspective, with one submitter expressing concern that it did not go far enough to demonstrate either commitment to Te Tiriti o Waitangi or regular/enduring consultation with tangata whenua.
Ngā Iwi o Taranaki and Post Settlement Governance Entities voiced strong concerns around water usage for hydrogen production processes and water pollution (discharge to water bodies) from post-hydrogen production processes. This was in particular reference to surface water bodies in Taranaki which they said were already under pressure for other uses.
Arup considered that Māori and iwi partners would play an important role in raising public awareness, understanding and acceptance of hydrogen in New Zealand’s energy system, and Māori participation in the opportunities that a future hydrogen sector might offer.
Arup recommended ensuring Māori representation in working groups and in governance settings under forums focused on regulatory settings, standards, workforce/skills and training and planning. They considered that iwi and hapū could provide useful input and guidance on how to stand up a partnership that could be both meaningful and impactful. The Taranaki Offshore Partnership recommended that the final Hydrogen Roadmap include a formal objective to further enable Māori participation.
Production and storage methods
14 submitters commented directly on different hydrogen production and storage methods. The University of Auckland and Hyundai supported a core focus on green hydrogen due to New Zealand’s strong comparative advantage in this area and its sustainability attributes. BEC stated that the economics of green hydrogen are expected to improve as the price for electrolysis and fuel cells falls. GNS recommended supporting research that progresses green hydrogen production from a range of non-freshwater sources given potential future pressures on freshwater (i.e. waste water and sea water).
Several submitters from the sector argued for a technology-agnostic approach (maintaining openness to blue, turquoise and gold/natural hydrogen) to keep the focus on emissions reductions, promote lowest-cost decarbonisation and/or enable incremental steps toward an at-scale hydrogen market. These submitters suggested government could enable these approaches by ensuring regulations took these technologies into account (i.e. through safety regulations and by clearly regulating carbon capture, utilisation and storage technologies).
Major Gas Users Group noted naturally-occurring hydrogen has the potential to outcompete other forms of clean energy, referencing Helios Aragón’s claim that it could produce naturally occurring hydrogen from a large underground reservoir in the foothills of the Pyrenees for €0.75 ($0.82) per kilogram — about half the current cost of producing grey hydrogen from unabated natural gas. Major Gas Users Group advocated for government to fund GNS (or another organisation) to provide basic geological data to parties interested in exploring for natural hydrogen.
Kakariki said biomass-derived hydrogen is a lower priority use of biomass than uses such as e-fuels and sustainable building materials. The Environment and Conservation Organisation submitted that liquid hydrogen is impractical because of the energy required to make it and because of losses due to boil-off when stored. A private submitter suggested the government take note of a patent filed by start-up Novacium SAS for a hydrogen production system using a chemical process to liberate hydrogen from low-cost alloys, without the need for electricity, extensive storage, or complex transportation infrastructure. Clarus and GNS discussed the potential for underground hydrogen storage in depleted gas wells, noting previous research on this by Clarus, the University of Canterbury and EnergyLink.
Electricity system interfaces
24 submitters commented on issues and considerations relating to the interface between hydrogen production and the electricity system. Several submitters, including academia, transport, industry and energy provider organisations, highlighted the importance of planning for grid capacity given the significant renewable electricity required, particularly in export-heavy scenarios. Some submitters considered hydrogen’s risks to grid stability too large to justify going ahead, while others claimed that grid impacts could be managed with effective planning and forward-signalling. Hiringa set out that hydrogen production does not compete for scarce green electrons. The flexible nature of electrolyser production allows for greater utilisation of variable renewable generation (otherwise spilled, curtailed, or sold at zero or negative prices), with less overbuild of transmission, storage and firming infrastructure than would need to be built in a ‘no-hydrogen’ scenario.
Some submitters, including offshore wind developers, noted the potential synergies between hydrogen and offshore wind to meet capacity – notably, the ability to develop projects at scale, proximity to demand, high-capacity factors and the ability for hydrogen to soak up ‘energy spillage’[1]
Several environmental groups plus an individual submitter expressed concern that hydrogen demand could increase electricity prices if the market is unable to meet demand for both increased electrification and production of green hydrogen. These submitters expressed a view that higher electricity prices are likely because hydrogen will involve construction of increasingly marginal electricity generation projects, and the 80 to 90% capacity factors for electrolysers will necessitate grid baseload power. These submitters also expressed doubt that additional renewable electricity generation to support hydrogen demand would lead to lower electricity prices, due to the way the electricity wholesale market is structured. They also noted the risk of a demand response market for hydrogen producers being paid via higher wholesale electricity prices for consumers.
Meridian Energy disputed the claim that the Southern Green Hydrogen project may lead to increased electricity prices, because of the strong pipeline of renewables projects in Southland that have been historically underinvested in, and that the project may help to unlock. They also said it is incorrect to claim that export would more directly link New Zealand electricity prices to a global commodity market, because the long-term contractual arrangements such as offtake agreements and Power Purchase Agreements (PPAs) would mean international prices do not flow through to wholesale electricity prices. They pointed to evidence from the Boston Consulting Group, MBIE and the Electricity Authority indicating a healthy pipeline of affordable renewable electricity development opportunities. They also highlighted historical increases in electricity and renewable generation capacity, citing an increase of 20,000 GWh of new electricity generation since 1996, and the increase over the last decade in the share of renewable electricity generation from 65% to 85%.
Some environmental groups plus an industry body and academic submitter noted that New Zealand is depending on ample supply of renewable electricity at low prices but build-out of renewable generation requires rising power prices. These submitters considered it was unclear how prices would fall sufficiently to achieve prices of $2 per kg of hydrogen, particularly if electricity has higher returns elsewhere. Ballance Agri-Nutrients considered electricity price relief would be needed to support early adoption.
Some electricity generators, suppliers and producers advocated the demand response benefits of large-scale hydrogen projects and view flexibility as one of the key benefits of their projects. They noted demand response would need to be adequately compensated to allow for loss of production. The group submission from J Haas et al. noted hydrogen’s benefits from capturing energy spillage and noted that projected hydrogen integration in South America has been shown to lower the average cost of electricity by enabling greater use of flexible generation.
Exporting hydrogen
A diverse group of 22 submitters commented directly on hydrogen export considerations. Their positions were mixed. Export was mostly favoured by commercial submitters as well as regional entities. Export was seen by these submitters to bring direct economic benefits as well as provide the scale necessary for wider hydrogen. Some submitters including Meridian, Bluefloat, Parkwind and BECA also claimed export could provide demand response and seasonal balancing. As above, Meridian disputed claims that export would impact electricity prices either through requiring increasingly marginal electricity projects or through linkages to international markets. J Haas et al. noted that the largest export scenarios discussed in the Interim Roadmap equate to around 0.1-0.2% of the projected global hydrogen demand by 2050, and given this small proportion, export could be flexible to seasonality.
Submitters across several different categories (Academia, Transport, Industrial suppliers/producers for example) supported a domestic focus in the near term until it is clearer that we will have sufficient renewable electricity, or with export growing in line with grid constraints. NZ Steel considered it too early to tell whether exporting hydrogen would support or detract from our domestic hydrogen and electricity markets.
Export was most likely to be opposed by individual submitters and environmental groups. These submitters expressed concern over energy security, environmental impacts, possible impacts on electrification if electricity capacity is diverted and possible impacts on electricity prices.
Some industry bodies and energy providers expressed doubt that New Zealand will be commercially competitive in the global market for green hydrogen, given our geographic distance from markets and higher renewable electricity costs. Bluefloat and Meridian Energy considered that New Zealand does not need to be the lowest cost producer to have a role in a diversified market, while J Haas el al. noted that while New Zealand does not have periods near-zero marginal electricity cost like Australia and Chile, we do have very cheap electricity prices at night, no significant space constraints for deploying renewable generation and an already highly renewable electricity sector.
The role of government
26 submitters made general comments on the role of government in addressing the issues to hydrogen uptake in New Zealand. Views varied across submissions, largely depending on the level of support for hydrogen in general.
Submitters with commercial or regional interests in hydrogen, such as Murihiku Regeneration, Parkwind, Hyundai, West Coast Regional Council and Ballance Agri-Nutrients, generally supported ambitious and decisive action from Government, including fiscal support, concrete targets, supporting early demonstration and use, procurement tools, diplomatic relationships, reducing investment uncertainty and facilitating connections across the value chain. These submitters noted the competitive global landscape for hydrogen projects, e.g. the financial incentives for hydrogen production introduced by the Inflation Reduction Act in the United States of America.
Several submitters (both with and without particular commercial interests in hydrogen) supported a technology-neutral approach focused on addressing legislative, regulatory, information and other system-level barriers to private investment, so that markets can allocate to the least-cost emissions reduction technology. These submitters often supported government intervention only where there are identified market failures.
Submitters with concerns about hydrogen’s safety, energy efficiency, or environmental characteristics (mainly environmental groups and individual submitters) called for the Government to limit activity relating to hydrogen, either to sectors with no other option (i.e. industrial uses), to later in time when likely safety and emissions impacts are better understood, or indefinitely.
Modelling/scenarios
9 submitters commented directly on the hydrogen economic modelling and scenarios. These comments covered views on the accuracy, realism or completeness of the assumptions and scenarios presented in the Interim Roadmap. Some noted the complexity of estimating hydrogen production costs and the limitations of modelling cost estimates in an emerging and technologically evolving sector.
Some submitters considered that the assumptions and scenarios appeared reasonable, while others noted that scenarios ultimately rely on the underlying assumptions used, making it difficult to judge the scenarios in this context. Feedback included statements around:
- Whether the Interim Roadmap represented the full range of potential scenarios, noting some ‘relatively narrow’ differences between the five scenarios (J Haas et al.).
- The ‘base case’ being the most likely scenario, with the accelerated uptake scenario giving an upper bound (National Energy Research Institute).
- Suggestions that the modelling exercise would be improved by including consideration of external drivers of change such as the rate of technology change, policy adaptations and economics that will ultimately influence the uptake of each scenario. This included the effects of the potential exit of the New Zealand Aluminium Smelter on wholesale electricity prices (University of Auckland).
- Support for consideration of alternative scenarios, such as one that includes using hydrogen for value-added products like steel and chemicals, but without direct export of hydrogen and/or derivative carrier chemicals - noting that the value-add scenario modelled included both (Taranaki Offshore Partnership and Arup).
- Comparisons to similar exercises undertaken in other jurisdictions or other modelling undertaken in New Zealand. Two submitters noted that the estimated wholesale levelised production cost for green hydrogen was lower than other modelling undertaken in New Zealand and estimates carried out in Europe (Arup and Major Gas Users Group).
- A need to consider demand side implications of hydrogen uptake - namely the willingness to pay for green hydrogen across different use cases and sectors (Arup).
- The implications of the model results compared to other energy modelling products that are widely used or relied upon in the New Zealand energy system, namely the Electricity Demand and Generation Scenarios published by MBIE (Transpower).
Footnotes
[1] Energy spillage is when excess solar or wind energy, for example, is allowed to dissipate unused.