Green hydrogen is unlikely to play a major role in cutting New Zealand’s industrial emissions before 2050, with electrification expected to do most of the heavy lifting, according to new research from the University of Auckland.
Modelling led by Business School masters student Geordie Reid suggests green hydrogen could contribute to decarbonising high-temperature industrial process heat, but only under optimistic cost and technology assumptions.
“New Zealand has committed to net-zero greenhouse gas emissions by 2050,” Reid says. “One of the toughest elements of this commitment is decarbonising industrial process heat; the coal- and gas-fired heat used to produce things like milk powder, steel and cement.”
The modelling finds that under realistic assumptions around costs, infrastructure, policy and uptake, green hydrogen does not emerge as a cost-effective option compared with electrification.
“However, if technologies rapidly develop and become more cost-competitive relative to alternatives, such as electrification, our results show a shift towards green hydrogen for supplying high-temperature process heat,” Reid says.
Even in the most optimistic scenario, hydrogen would supply only about 12% of industrial process heat energy by 2050.
The researchers say hydrogen becomes more viable when carbon prices are higher, renewable electricity is cheaper and the cost of hydrogen technology declines. But in most cases, electrification remains the dominant pathway.
Business School research fellow Selena Sheng says hydrogen systems are inherently less efficient than direct electrification.
“Compared to direct electrification, hydrogen technologies exhibit lower overall efficiency due to energy losses occurring at multiple stages across production, storage, transport, and end use,” she says.
Sheng identifies three main ways to reduce green hydrogen costs: cheaper renewable electricity, lower-cost electrolysis technology, and greater economies of scale.
“Firstly, we’ve got to have cheaper renewables, possibly through increasing wind and solar power,” she says.
The second pathway is improving electrolysis, including scaling up manufacturing, boosting efficiency and reducing reliance on expensive materials.
“Third, we need to achieve greater economies of scale in production; larger projects will further reduce costs.”
Energy economist Professor Basil Sharp says the modelling clarifies the barriers to wider hydrogen adoption.
“Green hydrogen is like the new kid on the block in terms of technology, so the unit costs are high relative to other forms of hydrogen,” he says.
“Practically, what governments can do is remove the barriers to adoption. One of the barriers early on was the absence of industrial standards regarding the transportation of hydrogen. Providing appropriate industry standards creates room for growth.”
Senior economics lecturer Le Wen says New Zealand’s high share of renewable electricity gives it a comparative advantage in producing green hydrogen.
“Green hydrogen is ‘green’ because it’s produced using energy from renewables. New Zealand is well placed in terms of green hydrogen because more than 80 percent of our electricity is already renewable, but cutting national emissions also means tackling industry, which still relies heavily on coal and gas for process heat.”
Wen says scaling up production could also create export opportunities.
“It may not solve everything on its own, but it could give the country a strong new export opportunity.”
