Renewable Energy

Mr HUGHES (Giles) (15:21): Much of the discussion on the policy positions to do with renewable energy and its various forms has centred on straightforward electricity production for group distribution or rooftop generation for households and businesses with the surplus exported to the grid. More direct, renewable-based industrial and manufacturing opportunities have not received the same degree of public attention.

Given the Paris agreement and despite its weaknesses, and the election of Donald Trump, the world will increasingly move in the direction of decarbonisation. That trend, which I hope is inexorable, opens up a raft of opportunities for South Australia providing we commit to being a first mover or at least an early adopter. Concentrating solar thermal, photovoltaics, wind and other forms of renewables all have the potential to expand manufacturing opportunities in South Australia despite a number of transitional issues that need to be addressed.

Concentrating solar thermal and the high temperatures generated can be used in a range of thermochemical processes in addition to being a potential substitute for gas in a number of resource processing applications. Wind and especially photovoltaics continue to slide down the cost curve. Evidence of that rapid slide down the cost curve is the recent winning bid of approximately $20 a megawatt hour for a utility-scale PV plant in the Middle East.

The package of measures that enabled that bid are not standard elsewhere, but it is worth noting that the federally-funded SunShot program in the United States has an explicit goal of reaching $20 per megawatt hour in just over a decade. Two years ago, the goal was $50 a megawatt-hour, which is an indicator of just how quickly things are changing.

A number of papers produced by Ross Garnaut confidently put the proposition that South Australia will become a low-cost energy producer. It will become a low-cost energy producer as a direct result of its world-class solar and wind resource, and the overlapping of those resources allied with the ever reducing cost of the technologies to exploit those resources.

One of the questions will be how to turn that abundant renewable energy resource into a product that the decarbonising world will want. One approach is to use our renewable energy resources to produce renewable fuels for export and domestic use.

In 2014, Japan's Ministry of Economy, Trade and Industry published a strategic road map for hydrogen and fuel cells. Japan is looking at building on the research, development and commercialisation it has done over the years on using hydrogen for a range of emission-free applications. Those applications include mobile fuel cells, stationary fuel cells and utility-scale electricity production by using hydrogen as the fuel for gas turbines.

It is interesting to note that 20 per cent of Japan's energy comes from Australia, which represents 40 per cent of our energy exports. Transporting hydrogen presents some challenges, given the nature of the gas. It is very light so, in order to transport it in bulk, it needs to be either liquefied at minus 250º or compressed at very high pressures, which would be a costly process.

Hydrogen can be produced through renewable electricity-driven electrolysis. In order to address the difficulties encountered in transporting hydrogen, hydrogen can be converted to ammonia using the widely used Haber-Bosch process. Ammonia is a combination of air-derived nitrogen and hydrogen, with one nitrogen atom to three hydrogen atoms. Ammonia becomes the carrier of hydrogen and it can be transported readily using available vessels, pipes and loading infrastructure. The process of ammonia production can be readily reversed to liberate the hydrogen, which can then be used as a very clean fuel.

Export infrastructure for ammonia already exists in South Australia at Port Bonython, some 42 kilometres by road from Whyalla. According to the Melbourne Energy Institute, in a paper prepared by Tim Forcey, supplying 5 per cent of Japan's energy needs through the process outlined would lead to the creation of a clean multibillion dollar industry that would rival Australia's liquefied natural gas industry. It is clearly theoretically possible, but the question is whether it is technically possible at scale and would it ultimately commercially stack up as a cost-effective energy resource?