Two new reports from the Australian Renewable Energy Agency and a group led by chief scientist Alan Finkel have highlighted the enormous opportunities for Australia in pursuing “green” hydrogen exports, based around the country’s enormous potential for wind and solar power.

The reports include the possibility that coal could deliver a similar outcome, but given the uncertainty and cost of carbon capture and storage, and the plunging cost profiles of both wind and solar, it seems inevitable that any hydrogen export industry will be based around renewables.

Several small-scale hydrogen facilities have been commission in Australia – in South Australia and the ACT – but these are mostly focused on transport solutions or smaller scale electricity storage.

Both the ARENA and the Finkel reports are focusing on much bigger ideas, the potential replacement of Australia’s massive LNG export business, for instance, by “green gas”, satisfying the emerging huge demand in east Asia in particular for emissions free fuels.

The ARENA report, prepared by consultants ACIL Allen – the same outfit that had to do the NEG modelling based on the sorry inputs of the Energy Security Board – highlights that this is a long term play, but with enormous potential.

According to the various scenarios, the hydrogen export market could grow from a low growth scenario of 26,000 tonnes in 2025 to 621,000 tonnes by 2040, to a high growth scenario of 3.2 million tonnes by 2040. The bulk of this would go to Japan, with Korea and China following.

The report from the Hydrogen Strategy Group, chaired by Finkel, also identifies Japan as the key market, given its big switch away from nuclear post Fukushima, and the lack of renewable options at home.

“I ask myself “why now?” given that the idea of a hydrogen economy has been seriously and frequently proposed since 1972,” Finkel writes in a letter to CoAG. “The answer is Japan’s commitment to be a large-scale enduring customer, and the hundredfold reduction in the price of solar electricity in the past four decades.” As we reported earlier this week, Finkel gave a 10 minute presentation to CoAG last Friday that was well received and ask to return in December with a detailed plan of action. His plan includes a bigger focus on domestic hydrogen opportunities, for generation, storage and transport. The implications for Australian generation are enormous. In the ARENA report, even in a medium scenario, they amount of new generation needed by 2030 would be 31,000GWh – almost equivalent to the current renewable energy target.

The amount of new generation for the high scenario is double that – 68THW (68,000GWh) by 2030 and by 2040 is 200TWh (200,00GWh) – equivalent to the annual output of the entire National Electricity Market.