Hydrogen is emerging as a critical part of the low-carbon transition for industries where electrification is not a straightforward solution.

This includes the production of steel, fertiliser and methanol as well as long-haul transport. In New Zealand, these industries account for about 17% of total emissions.

Hydrogen could replace these emissions but this would require annual production of 600,000 to one million tonnes. The cost of producing low-carbon hydrogen is a critical factor.

Currently, “green” hydrogen – made by splitting water with renewable electricity – costs more than NZ$12 per kilogram.

Long-haul transport companies have already invested in green hydrogen, but it remains too expensive for heavy industry or large-scale chemical production. For these industries, the tipping point for economic viability is closer to $4–5 per kilogram.

But New Zealand could be uniquely placed to explore a potentially cheaper option – “natural” or geological hydrogen which the Earth produces and, in some cases, traps in underground reservoirs.........

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