By Sonali Paul
MELBOURNE (Reuters) - The production of green hydrogen and green ammonia is technically feasible at scale in Australia, but will require a major investment in port, electricity and water services, BP (LON:BP) said on Wednesday, based on the findings of a study.
The study, supported by the Australian Renewable Energy Agency (ARENA), looked at building a demonstration plant and a 1 million tonnes a year facility, with an electrolyser powered by renewable energy to split water to produce hydrogen, which would be used to make green ammonia.
Australia, the world's top coal exporter and the second largest exporter of liquefied natural gas, wants to develop green hydrogen to replace fossil fuels in a global push to cut carbon emissions.
BP, which plans to spend $5 billion a year on low-carbon investments, found the mid-west region of Western Australia was a particularly promising location for large-scale green hydrogen production, as it has vast land access and abundant wind and sunshine.
"Importantly, our study also confirmed strong demand from potential customers in the hard-to-abate sectors, and for both local and export markets," BP Australia President Frédéric Baudry said in a statement.
"This has the potential to position Australia as a regional powerhouse of the energy transition," Baudry said.
Hard-to-abate sectors include steel making and long-haul transport.
The study, done by engineering firm GHD, found developing a hydrogen industry would depend on government support, including building transmission lines, expanding ports, providing incentives and setting emissions targets.
"The absence of a carbon price or emissions cap is a key barrier to attracting investment in renewable technologies such as hydrogen," GHD said.
The Australian government has refused to set a price on carbon or commit to net zero emissions by 2050.
GHD gave no cost estimates for a commercial scale plant.
BP said it would work with others to develop plans for green hydrogen projects in Western Australia.
Separately, Australia's Origin Energy and Japan's Mitsui OSK Lines said they would jointly study how Australian green ammonia projects could supply markets from 2026.
($1 = 1.3628 Australian dollars)