2019 Annual Merit Review Proceedings

Plenary Address by Alan Finkel, Australia's Chief Scientist (Text Version)

This is the text version of the Plenary Address by Alan Finkel, Australia's Chief Scientist video from the industry/R&D plenary panel session at the 2019 Annual Merit Review.

Sunita Satyapal, DOE Fuel Cell Technologies Office Director:

Please join me in welcoming Australia's Chief Scientist, Dr. Alan Finkel.

Alan Finkel:

Sunita, thank you so much for your kind words, and thank you for the invitation, and to Michael for your introductory comments. And Daniel, listening to you, we share a couple of things in common. The rule of three. I can't deal with more than three things either. One, two, three—the fourth one just pushes the first one out. So one's got to be modest in one's aspirations. And also driving a hydrogen car. I've driven two, and it's really quite an exciting experience. And I've got my name on the waiting list to buy a hydrogen car.

But I wanted to start my remarks today by inviting you to join me on a trip to Australia. You drive to the airport, you get on a plane, and you fly 10,000 miles to Sydney. Then you swap planes and fly 2,000 miles west to get to Perth. You swap planes again, and fly another 1,000 miles north. Then you get hold of a four-wheel drive, and you follow the rail line into the desert for another five hours. And now you're standing in the Pilbara, in Western Australia.

And you'll notice that it's very, very hot. It's very, very dry. And it's very, very remote. But it is also the home to the world's largest robot. And that is the Rio Tinto mine of the future. That mine of the future is a sophisticated mega machine, taking a million tons of iron ore from pit to port every day. With 1,000 miles of rail, running fully autonomous trains. And autonomous dump trucks the size of two-story buildings.

That mega machine in the desert is one of the reasons why we export more iron ore than any other country, with more than double the exports of Brazil. Okay. If you drive back to the coast, then you get on a helicopter and just keep going, you'll find yourselves staring down at the Indian Ocean.

And what you'll see out the windows is 100 miles of choppy water, maybe the occasional great white shark, and then the largest offshore floating facility ever constructed: a 600,000-ton LNG production platform, manufactured in Korea, and operated by Shell Australia. We've been developing the gas fields off the northwest coast of Australia for the past 30 years. And last year, we took the crown as the world's leading exporter of LNG.

You have to ask, is it hard to run giant robots in the desert and floating gas platforms in the sea? Yes, it is.

And when you factor in that we're a high-wage economy, that we are a long way from a lot of the key markets, and that we are scrupulous on environmental protections and safety, then the economics only work if you can operate at scale. By scale, think big. Biggest-in-the-world scale. Biggest-ever-attempted scale. And that scaled-up thinking is what I want to focus on today, a sense of the incredible opportunity in reach.

So let's start with the big picture: zero-emissions energy everywhere, for everyone. How do we get there? The answer, in a word, is electrification. In a sentence, we replace the fossil fuels in electricity production with solar, wind, and hydroelectricity, and possibly nuclear electricity. Then we massively increase the production of clean electricity, and use it to replace the fossil fuels everywhere else.

That is, we build what I call the electric planet. Now, electricity is incredibly versatile, but as you in the audience here today know probably better than anyone, it's not enough. We need a way to ship the sunshine internationally. We need seasonal storage. We need fuel for heavy-duty transport. And so we need the carrier, hydrogen. Hydrogen for energy at scale.

What does that look like, come 2050? In 2017, McKinsey did a report for the Global Hydrogen Council. Which set out a vision of 80 exajoules—it's a big number—80 exajoules of hydrogen consumption per annum. So let's accept this figure, and, further, for the sake of the discussion, let's assume that the world exclusively uses solar photovoltaics, in good locations, to produce all of this hydrogen, and that the losses in production, compression, and distribution are about 50 percent in total.

By my calculations, acknowledging that the hydrogen replaces some of the electricity that would otherwise be used directly in the electric planet, we would need just over 10,000 gigawatts of additional solar capacity to produce the 80 exajoules. 10,000 gigawatts. So how many gigawatts of solar capacity have we installed around the world thus far? About 400 gigawatts.

Wind and solar, together, are just about 1,000 gigawatts. The most solar and wind capacity we've ever installed in a single year is 140 gigawatts. Now I want you to picture that (just for making hydrogen) 72 times. If we continue to imagine that all that future electricity to make hydrogen comes from solar, then in terms of land area, using current technology, that's a solar farm the size of Wyoming. It's a lot of effort, but a lot of value.

If that 80-exajoule vision is achieved, then we're looking at a $1.3 trillion market for global hydrogen sales in 2050, per annum. An industry of this magnitude provides an extraordinary multiplier on return for effort. For instance, you might be the engineer who scrapes away for a decade for what looks on paper like a tiny improvement. But in a mega-scale market, every increment counts.

So let's say that all that 2050 hydrogen comes from electrolysis. That $1.3 trillion per year market. In that case, a one-percent efficiency gain in electrolysis saves $13 billion a year. Or say that half the 2050 hydrogen is to be used in fuel cells. A one-percent efficiency gain in the fuel cells would correspond to $7 billion saved every year. So that means that the work done by the world's best technologists—and I'm looking at you right here in this room—that work will repay investors in spades.

And if you're excited by scale, Australia is excited by scale. Because if any country is blessed with buckets of sunshine and years of producer experience, trust me, it's Australia. On my calculations, if Australia were to export as much energy in the form of hydrogen as we currently export in the form of liquefied natural gas, then we would need, in Australia, 880 gigawatts of new-build solar, which would cover just over 4,000 square miles.

In Australia terms, that's just a bit over half of our largest cattle station. So yes, it is a big requirement. But we're used to thinking on that scale. And phased over 30 years, it's absolutely conceivable. To fulfill that potential, we need commitment. And that's why I'm here, as the head of the National Task Force commissioned by every government in Australia (state and federal) to develop our national hydrogen strategy.

Now, as it happens, we're currently in the midst of a national election. And it's the first time to my knowledge that either of our major parties has gone to an election talking about hydrogen. And this time, it's both. Our leaders are alive to the promise of this agenda. So, there's the case for the affirmative. The reasons for optimism. But what you really want to know is the case for the negative. What wakes me up at night?

I'd say that there are three things. The first is cost. Japan has named the target: price parity with the landed costs of liquefied natural gas. That's tough. That's really tough. But then again, that's exactly what I and others would have said 10 years ago, if you'd asked me if new-build solar could ever get to parity with coal. And in many places today, it's not at parity. It's already cheaper. To meet the Japanese landed cost target for hydrogen, the electricity to produce it will have to be comfortably below $10.00 per megawatt hour. Without subsidies. So yes, we have to keep that cost target for hydrogen firmly in mind. But, like it's done before, the market will find a way. And I can go back to sleep.

The second thing that wakes me up at night is safety. Hydrogen has to be safe. And it has be seen to be safe by consumers. And that comes down to good regulations. Good regulations—they're not a constraint. Good regulations are a CEO's best friend. If you've got clarity, and the community has comfort, then investors will have confidence. Both the United States and Australia have outstanding safety records when it comes to handling natural gas. The risks associated with hydrogen are different, but they're not greater. And they can be managed. So I can go back to sleep.

That brings me to the third thing that wakes me up at night. I'll be honest, I close my eyes, and I see the valley of death. The Silicon Valley “valley of death.” And on the far side of the valley, I see the hydrogen economy in 2050. Freeways aligned with refueling stations. Half a billion hydrogen cars, trucks, and buses. Thousands of square miles of solar PV. A million forklifts powered by Plug Power fuel cell systems. Hundreds of hydrogen carrier ships crisscrossing the globe. It's glorious.

And then I look at the terrain right in front of me. And somehow, you and I and all the pioneers who can see that brilliant future so clearly, we've got to rally our people to hitch up their wagons, and trudge down that slope, and through the canyon, and up the other side. Whichever way I look at it, it's daunting. So. Can I go back to sleep? I'm still deciding. But there are two thoughts that I invite you to consider.

The first is that the valley of death isn't a gap to be jumped in a single flying leap. It's a journey to navigate on multiple paths. That means being prepared to build out gradually, learning and recalibrating along the way. For example, cracking the tough nut of moving hydrogen around the world. Yes, we could build pipelines. But we can't easily build a pipeline 4,000 miles long under the ocean from Darwin in Australia to Tokyo in Japan. We need ships.

Now, I would be delighted if a big investor would wake up tomorrow morning and decide to drop $10 billion on a hydrogen port and a liquefication facility in Australia. And perhaps throw in another $50 billion for 200 liquid hydrogen tankers to improve on the current global total of about zero. Not going to happen. But what we can do today is make and ship ammonia.

So we can start there, where regulators and investors have experience. And then gradually we can open up the pathways for global trade. We can take the same approach in the other big and interconnected systems that we need to develop. Be it systems and new technology for long-haul trucking, oor electricity generation, or hydrogen in the domestic gas mains. It's a global effort. It's still a race. It's a race against time. And it's a race against each other. But it's the sort of race that can generate the momentum to push everyone forward.

If we build on the emerging vision amongst experts in the United States, Europe, and Asia for a decarbonized energy supply, if we draw in private investment, if we collaborate as well as compete, if we develop the supply chains, and if governments make it a priority. So that's my first thought for this audience. The trudge through the valley—it might be grueling, but you're not alone, and there are many viable paths. And even your competitors are on your side.

And my second thought is to encourage you to reach out to Australia. What Australians see in America is a country that understands the challenges of scale. A country that's almost incapable of starting small without a plan to go big. So when you look at Australia, I want you to see your at-scale laboratory. We've got lots of space, lots of energy, and lots of expertise. Talk to us early, at the demonstration phase. We'll take the call.

I also want you to look at Australia and see a nation of early adopters. In no other country will you find a higher percentage of homes with rooftop solar. So choose Australia for your pilot program. Or look for—or look for opportunities to sell and support your products. And indulge me on just one more imaginary trip. Now it's 2050. You're flying over the heartland of Australia. Who knows what sort of aircraft, but whatever it is, it's impressive. And you look out over that great sunburned country, and spread out before you is the world's largest hydrogen farm. Australian sunshine, global technology. And I hope that you're seeing it with me, the realization of your ideas at scale.

That's where we're headed. So reach out to us to find your path. And, as chief scientists are allowed to say at the end of every speech, may the force be with you [laughter].