03/12/2021

International movements in the clean energy space inform, drive and impact developments in Australia.  Despite a certain level of ‘reluctance’ in making decisive and meaningful change at a Federal level, international guidance, such as international hydrogen development principles, as well as global cooperation and agreement have put the spotlight squarely on Australian practices.  This year, international pressure on Australia culminated with COP26, the UN Climate Change Conference in Glasgow, at which we were left in no doubt that Australia has more to contribute.  From an economic perspective, Australian businesses (and governments) should expect intense international pressure to reverberate through supply chains, as demand for greener products grows. 

  • COP26: Just days before the commencement of COP26, Australia came to the table with a 2050 net zero target.  However, the long-awaited announcement was not enough to escape international criticism, with Australia failing to legislate its goal and placing heavy reliance on technologies which are yet to be developed.  The pressure to keep up with other key players in the clean energy transition saw Australia make a number of important pledges throughout the course of COP26, including:

  • International hydrogen development principles: The Marrakech Partnership for Global Climate Action (tasked with helping implement the Paris Agreement) has developed ‘Guiding Principles for Climate-Aligned Hydrogen Development’ (Principles), which set out 7 principles to ‘help inform the production and use of hydrogen in ways consistent with avoiding unintended consequences’ to the planet.  These principles range from where and how to focus hydrogen development, to the importance of scrutinising emissions from hydrogen production (with an emphasis on moving towards purely green hydrogen) and the requirement for a just and equitable hydrogen industry development.  Our assessment of these principles is that Australia is already well on the way to adopting a best-practice approach to hydrogen development when compared against the Principles, given that the focus is primarily on green hydrogen and its use in areas that are difficult to electrify.  Companies, government and communities now need to focus on getting projects up and running, as well as ensuring a just transition by considering, in particular, native title issues.
  • The Green Hydrogen Catapult, a business coalition of leading green hydrogen developers, announced that it was committing to 45 gigawatts of electrolysers for development by 2026, with commissioning in 2027.  The commitment will form a cornerstone of the COP26 Breakthrough Agenda on Green Hydrogen, which focuses on accelerating development and deployment of clean energy technologies such as green hydrogen.  It also represents a key step towards rapidly lowering the cost of hydrogen to US$2 per kilogram.
  • Supply chains: Companies should expect that pressure to reduce greenhouse gas emissions will build throughout supply chains—Europe, for instance, is looking at implementing a green hydrogen import percentage for industries utilising hydrogen, so that importers must ensure a certain amount of hydrogen is green.  Such measures will reverberate through supply chains, as export markets and the companies supplying those markets are forced to adapt.

Interested in more information on COP26? See Australia COPped it at COP26: Key outcomes and their significance for Australia.

More information on the Marrakech Partnership for Global Climate Action and ‘Guiding Principles for Climate-Aligned Hydrogen Development’.

Want more on supply chains? See Chain reactions – global demand for supply chain sustainability.

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