Green hydrogen deal demonstrates energy certificate potential
Earlier this year, BOC announced it would be the first company in New Zealand to produce ‘green hydrogen’. This represents a major development for companies wanting to achieve their sustainability goals but which rely on gas for industrial processing.
BOC produces hydrogen at its Glenbrook facility, using only electricity and water through a process called electrolysis. In a deal through the NZECS with South Island-based renewable generator Kea Energy, BOC will purchase generation certificates from Kea’s hydro facility and new solar installation in Wairau, the largest solar farm in New Zealand. By matching the certificates to its electricity use, BOC is achieving the lowest carbon emissions possible to generate hydrogen.
For BOC, this is hugely important for its own emissions reporting and international reputation. It can now describe the hydrogen it is producing from this plant as ‘green’. Kea, in turn, receives the benefit of an additional income stream beyond selling its energy via the wholesale market - a reward for generating emissions-free electricity. With this income it has more security for potential expansion in future.
Leading New Zealand businesses, including those in the Climate Leaders Coalition and Sustainable Business Council, are seeking multiple ways to reduce their carbon footprint, responding to demand from investors, regulators and consumers. They are also looking to act now, rather than wait for the government to provide solutions.
Transpower’s roadmap for New Zealand has identified electrification of light vehicles and light duty trucks, as well as low temperature process heat, as two of our biggest opportunities to reduce emissions in the next 10 years.
As electrification advances, total electricity demand will inevitably increase. The Climate Change Commission (Figure 7.10) forecasts that total generation will need to grow by more than 10 TWh by 2035, and Transpower predicts at least an additional 20 TWh will be needed by 2050. Without increasing renewable electricity generation, demand will fall heavily on the remaining geothermal and coal assets.
To keep future emissions from electricity generation low, we will need even more new wind and solar facilities in the coming years, and committing to new projects is always daunting at the leading edge of a transition. The NZECS supports generators to invest now for the coming demand. Income from certificates can make a new renewable project economic to build and run, or provide the capital boost that enables a generator to expand its existing operation.
Energy certificates can also form part of a businesses’ sustainability story by contributing to low carbon products or supporting corporate-wide decarbonisation.
In addition, renewable gas (primarily biomethane sourced from sustainably-sourced biomass and ‘green’ hydrogen) is gaining popularity around the world as a low-emissions alternative to natural gas and transport fuel. Companies like Firstgas, Hiringa Energy and BOC are already investigating how to bring green hydrogen onstream for consumers in New Zealand to help with the energy transition.
Renewable gases have the potential to help many large energy users to reduce their emissions, particularly where electrification is not currently an option. Certified Energy is currently exploring what a system would look like for certifying renewable gas.
We know businesses are enthusiastic about better understanding their emissions profile and taking real steps on the journey to be carbon neutral. Energy certificates are not a silver bullet by any means, but they can be an important piece of the overall solution to reduce New Zealand’s emissions.
Tim Middlehurst, Chief Executive, Certified Energy. Originally published in NZ Manufacturer June 2021.