Our Views on the State of the Hydrogen Economy

In this newsletter, we’d like to comment on some of the negative press around green hydrogen.

It is fair to say that the “hype” around hydrogen of recent years is receding, particularly here in Australia but in other countries as well. Our view, in a nutshell, is that hydrogen’s current “bad press” was entirely predictable, and from our perspective, it is not a bad thing that reality is setting in.

Put simply, the orthodox thinking about hydrogen and its role in the energy transition has always been wrong, and Star Scientific Limited has pointed this out continually.

The problem has been that governments and big corporations’ motivations for hydrogen were out of sync with the economic reality of its deployment. Governments wanted to hit their political net-zero targets and gave hydrogen too much to do, too soon.

Assertions that hydrogen was just another fuel that would be produced in mass quantities and exported across the globe, just like oil or gas, were always wrong. Even with subsidies, green hydrogen is still relatively expensive to produce. Add to that the cost of mass storage, mass refinement to and from ammonia and long transportation distances and very quickly the economics just do not add up.

And then, to make the job for hydrogen harder, the orthodox view of how to liberate hydrogen’s stored energy is to burn it. As followers of HERO®’s alternative would know, burning hydrogen is wasteful and inefficient.

Enter Star Scientific Limited.

The first orthodox thinking we have challenged is that the main motivators for the green hydrogen economy is decarbonisation and climate change.

While, yes, that is important, the world just wants a better form of energy – energy that is cheaper, cleaner, and accessible to all, not the least being the one billion people in the world today that have no access to electricity.

The energy supply chain of the very near future will not be monolithic, capital-intensive, high barrier-to-entry systems that are dominated by a monopoly of a few global conglomerations. The energy delivery systems of the near future will be light, scalable, quickly deployable, local, printable, recyclable, and off-grid. That goes for the generation of green hydrogen too. The idea that we will be locked into massive solar and windfarms and their transmission systems to make hydrogen and transport is laughable.

Human ingenuity will see us get around the technical challenges to green hydrogen’s role in the energy transition. Star Scientific Limited and HERO® have already found a better way to use green hydrogen. The same technical breakthroughs will happen around its production.

Around the world, the penny is slowly dropping with governments. Of all the volumes of national hydrogen strategies we have been studying lately, most of which repeat the familiar orthodoxies, there are a few that are grasping the reality of green hydrogen, and from unexpected places.

One of the best we have seen recently comes from the Czech Republic. They have a considered, staged plan for a hydrogen economy that starts from the ground-up, rather than top-down from the Government. Their first stage will see green hydrogen produced and consumed locally, in small but profitable quantities, with supply and demand in balance.

The better government strategies we have seen, such as the Czech one, are open to adaption as innovative technologies disrupt the supply chain, technologies like HERO®.

Star Scientific Limited remains adamant, however, that the best thing that governments can do is to provide a supportive regulatory environment to support the development of the hydrogen economy. Sadly, there remains much to do, particularly here in Australia.

For example, in Star Scientific Limited’s home state of New South Wales, hydrogen still has no legislative basis as a gas. We first raised this with the Government in 2022. Now, in early 2025, we have been told by the Government that the earliest this will occur is August. We remain in close discussions with the Government.

Another example is the Future Made in Australia Bill recently passed by the Australian Parliament. While the bill includes billions of dollars in subsidies to make green hydrogen, the catch is that the minimum sized electrolyser that can be used is 10MW. Star Scientific Limited and others directly lobbied the government to remove any electrolyser size restriction to encourage local, grassroots production for industrial use and refuelling stations. The bill passed the Parliament unchanged.

These frustrations aside, we are more confident than ever that the times suit Star Scientific Limited and HERO®.

In the last year, our Deputy CEO and Head of Business Development has travelled extensively to hear the views of and hold discussions with literally hundreds of government officials, suppliers and off-takers. This is a critical form of risk management – we want to make sure that investors’ funds are deployed in jurisdictions that understand Star’s vision and are open to our presence. We don’t want to find ourselves blocked by inflexible thinking or competition from legacy technologies.

We will continue to robustly prosecute our views, on any legitimate platform, on behalf of our investors, supporters in public and private spheres, our staff and the dozens of companies and communities we have spoken to who want to be our first customers.

As a postscript, we note that we’re not the only voice bullish about hydrogen. Recently, Blackrock launched a new fund targeting hydrogen technology and they rarely, if ever, get it wrong.

On the shop floor

Star Scientific Limited has been using the holiday period to make serious advances on the technical side of our operations. For some time, we’ve been grappling with a solution to coat our substrates with the catalyst that is both adaptable for mass production and is compatible with our ESG rating. The previous method was slow, and complex and used toxic chemicals which were necessarily difficult to handle.

We’ve now adopted a simple but brilliant technique that is well within the bounds of ESG targets. Our early trials for this process have been very promising.

This technique and others have been brought to us by some experienced new hires who have the ability to look at things laterally. The same is happening to our R&D of HERO®. We have had some very exciting advice that the capacity to generate greenhouse gas-free heat is only one of HERO®’s applications. Many, many other current catalytic processes can be adopted, and improved, by our catalytic design.

For now, the priority is to get the pilots out to industries and operating (when the legislation allows us, as noted above) but we will be spending some time looking at these new potential applications.