Star Scientific Global group Chairman Andrew Horvath recently spoke at the Australian Hydrogen Conference 2021. Please see below the speech transcript.
Good afternoon, delegates.
In the short time available to me this afternoon I am going to restrain myself from a detailed description of Star Scientific’s core technology, the award-winning Hydrogen Energy Release Optimiser, or HERO®. There is plenty of detail including videos on our website and YouTube channel, but in a nutshell HERO® is a catalyst that, when hydrogen and oxygen are introduced to it, generates heat to the temperatures of 700-800 degrees Celsius in about 3 minutes. The only other output is pure water. HERO® is a “true catalyst” which means that it’s not “used up” in the process and quickly reverts to its inert state when the gasses are removed. There is therefore no combustion and thus no carbon or other exhaust gases.
HERO® is rapidly moving from laboratory prototypes to purpose-built pilot systems on its way to full commercialisation. A most important milestone was recently reached when we commissioned a prototype heat exchanger which is currently making combustion-free industrial steam at our facility at Berkeley Vale on the NSW Central Coast.
When I last spoke to this conference, two years ago, Star Scientific was focussed on the retrofitting of fossil-fuel powered infrastructure, and in particular coal-fired power stations, to run on hydrogen via a HERO® system. And why wouldn’t we? It has been estimated that there is up to US $4 trillion in potentially stranded assets globally.
We continue to pursue this path, however in the last two years it has become abundantly clear to us that the early adopter of industrial hydrogen will be those companies searching for a carbon-free alternative for industrial heat. And in the time remaining I would like to address four “megatrends”, two are positive, and two potentially negative, but all playing an influential role in the deployment of carbon-free heat in the industrial supply-chain.
Recently, on ABC’s A.M. news program, West Australian farmer, Simon Wallwork, explained why he was driving towards carbon neutrality for his barley farm. He explained that his customers, the world’s major brewers, were rapidly moving towards carbon neutrality and were demanding it of their own customers.
They key fact is that regardless of whether or not Australia has an official “carbon tax”, carbon is going to be priced into global trade. What our government does, in that sense, really doesn’t matter – carbon is being “priced in” on a supplier to customer basis. There is a major rush, if not mounting panic from the food sector to find an alternative to coal or gas for cooking, cleaning, drying and pasteurisation processes.
We were not even looking at the food sector when we took our first call before Christmas last year. That trickle has become a flood, and we have been fielding calls from diary cooperatives in New Zealand, tomato canners in California and vignerons in France. Fortuitously, our facility on the Central Coast happens to be right in the middle of a food processing hub for many household brands. We have spoken to them and we believe, in the great tradition of “thinking globally, acting locally”, our first industrial pilot project will be in a local food business.
I can assure you, however, that food is not the only sector looking for green industrial heat.
The second megatrend fuelling the advance of green hydrogen, as a source of industrial heat, is global finance. It has been well documented that there is a global retreat from financing fossil-fuel assets. This may be in response to shareholder and employee activism or simply because analysts have finally realised that digging things up and burning them is an expensive and risky way to deliver energy and heat. They know there are better technologies coming and those technologies have the added advantage of being carbon-free and therefore politically safer.
So, the global flight of capital from fossil-fuels is on, but money never sleeps, and those funds need an alternative energy investment. That’s where hydrogen comes in. It has dawned on the financial markets that there is only one chance of salvaging some of the fossil-fuelled infrastructure from the scrapheap, and that is with hydrogen. Further, financial markets are realising there is only one battery that can keep the turbines turning and the cookers burning 24/7 – and that “battery” is hydrogen.
So, believe me, whether it be the traditional financial instruments of debt, equity, venture capital or some of the newer sources such as green bonds, carbon credits, or the latest craze for SPACs, there is no shortage of private investment for proven hydrogen assets.
I would now like to turn to what I see as a negative megatrend that could hold back the deployment of hydrogen for carbon-free heat. The first is the “small thinking trap”.
We would be all familiar with those who revel in pointing out all the supply-side challenges for hydrogen. They are only too happy to point out perceived difficulties, whether technical or in the form of price, and therefore like to point to long horizons for the hydrogen revolution. Typically, they come from the fossil-fuel sector and their advisers, often from those companies that profess to be “champions” of hydrogen.
As I have said before, this is a trap. It risks creating a self-fulfilling prophecy where policy makers and stakeholders find themselves being too cautious in their ambitions for the roll-out of hydrogen.
I can tell you that Star Scientific has a far more bullish outlook for the rapid and comprehensive development of the hydrogen economy. Whether it be the mounting urgency of the industrial sector I discussed earlier, or the developing world, such as the Philippines, who are determined to drive green industrial growth via hydrogen, the hydrogen revolution will not be held back by the slow-riding tactics of some of the champions of fossil-fuel.
In terms of the supply-side issues, I can tell you that at Star Scientific we have scoured the world of inventors, entrepreneurs and innovators who are throwing themselves at these challenges. Typically, they are passionate, far-sighted people who have been overlooked by the “big boys and girls” of multi-national mega-companies or investment banks. In some cases, they simply do not know how to deal with the business world.
This is why we have structured our finance arm, Planet Power Finance, to seek out, develop and invest in them as future partners in the hydrogen delivery supply chain.
The other megatrend could go either way. It could be a positive or negative in the roll-out of hydrogen for industrial heat. This area is the dry world of regulation.
In Australia we need to double, even triple our efforts in developing a nationally binding system of regulation, definition, certification, and skills for the deployment of the hydrogen economy. Nothing could bring investment into the hydrogen revolution to a grinding halt faster than this area.
Politicians would find it quite ironic for a business to be calling for more regulation, but as we have been finding at Star Scientific, where we are at the cutting edge of the use case for hydrogen, we are quite often finding a blank page when we go looking for applicable rules.
Although not particularly exciting, the development of a sensible, universal regulatory regime is critical – critical not just for investment certainty but also for public confidence, for the oft-discussed “social licence”.
So, delegates, we are facing an exciting time for hydrogen – driven by the urgent search by industry for “green” heat. We need to embrace this demand driver with a positive and determined outlook and to be wary of those nay-sayers who have a vested interest in slowing us down.