Sarawak’s H2 foray is real

An aerial view captured during a flight from Miri to Bario. Recently, a law was passed giving Sarawak more control over how much natural gas extracted from their land and sea is exported versus how much goes to downstream activities. — EDDIE CHUA/The Star

IF you didn’t know it already, one gold standard for renewable energy that the world wants today is green hydrogen. But it is far from being viable for now.

This is because you need vast amounts of green energy to extract hydrogen from water. If you use other forms of energy such as gas, you only get blue or other “coloured” hydrogen.

Today, China is the world’s biggest producer of hydrogen, which is being used to power its large heavy vehicles such as lorries and trucks as well as some of its industries.

However, most of that is not green hydrogen, but other forms which use energy sources such as oil and gas. The point is, hydrogen as a source of energy is being pursued in a big way.

Those still stuck in the view that hydrogen is still a risky source of energy — with memories of the fiery spectacle that destroyed the hydrogen-filled Hindenburg in 1937 — ought to come up to speed with the technological advancements in the industry today as well as the ongoing innovation taking place.

Sarawak has a huge source of green energy in the form of its hydro-powered plants and since 2018 has been into the production of green hydrogen.

There are those that think Sarawak’s green hydrogen play is more of a public relations stunt. The few hydrogen fuel cell-powered buses that ply Kuching and the Toyota Mirai cars being driven by their top state executives, coupled with the hydrogen dispensing station in the capital, do make it seem so.

It is not difficult to pull that off with the huge oil and gas royalties the state receives.

Sarawak’s green hydrogen venture is real and here’s why.

In 2018, the state was already piloting the production of green hydrogen. Sarawak has come a long way with a firm design plan in place to build a green hydrogen production hub in Bintulu with Japanese and Korean partners, which are also in urgent need of green hydrogen as they embrace it fully.

There are plans to produce 238,000 tonnes of green hydrogen per year at Sarawak’s hydrogen hub in Bintulu through the projects dubbed H2ornbill (with Japanese oil firm Eneos and trading house Sumitomo Corp) and H2biscus (with Samsung Engineering, Posco and Lotte Chemical).

Plans for the hydrogen plant have moved beyond the concept stage and are now at the front-end engineering design stage.

It is akin to the time when National Petroleum Limited (as Petroliam Nasional Berhad or Petronas was then known) first built a liquified natural gas facility in Bintulu some 40 years ago. Sceptics had questioned if that was a good investment and in fact, Petronas had struggled to find buyers for its LNG. Today, it is one of the world’s largest producers of LNG, having reaped millions of dollars in profits along the way.

Could Sarawak now become as successful in producing and selling green hydrogen? Indications are that it will. Why else would the Japanese and Korean giants venture with SEDC Energy Sdn Bhd to do just that?

The foreign parties have a vested interest: They want the green energy produced in Sarawak to be shipped to their shores to power their industries.

Challenges abound. Not only will there be the construction and financial risks of building up Sarawak’s hydrogen hub, there are also challenges in shipping. It is not cost effective to ship green hydrogen in its raw form. Various methods to ship green hydrogen are being developed in laboratories around the world, and it is only a matter of time before viable solutions emerge.

Sarawak has another strategy, which is to bring in industries which need green hydrogen. You have to give it to Sarawak’s leadership.

Recently, a law was passed giving them more control over how much natural gas extracted from their land and sea is exported versus how much goes to downstream activities.

More gas-fired power plants are also being built to serve old energy-intensive industries which signed long-term power purchase agreements with Sarawak Energy.

Instead of giving those industries pure green energy from the state’s hydro dams, the new power plants will meet their needs.

The hydropower will then be used to power other industries that are willing to pay more for green energy, such as the production of green hydrogen, which will one day command a high price.

With such clever plans, the next thing is execution. Again, this goes back to leadership.

The Sarawak leadership under Premier Tan Sri Abang Johari Tun Openg is impressive. All the signs show that the state means business.

Dealing and accessing the SEDC for example is straightforward. The capital city of Kuching still looks like Kuala Lumpur 30 years ago, but the buzz about doing business there is real, and this is why we should keep an eye on their hydrogen foray.

This article first appeared in Star Biz7 weekly edition.

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