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Clean hydrogen is produced by either using renewable energy to produce green hydrogen, or by using fossil fuels with carbon capture and storage (CCS) to create blue hydrogen.

As part of determining the most cost-effective method of creating clean hydrogen, Coal Innovation NSW (CINSW) commissioned the Global CCS Institute to investigate the production costs of replacing 10 per cent of NSW’s natural gas supply with clean hydrogen.

The study considers a scenario where sufficient clean hydrogen is produced to achieve a 10% H2:90% CH4 (natural gas) mix by volume in the NSW gas network and supply the same total energy as is currently supplied by natural gas alone. Options considered were reformation of natural gas with carbon capture and storage (CCS), coal gasification with CCS, and electrolysis of water using renewable electricity. The study found that the best option for the production of clean hydrogen in NSW considering cost, scale, resource use, and emissions abatement outcomes is to utilise coal or gas with CCS.