EXPORTING GREEN HYDROGEN FROM AUSTRALIA

Where’s the opportunity?

Green hydrogen is hydrogen generated by renewable energy or from low-carbon power. The production of this clean energy emits significantly lower carbon emissions than grey hydrogen. Australia is competitively placed to be a major global producer and exporter of green hydrogen, thanks to its abundant renewable resources and established ports for existing fossil fuel exports.
Governmental support is also dedicated to make Australia a major supplier of green hydrogen globally. Australian government has already announced $500 million in funding to support hydrogen projects. In 2020, the federal government fast tracked approval for the world’s largest planned renewable energy export facility in the Pilbara region. Global hydrogen demand is predicted to continue growing, and by 2050, demand could vary from 150 to 500 million metric tonnes per year, depending on global climate ambitions and sectoral developments.

Our Export Tips

Product

The majority of hydrogen produced worldwide is inexpensive grey hydrogen made from natural gas. However, as a clean energy alternative, green hydrogen is gaining traction for being a better long-term solution to help decarbonize economies. Applications of hydrogen as an energy source include transport, manufacturing or electricity production. Australian green hydrogen producers have an edge over foreign competitors for two main reasons: (1) possessing abundant natural resources to produce green hydrogen; (2) having a well-established connection with Asia’s major energy importers.

Price

Globally, although the cost of production of green hydrogen is expected to continue falling, it is still more expensive than conventional grey hydrogen: AU$4-12/kg for green hydrogen compared to AU$1.5~3/kg for grey hydrogen. Australian green hydrogen, costing between AU$4-7/kg, is at the low end of global ranges thanks to its abundant low-cost renewable resources. On the long run, competitive pricing could be a key advantage of Australian green hydrogen. Australian National University predict that, as cost of production falls, Australian green hydrogen could equal the price of conventional and grey hydrogen by 2030, which would be cost-competitive with both fossil fuels.

Promotion

Sustainability, flexibility and multi-usage capability are major values to communicate when promoting green hydrogen.

1. Sustainability: Highlight green hydrogen’s sustainable production process of using renewable energy and sustainably sourced water, which in turn helps decarbonise future energy production.

2. Flexibility: As a flexible energy source, green hydrogen can be used immediately or be stored and transported for later use.

3. Multi-usage capability: Green hydrogen can (1) support domestic energy needs; (2) be used as a clean transport fuel; (3) provide electricity to the grid, and (4) offset the carbon from manufacturing processes in factories.

Industry events and conferences are also effective promotion channels: The Australian Trade and Investment Commission (Austrade) has led a delegation of over 25 Australian businesses to the World Hydrogen Summit in Rotterdam in May 2022 to showcase innovation in green hydrogen, providing a great opportunity to promote your products to foreign energy importers.

Place

Demand for Australian green hydrogen exports is expected to come from various countries currently importing Australian fossil fuel. In 2019, Australia exported almost AU$64 billion of black coal, mostly to Japan, South Korea, India and China. As these countries decarbonise, the coal industry will shrink, shaping green hydrogen as a high-potential replacement. Europe is also a key export destination. As the energy crisis stemming from the Russia-Ukraine war unfolds, Europe is aiming to cut its reliance on fossil fuels and embrace clean energy imports. The Port of Rotterdam (Netherlands) is seeking millions of tonnes of hydrogen imports in one of the world’s biggest projects to import and generate clean and transportable fuel. Among more than a dozen supplier countries, Australian green hydrogen is believed to have the most competitive price thanks to the cost profile of its renewable energy sources.

Our Strategic Takeaways

Australia is well placed to become a major producer and exporter of green hydrogen. The rich renewable resources and governmental green initiatives produce a conducive environment for Australia to supply competitively priced green hydrogen to various countries seeking alternative clean energy sources. To communicate the value of green hydrogen, consider highlighting its major benefits of sustainability, flexibility and multi-usage capability.

Exporting Tea to Australia 

Where’s the opportunity? 

Australia’s tea market is valued at $1.2 billion with an annual compound growth rate of 3.5 percent. There are many opportunities for overseas businesses as the majority of tea in Australia are imported, and domestic tea production remains relatively small. The tea market has evolved away from the conventional tea such as black tea to more unique speciality blends. Traditionally, exporters wishing to enter the market would need to match the large production scales and range of existing players to remain competitive. However changing consumer demand presents opportunities for businesses operating within niche and premium product segments. The growth in this segment has reduced barriers of entry, allowing small manufacturers to break into the market without the need for considerable capital investment. On the other hand, some challenges for exporters in the current industry climate include supply chain disruptions spurred on by the COVID-19 pandemic. With an appropriate cost benefit analysis, we think there are some promising opportunities for some exporters thinking of entering the Australian market.

Product

Our analysis shows favourable growth prospects in niche product segments. Black tea consumption has fallen over the last 12 months while speciality tea sales grew by 4 percent. Among these, green tea, fruit tea and herbal tea are emerging as popular choices. Health and wellness herbal teas are currently experiencing the highest growth rates among various categories of tea. Young tea drinkers are becoming increasingly interested in low caffeine products – often opting for fruit or herbal teas. While niche players are not expected to offer the same extensive product range as large competitors, having at least 4-5 products in its range can help brands a strong presence in the market. Brands should also think about how they can be more environmentally friendly through using biodegradable and recyclable materials in their packaging.  

Price

Premium tea price range varies in the Australian market. Planting Organics (Chillax tea) offers loose tea at $2.92 for 10g. The Rabbit Hole (Sweet Dreams) has price point of $8.32 at 10g for its unique blend of local Australian ingredients. Popular Australian brand, T2 offers $3.4 for 10g for its loose leaf (Sleep Tight) product.

Promotion

Tea drinkers are becoming interested in high quality products with a great story.  Niche brands can focus on their origin story behind the scenes of harvesting and processing its tea, as well as the people behind the business. This can help drive the premium value of the brand as well as establish a greater proximity of the brand with its customers. Businesses should also focus on market education particularly on its exotic and unique blends of tea products.

Place

Traditional retailers for tea in Australia include the supermarket chains such as Coles, Woolworths, and ALDI. These suppliers can be especially difficult to break into for new brands. Exporters of niche brands should consider speciality tea retailers or cafes and other beverage stores.

Our Strategic Takeaways

We see some promising signs for exporters entering the Australian market. The tea industry in Australia is in a transitionary period as we start seeing an increasing number of niche brands emerging in the market. Sustainability and wellness will be key value propositions for exporters to attract local consumers. Exotic blends of tea with unique stories will also be a key factor for players to differentiate themselves in the market.

The Australian dollar has been volatile in recent years, particularly since the onset of the COVID-19 pandemic. It’s important for exporting and importing businesses to consider how they can protect their margins against foreign exchange risk.

The Australia-India Economic Cooperation and Trade Agreement (AIECTA) signed on 2 April signals a new phase of economic cooperation between Australia and India. The interim deal also indicates a possible step towards a full Free Trade Agreement.

What does this mean for you? 

The benefits of this trade agreement extend across multiple sectors and industries. If you are a business exporting from India, you will be granted tariff free access to over 95 percent commodities in the Australian market. Export of several labour-intensive sectors including textiles and apparel, agricultural and fish, leather, footwear, jewellery, and selected pharmaceuticals will benefit from duty-free access to Australia. Meanwhile, Australian businesses will be able to benefit from diversified global supply chains and preferential access to a market of nearly one and a half billion customers.  This includes reduced and/or elimination of tariffs for products including wine, barley, wool, coal and an extensive range of other products and services.

Such deals represent a golden opportunity for business looking to upscale or expand their international trade portfolio. It will allow businesses to tap into new industries where previously not economically viable due to high tariffs. Australia has a reputation for producing highest quality products, seeing boosts in the manufacturing sector. Over the next 20 years, the fast-developing Indian economy will see high demand for many of Australia’s goods and services including agriculture, critical minerals, education and skills training, and healthcare. Likewise, the deal is a welcoming sign for Indian businesses looking to enter Australia, particularly amongst growing calls by the Australian Government for the need to diversify its trading partners.

Australian businesses will continue to have close ties with India. If you have any queries about how the AIECTA will impact your business, or if you’re interested to know how you can tap into its opportunities, contact our consultants at Smart Mango today.

Phone  +61 2 7903 0543

Email contact@smartmango.com.au

Exporting Wool from Australia 

Where’s the opportunity?

Australia is the largest exporter and producer of wool in the world, with industry exports valued at approximately $3.5 billion. Wool production is forecast to increase by 4.4% during 2022-23. Above average rainfall over the past year have bolstered pasture quality and resulted in an increase in national sheep heard quantities. Demand for wool apparel products such a sweaters suits and coats are also on the rise particularly in markets located in China, US and the EU.

Product

Australian wool is known for its innovation and high quality with world-leading systems in clip preparation and sustainable farming practises. The Australian made label has high social value in global export markets. Australian producers of wool and wool products often compete with other brands that use relatively cheap synthetic fibre and other wood substitutes materials. The top industries to enter are textiles (including woven apparel and knitwear) followed by premium bedding, upholstery, and carpet. There is an increasing demand for fine and superfine wool used in tailored and high-end fashion. On the other hand, demand for micron wool used in blended polyester wool fabrics, coast and outwear is expected to fall.

Price

The domestic price of wool is forecasted to increase by 16.5% during 2021-22, to reach $13.904 /kg due to global economic recovery. While this is the case, prices will be expected to decline by 2.9% next year brought on by the increase production of wool.

Promotion

Australia’s premium wool quality is what differentiates itself from other synthetic wool brands overseas. Highlight any quality and functional properties of Australian wool in promotion initiatives. Third party resellers like AuMake are lucrative channels for brands targeting the Chinese market. Brands may also consider selling at local souvenir shops to target overseas tourists.

Place

Demand for Australian wool in Europe is expected to be especially strong. China remains the top importer of Australian wool. Traditionally, Chinese demand has been largely determined by United States and European Union demand for garments and other wool products. This drove increased demand for wool over much of the past five years, due to strong demand from the United States and the European Union for Chinese manufactured wool products.

Our Strategic Takeaways

There will always be keen buyers of Australian wool, particularly because of its unique aesthetic characteristics and functional properties. The main challenge for the industry is competing with cheaper synthetic wool brands which threaten the share of Australian wool as an input in clothes manufacturing. Overall, we see it as a moderately attractive industry to enter both for producers of wool and wool products

While construction companies are building the future, they have the responsibility to remember the past

Developing Reconciliation Action Plans is a journey to building collaborative partnerships with Indigenous Australians and ensuring your business operates in sustainable and ethical ways.

What is a RAP?

A Reconciliation Action Plan (RAP) provides a useful framework for organisations to think about and commit to diversity, inclusivity and take strategic actions towards national reconciliation. They are designed specifically for workplaces and involve a formal process of accreditation. RAP is based on core values of relationships, respect, and opportunities – providing substantive benefits for Aboriginal and Torres Strait Islander Peoples, increasing economic equity and supporting First Nations self-determination.


Why should my construction business have a reconciliation action plan?

Being able to sustain a successful organisation in the long term isn’t just about operational efficiency. Organisations should recognise the interests and concerns of its publics and make an effort towards engaging with them. This is what we call a two-way model of communication. Construction companies builds roads, rail networks, hospitals, schools, residential housing across Australia, and it is important to recognise that they do this on land that has been in the custodianship of Aboriginal and Torres Strait Islander Peoples for more than 60,000 years. Part of building a two-way communication with publics is investing in actions towards reconciliation. Implementing a RAP can help construction companies develop mutually beneficial relationships with Aboriginal and Torres Strait Islander stakeholders and sustain long term operations. RAPs allow businesses to formalise their commitment to reconciliation and consolidate their good intentions into action. Once your organisation has official accreditation by Reconciliation Australia, you can share and promote your RAP externally. Construction companies like CPB Contractors and BuildCorp launched their RAP as part of their Corporate Social Initiatives for diversity and inclusion, and engagement with people and the community.


Developing a meaningful RAP

 Below are our tips on making the most of your RAP

1. Be realistic: Understand the costs of the targets you want to achieve and be realistic about the number of targets you set. The proportion of Indigenous graduates in the construction sector each year is small so don’t overestimate your employment targets.

2. Meaningful Engagement: Indigenous Australians are some of the most consulted people and this has resulted in Elders being burnt out. Look at how you can meaningfully engage both directly and indirectly with them. Traditional methods of knowledge extraction with Indigenous communities have had a “what’s in it for me” mentality. If you are engaging directly with Indigenous peoples, talk to them and give them the opportunity to express their concerns and ideas. Be a good listener and have the right mindset to take new perspectives on board.

3. Practise what you preach: Communicate your commitment to reconciliation to all staff and engage external stakeholders in your reconciliation journey. Research best practises in areas of race relations and anti-discrimination. Have a designated committee to oversee the implementation of RAP. Ensure mechanisms are in place to measure and evaluate action.

Smart Mango acknowledges the Traditional Owners of the lands on which we live, work, and learn. We pay our respect to Aboriginal and Torres Strait Islander peoples and to Elders, past and present. We hope to see Australia’s construction industry develop a unique identity, one based on values of integrity, inclusiveness, and respect.

Who are we? 

Smart Mango is a Sydney based export marketing development agency giving you access to 35 plus countries globally. Our experts can provide you with market research and distributor search as well as local representation to help your brand expand to global markets.  We tailor our services to your needs – looking closely at the demographics, trends and spending habits of markets specific to your product or service.

Contact one of our specialists today for any enquries 

Phone:  +61 2 7903 0543

Email: contact@smartmango.com.au