December 18, 2020

Hydrogen – Hype or Hallelujah

Currently never a day goes by without Hydrogen being mentioned in our crusade to a NetZero future – but what is it? why is it so special? is it truly a panacea?

Hydrogen(H2) is the most abundant element in the universe – making up approximately 75%of all matter, and it is also has the potential to be a zero-emission fuel. Conversely it is highly reactive and currently needs a primary energy input to produce it (at scale) – and so has limited green credentials.

And although it is one of today’s buzzwords, the potential for H2 as a major energy source has been known for years, from small-scale government grants and industrial research and development – even the United States Air Force were developing prototype hydrogen engines in the 1950s.

Figure 1 - A universe of Hydrogen Applications (Berkeley Lab)

Figure 1 from the BerkeleyLab highlights the many potential uses of this fuel.

The major sectors using hydrogen currently are industrial. The world’s refineries use the gas as a feedstock to decrease the sulphur content of diesel, increase the octane rating of gasoline, and hydrocracking long-chain hydrocarbons to shorter ones.  However, a greater proportion of global hydrogen production (~55%) is currently used in agriculture – where it is combined with nitrogen to create ammonia (NH3) for use as a fertiliser.

There is great potential future growth in transport (fuel cells in light vehicles, heavy transport, trains, shipping, aviation and spacecraft – NASA has used H2 as fuel since its inception in 1958, heating (residential and commercial), power (hydrogen-fuelled gas turbines for electrical generation), and energy storage (swing supplies for intermittent renewables).

This element does not exist naturally on earth as it forms covalent compounds with most non-metallic elements – hence the abundance of water (H20) and methane(CH4), and all growing bodies (biomass). From an environmental perspective, the beauty of H2 is that when used as a fuel it only releases energy (it has the highest energy per unit mass of any element), with water asa by-product. Yet, it also has the lowest energy mass by volume (IEA,2020) and that is where its challenges start.

Various options exist whereby it can be converted from a gaseous form to a liquid ,e.g., cryogenical liquification, conversion to another medium, such as ammonia or liquid organic hydrocarbon carriers (LOHFC) - but all require additional energy inputs and add cost.

The carbon-reduction credentials of hydrogen vary according to its production method:

·      Brown – via the gasification of coal results in H2 and carbon dioxide

·      Grey – like Brown, however instead of coal, methane is used, producing H2 and CO2without carbon sequestration

·      Blue – as Grey, but with Carbon Capture and Storage (CCUS) – the first major projects are close to approval (Equinor, 2020)

·      Green – produced via electrolysis with the electricity coming from renewable sources

 Currently around 95% of global H2 production (112 million tonnes / year) is ‘brown’. Demand is driven by China and the United States (~20%each). Renewable-based H2 production is only 0.4% of the total. 

There are challenges in moving from brown to more environmentally friendly forms of hydrogen gas.  It is necessary to reduce the cost of production and stimulate demand beyond the existing industrial users (The Hydrogen Council,2017).  More specifically:

·      Major investments required of approximately USD $70 billion in the next 10 years in the mass deployment of electrolysers (70GW of capacity); CCUS subsidies; transportation and commercial / residential infrastructure investment          

·      Globally aligned policies / regulations / financial incentives to accelerate scale-up and investment from industry

·      Market dynamics that create demand; long-term off-take agreements; complimentary solutions around an anchor opportunity; investment in low carbon and renewableH2 production.

Governmental and Industrial commitments

Europe is leading the way on the evolution of hydrogen technologies with projects involving CCUS, electrolyser capacity, fuel cell electric vehicles, transmission and distribution, and the gradual industrial adoption of low-carbon hydrogen. It is driven by political momentum from the EU (European Commission, 2020), and to a lesser extent the G20 through to key targets individually set by Belgium, Finland, France, Germany, Holland,Japan, Korea, Spain and the UK.

The UK Government recently published its 10 Point Plan for its Green Industrial Revolution which entails working with industry to produce a strategy, build out business models and begin localised hydrogen heating trials by 2025. 

Also, in what is believed to be a global first, a trial providing 100% green hydrogen to 300 residential properties was approved by the UK’s energy regulator, supplemented by funds from the Scottish Government totalling the equivalent of USD$27 million. It is clear that without governmental support, such non-industrial schemes would not receive funding.

In Japan, the Fukushima Hydrogen Energy Research Field was opened on 7 March 2020, boasting a 10MW H2 production unit. The United States Government recently announced the creation of two consortia investing USD$100 million over 5 years– one on Green Hydrogen and a broader coalition of industrial manufacturers of fuel cell trucks.

And most major players in the traditional Oil and Gas industry have made policy statements and are pursuing initiatives to increase their renewable portfolios, with many including green hydrogen strategies.

 

Opportunities & Challenges

In a recent Wood Mackenzie report it was estimated that green hydrogen costs will fall by over 60% by 2040.  Yet in addition to production challenges, it must be commoditised, and the storage, transportation, transmission and integrated supply chains developed.  Research, development, and improvements in existing technologies and methodologies are being made across the spectrum.

It may be considered, that Fuel Cell Electric Vehicles (FCEV) are the future of personal transportation. However, once production challenges are overcome, the energy losses associated with compressing, storing, transporting and use in a fuel cell are considerable. It is estimated that such FCEVs are 60% less efficient (James Morris, Forbes) – so challenges exist in hydrogen’s ability to displace competing technologies – especially at scale.

In the aviation world, fuel cells and battery prototypes are being evaluated, though neither provide enough thrust for larger aircraft to take off (TheEconomist, 2020) - hydrogen driven turbines are needed for that, such propulsion systems being more demanding than their kerosene-based incumbents. And we should not forget that biodiesel as a fuel source could be the solution for aviation.

A recent report by the International Energy Agency concluded that “more work is needed on hydrogen fuel”– highlighting how the development of carbon neutral systems is critical for the energy transition. 

Not least, due to its explosive nature, hydrogen cannot be treated the same as the energy sources it displaces.

Summary

It seems clear that this key renewable energy source, in whatever form, will contribute a greater percentage of the global energy mix in the future. Virtually every energy policy document includes references to its development and deployment of hydrogen.

The future will have a mix from ‘grey’ to ‘green’ hydrogen, and demand will be driven by those technologies where it can deliver a true competitive advantage, including carbon offsets.

Governmental policies promoting multilateral initiatives are essential – they have been instrumental in moving forward the solar and wind technologies. Such policies must be developed to strengthen the market for large scale hydrogen production; infrastructure upgrades; additional funding for research, development and deployment; and the expansion of international technology collaboration (IEA - Making the transition to clean energy).

So, it is unlikely that Hydrogen will be a panacea – providing the solution to all our energy needs - however it will feature across a range of industries and uses and be instrumental in bringing down the overall global carbon footprint.

Future Energy Partners provide clean energy options and practical solutions for our clients. Businesses involved in transport - ships, trains, trucks, forklifts, heavy equipment should examine their carbon footprint and develop a strategy towards utilising cleaner energy. It may involve hydrogen, but there are many interim solutions which can make a meaningful difference to your business and support the reputation and bottom line that is required for success. Contact us to discuss a way forward.

 

 

 

 

 

 

 

 

 

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