Hydrogen: any colour but grey [NGW Magazine]
Hydrogen’s potential as a major driver of the energy transition has become widely accepted. But there’s little agreement on how to build a “clean” hydrogen industry from scratch.
How to scale up production, lower costs, boost demand and distribute the fuel are among the main questions. A rash of strategies has been adopted in the European Union (EU) in recent months, but the solutions to these fundamental issues remain sketchy and often contradictory.
In June, the German government adopted a National Hydrogen Strategy (Nationale Wasserstoffstrategie). The document offers an outline of a plan for building an industry based on green hydrogen.
The strategy says its goal is for the state to create favourable conditions for the private sector to invest in the production, transport and use of emission-free hydrogen in order to decarbonise branches of the economy (see feature, page ??).
Not long afterwards, the European Commission (EC) unveiled its own plan, dubbed the European Clean Hydrogen Alliance. Part of the €750bn Next Generation EU recovery plan, the EU executive says that the strategy will boost clean hydrogen production in Europe.
Hydrogen’s role either as a feedstock, fuel, energy carrier or storage solution will be encouraged, it says, to help reduce greenhouse gas emissions across the industry, transport, power and building sectors. Burning hydrogen releases clean water and no CO2.
“Renewable electricity is expected to decarbonise a large share of the EU energy consumption by 2050, but not all of it,” the EC strategy admits. “Hydrogen has a strong potential to bridge some of this gap, as a vector for renewable energy storage, alongside batteries, and transport, ensuring back up for seasonal variations and connecting production locations to more distant demand centres.”
It is this versatility that provides much of the momentum hydrogen is enjoying, points out the IEA.
“Technologies already available today enable hydrogen to produce, store, move and use energy in different ways,” it declares in a recent report. “A wide variety of fuels are able to produce hydrogen, including renewables, nuclear, natural gas, coal and oil. It can be transported as a gas by pipelines or in liquid form by ships, much like liquefied natural gas (LNG). It can be transformed into electricity and methane to power homes and feed industry, and into fuels for cars, trucks, ships and planes.”
Green vs blue
However, as the excitement over hydrogen’s potential mounts, so too has an understanding of just how tough a challenge it is to build a hydrogen industry from almost nothing. That has sparked disagreement over which precise fuels should be supported as a means to developing a green hydrogen economy.
Over 95% of hydrogen consumed around the globe – mostly in energy-intensive heavy industries – is “grey” hydrogen, produced from coal or gas. The IEA estimates that the 70mn metric tons that were produced in 2019 released 830mn mt of CO2 into the atmosphere.
“Blue” hydrogen – produced from fossil fuels but utilising carbon capture technologies – is a vital step towards expanding the niche industry into a major energy source. It offers a cheaper, faster way to clean up industrial emissions while helping build the demand and infrastructure that will be needed for green hydrogen.
Estimated current costs for grey hydrogen in the EU are around €1.5/kg, depending on gas prices and disregarding the cost of CO2, according to the EC. Blue hydrogen costs are around €2/kg. Green hydrogen currently costs €3.5-6/kg.
“Developing blue hydrogen is a must, as green hydrogen will not be available in substantial volumes until the power sector is fully decarbonised by renewable electricity, that is, not before 2040, possibly 2050,” writes Ralf Dickel at the Oxford Institute for Energy Studies. “Starting with blue hydrogen will be essential for timely and deep decarbonisation and will pave the way for green hydrogen to enter the market as soon as it becomes possible.”
However, others warn that it’s a predictable part of the fossil fuel industry’s efforts to stay relevant amid the energy transition.
The gas industry’s hyping of its potential low-carbon role is a “dangerous distraction…to keep all kinds of gas, particularly fossil gas, on the energy menu, and help the industry stave off being rendered obsolete by more climate-friendly renewable energy and electrification,” says the Corporate Europe Observatory NGO.
Green for green
Berlin has pledged to put up tens of billions into supporting the development of a hydrogen economy, although for the moment the strategy details spending of only €9bn. The long-term costs of decarbonisation of individual industry sectors are far higher.
Analysts at the Warsaw-based Center for Eastern Studies (OSW) estimate that cleaning up just the steel and chemicals sectors will carry a tab of around €75bn. Across Europe, these two sectors provide the bulk of the current 55 TWh demand for hydrogen.
In a bid to tempt private investors, German hydrogen-based projects will receive preferential treatment from Berlin in applying for EU funds. Operators of electrolysers – which produce green hydrogen by using renewable energy to split water molecules – will be exempted from taxation, which constitutes a fifth of electricity prices in Germany.
The German plan aims to have 5 GW of electrolysis capacity up and running by 2030, equalling annual hydrogen production of 14 TWh. Electrolysis capacity should double by the end of the following decade.
The EU strategy does not name a specific level of public support but it says investment will need to total €180bn to create 4 GW of electrolysis capacity in the next four years, and 40 GW by 2030.
Lobby group Hydrogen Europe – whose members include all of Europe’s energy giants as well as hydrogen players and researchers – estimates that in order to expand the green and blue hydrogen segments in the EU by 40 GW each by 2030 overall investment of €430bn will be needed.
Of that, €145bn should be public money, the trade association says. Scaling up green hydrogen production to 40GW would require €220bn, it estimates.
Overall demand for hydrogen in 2030 is expected to reach around 90–110 TWh. That means that hydrogen produced using fossil fuels will still have a significant role to play.
Dickel says that dismissing the bulk of the blue hydrogen segment will make a fully-fledged hydrogen economy all the harder to achieve. He says that without this interim step, “the aspirations for hydrogen could falter due to unrealistic expectations based on political, rather than commercial and technical, reality.”
The EC says renewable hydrogen is the focus of its strategy. “It has the biggest decarbonisation potential and is therefore the most compatible option with the EU's climate neutrality goal.”
But gas as feedstock is also needed for the meantime, accompanied by carbon capture and storage or “other forms of low-carbon electricity, to clean existing hydrogen production, reduce emissions in the short term and scale up the market.”
However, even at its current limited scale, global hydrogen production is responsible for 800m mt/yr of CO2 emissions annually, equivalent to the combined emissions from Indonesia and the UK.
Proponents claim that a move to blue hydrogen could cut most of those emissions. And others suggest that green and blue hydrogen attract specific players: utilities focused on renewables and seeking help to balance power grids on the one hand may favour green, while industrial players seeking to lower their carbon emissions would prefer blue.
The head of RWE’s generation business Roger Miesen noted at a recent event that while his company does note “not think blue hydrogen is bad,” it does consider development of the fuel as more of a job for the oil majors than for utilities.
The 300 electrolysers working in the EU produce less than 4% of the total, according to EU data. The EC strategy estimates that up to €15bn could be invested in electrolysers by 2030. A further €50bn-€150bn could be put into dedicated wind and solar capacity of 50-75 GW.
The momentum towards these targets is building. According to Wood Mackenzie, planned global investment in electrolysers by 2030 is rising. However, their analysts estimate that new capacity is still limited to 8.2 GW.
Still, as those investments take shape green hydrogen costs should start to drop. The IEA forecasts that the cost of producing hydrogen from renewable electricity could fall by 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production.
But replacing just the current 70mn mt/yr global output of fossil-fuel hydrogen with green hydrogen would require 3,600 TWh of renewable energy. That is more than the EU’s total generation capacity.
In addition, clear definitions and certification are needed to facilitate any green hydrogen market. That is the sort of drawn out, dull and bureaucratic process that all but kills widespread public interest but is often key to successful implementation of technology.
Hydrogen Europe predicts EU demand for “clean” hydrogen – which includes blue and green – is likely to rise to 17mn mt by 2030. But to provoke that demand, consumers will need to be able to access hydrogen, and that puts gas players – desperately seeking a way of remaining relevant amid the energy transition – in a position to play a key function.
“The gas industry faces an existential issue, as it needs to find a role within an energy economy that is set to decarbonise rapidly in order for the EU to meet its net zero emissions target by 2050,” writes Dickel.
The EC appears keen to involve the gas industry. It predicts it will cost up to €130bn over the coming decade to build hydrogen distribution and storage facilities and set up refuelling stations for transport.
Using existing gas networks should help the price fall, EU climate chief Frans Timmermans said as he unveiled the EC’s strategy.
“It is important that we look at existing natural gas and LNG infrastructure to see to what extent it is already usable for hydrogen or can be adapted to the use of hydrogen,” he said.
Norwegian consultancy DNV GL says that while around 3% of global energy consumption today is used to produce hydrogen, just 0.002% of this hydrogen, or about 1,000 mt/yr, are used as an energy carrier. The rest is used in industrial processes, mostly as feedstock.
“In a world that is seeking clean energy carriers, hydrogen can carve out a more prominent niche in the energy mix. It is an especially attractive option for countries with an existing natural gas infrastructure, as demonstrated by the UK which is already implementing large scale hydrogen projects,” the DNV GL analysts sum up.
The call to action has clearly been heard, with over a fifth of Europe’s oil and gas players already involved in hydrogen projects, and more than half expecting to enrol in the immediate future.
A group of nine European TSOs announced in mid-July that they are teaming up to modify their gas pipelines to develop a network of hydrogen infrastructure – potentially a tricky technical challenge owing to the smaller size of hydrogen molecules compared with natural gas and the lower energy density per volume.
However, quoting “new research” that “shows that existing gas infrastructure can be modified to transport hydrogen at an affordable cost,” Enagas, Energinet, Fluxys Belgium, Gasunie, GRTgaz, Net4gas, OGE, Ontras, Terega, Snam and Swedegas say they hope to have a network stretching 6,800 km by 2030 and 23,000 km by 2040. Three quarters of these pipelines will be converted gas infrastructure, with new connections to link the networks.
“Ultimately,” the European Hydrogen Backbone group claims, “two parallel gas transport networks will emerge: a dedicated hydrogen and a dedicated (bio)methane network. The network can be used for large-scale hydrogen transport over longer distances in an energy-efficient way, also taking into consideration hydrogen imports.”
The cost of the plan is estimated at €27bn-€64bn, which the group says is “relatively limited in the overall context of the European energy transition.”
The clean hydrogen swindle: comment by chemical engineer Samuele Furfari
Clean hydrogen, produced using electricity generated from renewable, intermittent energy, has the wind in its sails and features prominently in many European countries’ plans for a net zero carbon future. The European Commission even has a strategy for it. But the science to back it up is just not there and it is no more than a pipe dream, according to chemical engineer and energy researcher Samuele Furfari, writing for NGW.
When the European Union talks of renewable energy, it means wind and solar photovoltaics, rather than more dependable hydro. As the excess electricity output at times of low demand cannot be stored, there is only one thing to do with it: hydrolyse water and store the hydrogen for combustion at the time and place when needed.
This is a four-stage process: generate excess electricity with wind and solar; transform this electricity into hydrogen by water electrolysis, compress or liquefy and transport the hydrogen; and burn it to generate electricity.
None of these steps require new technology, but industrial chemical processes are never 100% efficient. The EC however has ignored this basic fact of chemical engineering. Step 2 is at best 80% efficient and step 3 is at best 70%. Step 4 with fuel cells – an expensive technology not yet in mass production despite 30 years of public support – is 50% efficient now, even if we may imagine 60% in the future. So, the efficiency of the complete process is: 0.80 x 0.70 x 0.50 = 0.28.
An old dream
The first reference to hydrogen as an energy source that I found in EC reports dates back to 1972, even before the first oil crisis. It did not work then, and it will not work now as the science is missing. Hydrogen is too unstable to exist alone: the chemical industry has to make it, by steam reformation of methane. Steam reacts with methane to produce hydrogen and CO2 and this accounts for 85% of the world’s hydrogen: CH4 + 2H2O è 4 H2 + CO2. The other 15% is mainly a by-product of chlorine and soda production from the electrolysis of sodium chloride.
This molecule is hugely important, mainly for the production of fertilisers. As the global population has grown and agricultural yields more important, so has the demand for hydrogen. Plastic is another use for hydrogen.
As gas prices have been coming down with competitive trading, one should also expect lower prices for hydrogen production, partly because the primary input is cheaper and partly owing to economies of scale.
But using renewables makes it more expensive and complicated. The EC puts the cost of ‘blue’ hydrogen at €1.50/kg and ‘green’ hydrogen at €2.5-5.5/kg. Green hydrogen will always be more expensive than hydrogen produced from gas.
Political market manipulation
Since a product cannot have more than one price in an open market, green hydrogen must be subsidised, as natural gas will also be available for at least a century for making blue hydrogen. Of course, some industries will make a killing out of the hydrogen strategy – that is what political market manipulation means – just as others have, from biofuels: guaranteed prices and a green image, that is paid for by consumers and taxpayers.
Besides, burning hydrogen to generate electricity, when hydrogen has been produced by electricity, is an extravagance akin to keeping warm by burning designer handbags. Inefficiencies are compounded by inefficiencies. Yet the EC says that this is a strategic opportunity to green up the global reset.
Russian gas exporter Gazprom is investigating thermal methane pyrolysis. It announced – with a lot of conditionals and very little scientific literature – that it can produce hydrogen and carbon black, using a plasma.
But these “new” processes are only economically sustainable if there is a high enough carbon price – some say €50/metric ton others €300/mt. Since some countries will have lower carbon prices than the EU, hydrogen production will leave the EU, to the detriment of European petrochemical industry.
Professor Samuele Furfari, a chemical engineer, was a senior official at the EC’s energy directorate 1982-2018. He worked there on energy technology and policy.