Hydrogen – the elevator Invoke

• The Paris Agreement and ‘beyond diesel’ mean that everyone is talking about clean hydrogen.

• This clean hydrogen can be used to clean up heavy industry and displace fossil fuels more generally.

• Paris Agreement means a Net Zero economy – clean hydrogen expected to be a $1tn market in that.

• ‘Beyond diesel’ means installing hydrogen fuel in heavy vehicles like trucks, trains and ships.

• You can use carbon capture and storage or renewable electricity to make clean hydrogen. This technology is proven and underway today.

• 39 countries have hydrogen policies in place, with $70bn of funding. EU, China, Japan, California have the best investment climates for clean hydrogen.

• In the UK, for example, there is already £3.5bn of low carbon government funding including hydrogen. Phase out of diesel from UK HGV starting 2035 underlines UK hydrogen potential.

• There are >500 clean hydrogen projects on the drawing board today, with spending that could reach >$700bn to 2030 .

• If you’re into energy, this is all pretty hard to ignore. The sector has $1tn market potential in 2040. A 200x increase in clean hydrogen supply is anticipated 2019- 2030, and…potentially 20% of the primary energy mix by 2050.

What drives demand for clean hydrogen?

Policy makers and industry are converging on clean hydrogen as a core technology to deliver Net Zero and improved air quality.

The Paris Agreement has led 39 countries to set out hydrogen policies and $70bn of funding as part of Net Zero targets to deliver the Energy Transition to a low carbon economy.

Burning fossil fuels for energy releases green-house gas and poisonous particulates. More than 20 countries have announced sales bans on internal combustion engine vehicles before 2035, and over 25 cities have pledged to buy only zero-emission buses from 2025 onwards.

This is driven by Net Zero agendas, plus the imperative to reduce poisonous emissions from diesel in urban environments.

According to the World Health Authority (the “WHO”), some 4.2 million deaths per year are caused by poor ambient air quality, and 91% of the world’s population live in places exceeding the WHO’s air quality guidelines. Much of this pollution is as a result of emissions from internal combustion engines (“ICE”) and fossil fuel power plants.

Access to clean hydrogen is a priority for refiners and steel and ammonia producers as they address GHG emissions. Heavy industry such as steel and oil refining are under tremendous pressure to reduce or eliminate grey hydrogen from processes, to reduce the GHG emissions that result from this. Much of today’s demand for clean hydrogen is basically a clean-up of grey hydrogen.

In the future, clean hydrogen can displace fossil fuels in hard to decarbonize sectors, either by burning it in power plants to replace natural gas, coal and oil, or by converting it to electricity through hydrogen fuel cells. Water vapour is the only by-product of using hydrogen as a fuel.

Hydrogen can store and transport intermittent renewable power at a grid scale. As wind and solar become a large percentage of electricity supply over time, the electric grid will need large scale electricity storage to offset periods of low wind and low light. By converting electricity to hydrogen, the energy can be stored over long periods of time either in pipelines and tanks, or in underground salt caverns.

Myths in clean hydrogen
Hydrogen sector has plenty of ill-informed commentary, and plenty of lobbying between competing industry groups. Here are the main arguments, and a rational middle:
Blue versus Green

Blue hydrogen uses a natural gas feedstock, hence supports continued fossil fuels drilling and production. Protagonists of green hydrogen, particularly companies involved in making renewable power and electrolysers, lobby against blue, and characterize it as an oil company in disguise.

Reality: Blue hydrogen is a viable option for clean hydrogen NOW

• A ultra-low GHG emissions fuel, which is the whole point.
• Cost-competitive with grey hydrogen, whereas green hydrogen is more expensive
• Enables the continued use of natural gas wells and pipeline infrastructure that would otherwise have to be scrapped. This accounts for multi-trillions of dollars of sunk capital

Reality: Green hydrogen is a good short to medium-term option

• Complementary with blue and will scale up as renewable power grows
• Relatively high cost today, and a little behind blue in terms of cost curve

Battery electric cars versus hydrogen fuel cells
Proponents of battery electric cars argue that hydrogen fuel cells don’t compete.
Reality: battery and fuel cell vehicles both have great niches
Battery electric is the best option for cars over short to medium distances. However, batteries can’t store enough energy at a reasonable size to move heavy vehicles over long distances.
Hydrogen fuel cells are the best option for trucks, trains (on tracks that are not electrified), fork lift and SUV.

Hydrogen fuel cells flight versus synthetic aviation fuel
This is a complex area, that is really in the innovation / R&D stage. It’s too soon to call this, however companies like British Airways and Airbus are investing in the technologies.

Reality: hydrogen fuel for flight has great potential but is not proven commercially

Hydrogen tanks that feed fuel cells to power turbo prop planes is a real option, and there are test flights underway today (eg ZeroAvia). This could work for short haul commercial flight eg 50 seaters. Airbus are developing commercial jet engines to potentially burn hydrogen by storing fuel in the fuselage.

Hydrogen has been used in jet engines in the Russian aviation sector. However, bulky and strong liquid hydrogen tanks are needed to fuel long distance flight, or innovation in hydrogen storage, due to hydrogen’s low energy density compared to traditional jet fuel.

A viable alternative is to combine clean hydrogen with CO2 to make synthetic aviation fuel. This is World War 2 technology (“Fischer Tropsch”) which was developed to make transport fuels from coal and gas. It is, however, relatively high cost.

Clean hydrogen is high cost and won’t compete with fossil fuels.
These arguments centre on the cost and time required to build up hydrogen infrastructure
versus producing lower carbon, oil and gas via CCS.

Reality: these are old arguments that are rapidly falling away.

As an example, all of the big oil companies, including fossil fuel enthusiasts ExxonMobil now have hydrogen and carbon capture strategies – ExxonMobil see hydrogen as a $1tn market medium term; BP see hydrogen as up to 15% of the energy mix long term. The debate has really shifted to the timescales.

  • There are headline hydrogen prices on a $/kg basis:

• Grey $1-2/kg: established market price. This source of hydrogen will be phased out
• Blue $2-3/kg: includes CCS cost
• Green $3-6/kg: higher price, which reflects early-stage projects

Fossil fuels market share will fall over time in the energy transition. They are expected to become more expensive due to carbon penalties and / or mitigation costs. But there will be ‘low carbon fuels’ with things like CCS applied.

Hydrogen is cost competitive with other low carbon fuels including such fossil fuels at a hydrogen cost of $1-4/kg (building heating $4, trucks $3, cars $2, industrial heat and power <$2). These costs are in the range of grey and blue hydrogen today. Green hydrogen costs are around $6/kg, which are 60% lower than 2010 and are expected to be $2-$3/kg in 2030 due to electrolyser scale up (-$2/kg) and lower green electricity costs (-$1.3/kg).

Most categories eg transport and heat/power reach cost equivalence with other low carbon energy in 2030.

You can’t put hydrogen into natural gas networks, can you?

Various theories that hydrogen will corrode pipes, it will leak, and that it can’t be burnt in power plants and domestic boilers.

Reality: this is an out-of-date concept. 

In the early stage, there will be blending of hydrogen and natural gas in existing networks. For example, HyDeploy (UK) has trailed a 20% hydrogen blend with natural gas into domestic boilers (2021). Pure hydrogen boilers are on the market today.
Gas turbines that use hydrogen in power plants are being deployed in the Netherlands, Japan and the USA.


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