Nearly 30 years ago hydrogen was ushered in as an
emerging clean energy source. Despite a series of high expectations, its spread
as an alternative fuel was dismissed mainly due to technology immaturity and
its associated high cost. Nonetheless, after suffering a decade of silence,
hydrogen is beginning to sound strong again, and recent cost and performance improvements
are pointing toward its economic viability. Now a growing body of evidence is advocating
that hydrogen is here to stay, saying it has the potential to decarbonise the whole
energy value chain as a zero-carbon fuel and a reliable energy carrier which can
be easily stored and transported.
One would rightly wonder what changed to allow hydrogen
to make such a spectacular come back?
In addition to positive changes in the hydrogen
production cost trajectory, three major contributors are in play here:
reduction in the cost of renewable energy (wind and solar PV) that makes
hydrogen economy viable;
decarbonisation approaches are showing their level and limit of applications, for
instance battery storage and carbon capture and storage (CCS) would play their
roles but could not decarbonise the entire energy landscape;
is now more feasible to repurpose and make use of existing assets such as
upgrading gas turbines to operate with hydrogen fuel or utilising existing gas
networks for hydrogen storage.
However, widespread deployment of hydrogen across
all sectors and assuming it is the central driver for decarbonisation is an
unrealistic optimism. To leverage its benefits, governments and businesses need
to be strategic. Hydrogen investments need to be on areas where zero-carbon
hydrogen could be deployed at scale using existing infrastructure, and there are
no cheaper feasible technologies available.
Hydrogen as an energy carrier has advantages and disadvantages. It is a versatile fuel, it can operate across various industries to produce heat (combustion with oxygen), to generate zero-carbon electricity (using fuel cells) or could be used directly in chemical reactions. On the downside, hydrogen is a colourless, odourless, tasteless and highly flammable gas at standard temperature, so we still need to find a suitable odorant that could be used to detect leaks. Moreover, once combusted, there is no visible flame, so there needs to be a way of detecting whether it is lit. On the downside, although water vapour is the by-product when using hydrogen, it erodes and corrodes equipment in use (e.g. compression, storage, transporting equipment, etc.).
For hydrogen to play its role in the zero-carbon future, it is important to differentiate how it is produced. Currently, more than 95% of hydrogen used in heavy and process industries is produced from fossil fuels (methane CH4) using steam-methane reforming (SMR) process which ultimately produces CO2 (gray hydrogen). To be sustainable, this process would need to be incorporated with CCS (blue hydrogen), which is itself expensive and in need for further development. Electrolysis produces zero-carbon hydrogen (green hydrogen). The amount of hydrogen that can be produced using this method depends on cost of electrolyser (both CAPEX and OPEX) and availability of electricity from renewable sources.
For zero-carbon hydrogen (blue or green) to be
financially attractive, it must be deployed in applications whose hydrogen
demand would justify the investment required to build large-scale production
facilities and associated infrastructures. Thus, deployment of hydrogen must be
avoided in applications where zero-carbon hydrogen is unlikely to be cost
competitive. For light vehicle applications, electric cars are several years
ahead of hydrogen in terms of maturity due to their lower costs and readily
available infrastructure. Efforts need to be made to make fuel cell cars cost competitive
compared to electric vehicles. Moreover, benefits of hydrogen for aviation has
been questioned as it produces more than double the water vapour emissions of
jet fuel, causing radiative forcing and contributing to net warming.
Large-scale use of zero-carbon hydrogen appears to
be attractive in applications labelled “hard-to-decarbonise” where technology
and infrastructure barriers are justifiable, such as process industries and
long-distance transport (e.g. marine applications).
Currently, steel and process industries rely on
fossil fuels for three-quarters of their fuel mix, and account for more than
20% of direct global greenhouse gases emissions, and to-date have shown very
limited progress on decarbonisation, if any. In addition to using zero-carbon
hydrogen, options for decarbonisation include electrification, using biofuel,
carbon capture usage/storage (CCUS), industrial clustering, energy efficiency
improvement and heat recovery where possible. For hydrogen to replace natural
gas as a fuel, burners and furnaces would need retrofit or replacement, and
there is a likelihood of fundamental re-design of the plant which would require
substantial investments. Commercialisation is not expected before 2030 due to
cost uncertainty, and relatively low maturity of the hydrogen technology. In
addition, long equipment lifetime and investment cycles in such industries would
further hinder the transition. To accelerate process industries decarbonisation
and solve the climate issues in line with the Paris objectives a global and clear
carbon price policy would be the right catalysts here.
For zero-carbon hydrogen, potentials in process industries are massive. It could be used both as fuel and feedstock (e.g. in oil refinery and ammonia production). So, in addition to the potential use as fuel, there is already solid demand for hydrogen as feedstock. To-date gray hydrogen is used for feedstock, hence decarbonising feedstock and switching to zero-carbon hydrogen would be relatively straightforward, requiring only advancement in the production of hydrogen itself. According to a study conducted by Boston Consultancy Group, if all current grey hydrogen consumption globally were replaced with green hydrogen, the amount of required renewable power would be roughly equivalent to the total amount of power currently generate in the European Union annually (nearly 3500 TWh).
It is therefore essential to promote large-scale
and cost-effective production of zero-carbon hydrogen. For green hydrogen to be
cost-effective, electrolyser technology needs to mature, production efficiency
needs to improve (over 70%), and unit sizes need to scale up to 100-300 MW
compared to current capacity of 5-10 MW that would result in electrolysers cost
reduction of more than 50%. According to the Energy Transition Commission, targeting
capital casts of $250/kW need to be considered for electrolysers to scale. To
meet 50% of future hydrogen demand by electrolysis, the total volume of
electrolysis facilities would need to increase 100 times from current level
creating significant potential for cost reduction through economies of scale
and learning curve effect.
For blue hydrogen to really be nearly zero-carbon,
the carbon leakage in capture processes as well as methane leakage throughout
the gas value chain would have to be brought down to minimum. Likewise, to meet
50% of future hydrogen demand using SMR-CCS, the related carbon
storage/utilisation need would amount to 2-3 Giga tonne. For blue hydrogen to
be viable, financial feasibility of using CCS and the public resistance to the
development of CO2 storage facilities need to be addressed. There
are companies investing in technologies to utilise captured CO2
(e.g. plastic manufacturing) which would minimise or potentially eliminate the
need for CO2 storage facilities. Reaching economies of scale for
blue hydrogen is more difficult than green hydrogen as it includes more
infrastructure for CCS and depends on the capture rate. Producing hydrogen
using biomethane reforming could also be considered zero-carbon but it is
unlikely to play a major role, given other higher priority demands on limited
sustainable biomass resources.
Successful scale up of zero-carbon hydrogen
production and full utilisation of its potentials require reductions in
technology costs which demands government and regulatory support in addition to
consistent and smart energy policies. Unclear or frequently changing policies undermine
the business and industry confidence to make long-term investments. Countries
need to work together and jointly develop a system of policy support for
long-term hydrogen production, transport, and utilisation. Currently, Europe is
the global leader in developing electrolysers for green hydrogen production.
There have been nearly 250 hydrogen demonstration projects benefited from EU
funding and 80% of which accounts for electrolyser development. It is believed
that with the right support and right policies including global policy related
to carbon price, hydrogen technologies can reach a cost and performance
trajectory like those of renewables (e.g. wind and solar PV) and in medium term
provide a crucial and complementary zero-carbon option across energy landscape.