The Future of Hydrogen: Decide End Uses and Supply Will Follow

HOUSTON — On the opening day of what is arguably the world’s largest energy conference, hydrogen took center stage, with a presenter citing transportation as a potential market to lead its growth.

The CERAWeek conference, now owned by S&P Global and managed by its Commodity Insights division, held several sessions on Monday in which the future of hydrogen as part of the so-called “energy transition” was widely discussed. boasted. The section of the conference known as the Agora had a hydrogen “hub” set up in the foreground, and formal and informal hydrogen-focused sessions took place there all day in front of large crowds.

A message that came up repeatedly over several sessions was that focusing on creating a hydrogen supply was backwards. Instead, it has been argued that the path to making hydrogen an important fuel in the energy transition to a cleaner fuels world is to first establish more uses and supply for it. will follow.

“I think hydrogen is better suited for heavy industry and heavy transportation, and mass deployment will probably come later,” said Marco Alvera, CEO of Snam. Alvera was part of a panel whose title largely summed up much of the conversations heard during the day: “Will Hydrogen Deliver – and When?”

Snam’s main activity is the construction of energy infrastructures.

Hydrogen does not exist by itself. Its molecules must be separated from any other molecule it is attached to, such as its attachment to oxygen in water.

It is the choice of the energy required to separate this hydrogen molecule that offers the possibility of making it a clean alternative fuel that can be used in many applications, such as in a fuel cell to power a vehicle. Hydrogen created from electricity from a coal-fired power plant would have a large carbon footprint, even if the hydrogen vehicle had no specific carbon emissions.

From left to right: Shankari Srinivasan, S&P Global; Bill Newsom, Mitsubishi Power Americas; Samir Serhan, Air Products; Marco Alvera, Snam

Alvera presented some figures on the current economic competitiveness of hydrogen. He expressed it in terms of the ability of a fuel to deliver one megawatt hour of electricity.

Hydrogen in Europe now costs around $100 per MWh. Oil is around $80-90 per MWh, while US natural gas, which hasn’t reached the rise of other fuels, is around $20 per kilowatt-hour. But European natural gas, which was already scarce before the Russian invasion of Ukraine, costs up to around $300 per kWh.

Green hydrogen, produced entirely from renewable fuels, would now cost around $100 per MWh, Alvera said. That compared to German electricity prices, which he said are close to $480 per MWh.

The panel member with the most hydrogen experience was Samir Serhan, the COO of Air Products, which has long been an industrial hydrogen producer. Government policy toward the various technologies that can be used to produce hydrogen should be “agnostic,” Serhan said, and that policy “should be more focused on promoting end-market use.”

But even though the message was that the growth of hydrogen had to go through the development of end-use markets, the technology needed to produce it was at the center of much of the discussion.

Bill Newsom, president and CEO of Mitsubishi Power Americas, said a key goal should be to reduce the cost of electrolyzers that split water and produce stand-alone hydrogen. One way is to start standardizing electrolyzers, which Newsom says are now mostly “tailor-made,” with little standardization.

Alvera described the current range of electrolyser technologies as “the difference between handmade boots and factory-made boots. … The cost curve can come down simply by using existing technology.

A specific government-sponsored demand accelerator that was praised by Serhan was California’s low-carbon fuel standard, which encourages the use of low-carbon fuels, such as hydrogen or renewable diesel. , by allowing the use of these fuels to generate credits that can be sold to companies that do not meet their low carbon objectives. Serhan said that by promoting the use of hydrogen, demand is generated and supply increases to meet that demand, “production costs will naturally come down.”

A company’s desire to be seen as environmentally conscious is also a boost. Alvera said some companies would give Snam a somewhat vague command to “just cut my CO2 costs.” But others are more specific, he added, citing an ice cream company that wanted its CO2 emissions reduced enough to brag about its environmental achievements in its marketing. To do this, however, green hydrogen would be required in the manufacturing process, as opposed to blue hydrogen (produced with natural gas and carbon capture and sequestration) or gray hydrogen (produced with natural gas and without CCS).

But Serhan said something else is going to be needed: government standards for when a company can claim to have a low enough carbon footprint to warrant some sort of low-emissions labeling on its products.

But even though the focus of the panelists was on creating demand, the question of supplying the infrastructure for the hydrogen economy kept coming up. Alvera raised the specter of Western nations repeating past mistakes, when they funded what he called “trillions in subsidies” to create demand for the solar industry, “and all the production goes to Asia. We should create demand and create manufacturing at the same time.

This led to a deeper discussion of the supply chain needed to create the hydrogen economy, with Newsom commenting that high transport costs could act as a stimulus to drive hydrogen infrastructure manufacturing towards Western countries which are expected to be the biggest consumers.

Throughout the day, the benefits of hydrogen were often repeated: it can be transported relatively easily, Serhan noting that his company operates hydrogen pipelines that run hundreds of miles. Areas rich in renewable capacity – like a sunny area – can essentially store their excess renewable capacity by turning it into hydrogen, which can then be transported elsewhere.

“Hydrogen is a great catalyst and connector,” Alvera said. “This allows renewables to be built where they would otherwise be held hostage to existing grid bottlenecks. This allows for larger scale development.

And long before the economy developed what one panelist in another discussion derisively called an overly optimistic “shining hydrogen city on the hill” with hydrogen powering a lot of business, Alvera has said hydrogen can make inroads into decarbonization through blending. Blending 10% hydrogen into a natural gas stream, for example, would “create demand overnight” that would help boost hydrogen infrastructure that could yield significant benefits in 10 to 15 years old.

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