By Claire Dougherty, Research Analyst, David Gardiner and Associates
Hydrogen – particularly green hydrogen – has been in the news more and more. Excitement surrounds hydrogen’s wide range of applications, zero-emissions potential, and energy storage capabilities. The goal of this blog is to help companies begin think through the hydrogen opportunity; what is it, what can it do for industry, what are the barriers to commercial deployment, and what’s changing in the market?
What is it?
Hydrogen is a colorless, odorless gas that is a widely-used in industrial applications.
Hydrogen comes in different “shades:”
Brown or grey hydrogen is produced through steam methane reformation powered by coal (brown) or fossil gas (grey). Today, fossil fuels produce 96% of U.S. industrial hydrogen.i
Blue hydrogen is produced by fossil gas-fired steam methane reformation, with the resulting emissions managed through carbon capture and storage (CCS).
Green hydrogen is created using renewably-powered electrolysis. With the only emission from hydrogen combustion being water, green hydrogen is a zero-carbon solution.
How does Hydrogen fit into Decarbonization Efforts?
Hydrogen has been used in the industrial sector for decades. Many industrial processes use it as a catalyst (i.e., fertilizer production, oil refining, and metal processing).
As an energy fuel, hydrogen can be deployed for energy storage (particularly for seasonal storage, or curtailed or intermittent renewable electricity), transportation (via fuel cells), and direct combustion (for residential, commercial, and industrial use).
Blending hydrogen with fossil gas in distribution pipelines – particularly to residential and commercial customers – offers a portfolio-level carbon-reduction opportunity while continuing to leverage the value of the gas distribution network.
Industrial customers may be able to source hydrogen as a process fuel via existing pipelines, of which there are 1,600 miles in the U.S., or new dedicated pipelines.ii The U.S. has several geographic clusters of heavy industry – typically harder to abate sectors – proximate to potentially well-aligned renewables markets; availability of curtailed-, low-cost-, or developing offshore renewables supplies. These may be especially interesting opportunities for green hydrogen deployment.
What are the Key Barriers to Scaling Hydrogen?
- Renewable electricity supply and price: Green hydrogen offers the greatest emissions reduction potential, but will require a significant expansion of very low-cost renewable electricity supply to realize industrial-scale production at costs that can compete with fossil gas. Many stakeholders are looking eagerly at pending off-shore wind development as transformative source of renewables for green hydrogen production.
- CCS viability: CCS requires a series of technological and economic improvements before blue hydrogen is a viable industrial-scale solution.
- Transportation: The National Renewable Energy Laboratory (NREL) estimates hydrogen can be transported in up to a 17% hydrogen/natural gas blend in existing natural gas pipelines without requiring significant retrofits.iii Beyond that percentage, there are concerns of steel pipeline embrittlement, hydrogen leakages due to its smaller molecular size, and volumetric energy density which require larger pipelines. Pipeline restrictions can be avoided by mixing hydrogen and gas on-site, and many systems that run on natural gas require only minimal retrofitting to switch to hydrogen.iv Hydrogen can also be stored and transported outside of pipelines as ammonia and converted back into hydrogen for combustion.
What’s Changing in the Market?
Basic hydrogen production technology has existed for decades, but significant changes in the market may suggest that hydrogen – and particularly green hydrogen – is poised for transformative impact.
- Renewable electricity prices are dropping; in many cases, more quickly than expected. v For green hydrogen, the cost of the renewable electricity input is a primary economic driver. As renewables continue to drive costs down, green hydrogen becomes more and more feasible.
- Electrolyzer prices and fuel cell prices are decreasing.vi Although fuel cells are not common in industry, hydrogen market growth across multiple sectors will help drive down prices for all hydrogen end uses and promote infrastructure expansion.
- Governments are beginning to create hydrogen pathways. The European Union, South Korea, and Australia have included hydrogen in their climate and energy policies and plans.vii viii ix.
- Increased corporate commitments in energy, emissions reductions, and climate will drive the hydrogen market as companies search for solutions, particularly for hard to abate processes.
Projections for green hydrogen’s achievement of commercial scale vary, and the challenges to be managed between now and then are not insignificant.
We will continue to explore hydrogen as this exciting market develops. Register here for our October 27 webinar where we look at the future state of play for green hydrogen.
Green hydrogen will also be a featured topic in the our upcoming virtual Summit, taking place on November 9-10, 2020. To see a full Summit agenda, list of speakers and sponsors, and registration details, please visit here.
For Further Reading
- Wood Mackenzie’s “Hydrogen Landscape 2020” for a global overview of the hydrogen market.
- Rocky Mountain Institute’s “Hydrogen’s Decarbonization Impact for Industry” for challenges and projections for industrial end users.
- The Green Hydrogen Coalition’s “Green Hydrogen Guidebook” for production, distribution, policy drivers, and case studies.
i Rocky Mountain Institute. (2020). Hydrogen’s Decarbonization Impact for Industry.
ii U.S. Department of Energy: Hydrogen and Fuel Cells Technologies Office. (n.d.). Hydrogen Pipelines.
iii Goldmeer, J. (2019). A Hydrogen Society: What it Takes. General Electric Company.
iv National Renewable Energy Laboratory. (2010). Blending Hydrogen into Natural Gas Pipeline Networks: A Review of Key Issues.
v Goldmeer, J. (2020, September 18). Technical Questions on Hydrogen. (C. Dougherty, Interviewer).
vi World Energy Council. (2019). New Hydrogen Economy: Hope or Hype?
vii World Energy Council. (2019). New Hydrogen Economy: Hope or Hype?
viii European Commission. (2020). A European Green Deal.
ix Australian Department of Industry, Science, Energy and Resources. (2019). Australia’s National Hydrogen Strategy.
x International Energy Agency. (2019). Korea Hydrogen Economy Roadmap 2040.