Abu Dhabi, UAEFriday 7 August 2020

FUTURE

How hydrogen is becoming the next big clean energy source

On Friday, 11 European gas infrastructure companies presented a plan for a continent-wide hydrogen network consisting of 23,000km of pipelines

Nikola founder Trevor Milton is now worth $7.1bn after shares of his hydrogen-powered electric truck company more than doubled following their stock market debut. Photo: Reuters  
Nikola founder Trevor Milton is now worth $7.1bn after shares of his hydrogen-powered electric truck company more than doubled following their stock market debut. Photo: Reuters  

Hydrogen, the primeval element forged in the Big Bang, is undergoing a renaissance. After periodic hype as an energy carrier, most recently under former US president George W Bush, it faded into the background. But now a rush of announcements has brought it back as the next big clean energy hope.

Nikola Motors, a US manufacturer of hydrogen fuel-cell vehicles, had its initial public offering on June 4. It has no revenue and has yet to make a sale but is valued at $17.6 billion (Dh64.6bn) – half as much as BMW.

On July 7, a consortium comprised of industrial gases company Air Products, Saudi-based private electricity developer Acwa Power and Neom, the new city planned in the kingdom’s north-west, agreed on a $5bn project to produce hydrogen using solar and wind power.

Shell and Dutch gas utility Gasunie unveiled plans to use offshore wind to produce hydrogen for distribution through existing gas pipelines.

Danish marine company Maersk, offshore wind leader Orsted and airline SAS joined forces to produce hydrogen for synthetic aviation and shipping fuels while BP is looking at a wind and solar-powered hydrogen facility in Australia.

Japan developed its hydrogen strategy as far back as 2017 and Germany unveiled its own approach last month.

On Friday, 11 European gas infrastructure companies presented a plan for a continent-wide hydrogen network consisting of 23,000 kilometres of pipelines.

These various initiatives have two common themes. Firstly, they focus on “green” hydrogen made by breaking down water through electrolysis, using low-carbon, renewable electricity.

This is used instead of making hydrogen from natural gas, the most common – and a much cheaper – method. Production from gas and the capture of the associated carbon dioxide gives low-carbon “blue” hydrogen.

Secondly, they follow the successful expansion of solar and wind power over the past two decades: to scale up and build large numbers of green hydrogen systems, bringing down their costs to parity with natural gas. Hydrogen from electrolysis currently costs about $2 per kilogram but has to fall to around $1 to make it viable – roughly comparable to long-term liquefied natural gas prices.

There are still other parts of the puzzle to crack. Electrolysers need cheap electricity but must run near-continuously to cover their capital costs.

Clever combinations of intermittent renewables are required to achieve this through night-time or less windy periods.

Hydrogen is tricky to transport because of its low density. Producers in North Africa could use existing gas pipelines to transport it to Europe.

Neom and the BP Australia project will produce ammonia, which can be used as a fuel or fertiliser directly or broken down to hydrogen at its destination. Still, this adds extra costs.

The element has several different uses: it is used mostly to make ammonia and methanol, the fuel and chemical feedstock, as well as being used in oil refining.

In the future, hydrogen could produce important industrial materials, such as steel, without carbon dioxide emissions. It can also be blended with natural gas for lower-carbon home heating and cooking, to help fuel trains, ships and aircraft or be used to store energy for later use.

The only product of burning hydrogen is water. This versatility and cleanliness explain the growing interest in hydrogen.

Indeed, we might wonder why hydrogen development went fallow before being revived so suddenly. Why were we not looking ahead a decade ago?

However, the current direction of hydrogen policy also poses a concern for the Middle East. Apart from Neom and a hydrogen distribution system in the kingdom’s industrial city of Yanbu that was built by French company Air Liquide, there are few large-scale projects in the region.

Adnoc and Masdar are launching a hydrogen-filling station while Dubai’s Expo 2020 site has a pilot solar hydrogen electrolyser.

The Neom site has some advantages: large scale, excellent sun and relative proximity to Europe through the Suez Canal. It has its challenges, too – such as not being near the kingdom’s existing industrial sites or other users of hydrogen.

If the region is to continue making use of its giant oil and gas resource, it needs to do so without contributing to climate change.

To meet the Paris Agreement’s target of no more than 1.5°C of warming above pre-industrial levels by 2100, humanity can emit a maximum of 464 billion tonnes of carbon dioxide.

The world’s current reserves of oil and gas would yield more than 1,100 billion tonnes, and that is without considering the much larger amounts of coal.

Converting oil and gas into hydrogen is one way to square this circle.

However, if large blue hydrogen projects do not go ahead soon, policy and supply will fixate on green hydrogen.

Countries such as Germany already have a natural inclination that way because of their surplus renewable generation and environmentalist mistrust of the fossil fuel industry.

As electrolyser costs fall, domestic production will seem more attractive than imports, which face the burden of transport costs anyway.

The Middle East was slow to the renewables revolution and only a few regional countries are truly taking advantage.

Saudi Arabia needs to push through the Neom project and other similar projects without delay.

However, the kingdom and other big petroleum producers in the region need a strategy for hydrogen – and some real blue and green hydrogen projects.

They should work with international partners such as Japan and Germany and encourage policies that would reward a decarbonised industry, transforming themselves into the clean workshop of the world.

The nascent competition to come up with the first hydrogen champions is already heating up. The region cannot afford to miss the hydrogen-fuelled bus.

Robin Mills is chief executive of Qamar Energy, and author of The Myth of the Oil Crisis

Updated: July 21, 2020 10:19 AM

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