Hydrogen storage tanks in Spain, May 2022. Hydrogen has many uses and can be deployed in a wide range of industries.
Angel Garcia | Bloomberg | Getty Images
The buzz around hydrogen has grown over the last few years, and many see it as an important tool to reduce the environmental impact of heavy industry and help the economy reach its net-zero goals.
The green hydrogen sector, which focuses on hydrogen production using renewable energy sources such as wind and solar, has attracted particular interest and has some prominent supporters.
Among them is German Chancellor Olaf Scholz, who in 2022 called it “one of the most important technologies for a climate neutral world” and “key to decarbonizing the economy.” called.
But despite all the excitement about hydrogen’s potential, which the International Energy Agency describes as a “versatile energy carrier,” there are undeniable challenges.
First, the majority of hydrogen production is still based on fossil fuels rather than renewables, a fact that clearly contradicts net-zero targets.
Especially for green hydrogen, production costs are a key issue and will need to be reduced in the coming years.
Transporting hydrogen from the production site to the user is an equally important factor to consider.
“Moving hydrogen is pretty expensive,” Murray Douglas, director of hydrogen research at Wood Mackenzie, told CNBC in an interview.
“It’s harder to move than natural gas…technically, engineering…just harder,” he added.
Douglas isn’t the only one to highlight some hurdles in hydrogen delivery.
For example, the U.S. Department of Energy states: Take note of important issues “This includes reducing costs, improving energy efficiency, maintaining hydrogen purity and minimizing hydrogen leakage.”
The DOE added that further research is needed to “analyze the trade-offs between hydrogen production and hydrogen delivery options when considered together as a system.”
In particular, regarding the distribution of green hydrogen, What you need to be careful about is the location of the production equipment.
Often these are assigned to regions such as Australia, North Africa and the Middle East, where renewable energy sources are abundant, but miles away from where hydrogen is actually used.
Wood Mackenzie’s Douglas mentioned transportation options when looking back at the investment horizon over the next decade.
“You could pipe it in, of course, but you’d probably need a dedicated pipeline,” he said, noting that this would likely be a new build closer to end users.
The only other realistic option for this investment period, he said, concerns exporting hydrogen as ammonia.
“We produce hydrogen, green hydrogen, and then combine it with nitrogen to produce ammonia,” he said.
Douglas said transporting ammonia “is a fairly well-established technology and industry, with many receiving ports already in place.”
This ammonia could be sold directly to end users such as fertilizer producers.
Another option is to “break the ammonia back into hydrogen”, but this is not without its own problems.
“As soon as you start to go back ‘in earnest’ to using hydrogen, you start to see fairly large energy losses,” Douglas said.
In a statement sent to CNBC, Jorgo Chatzimarkakis, CEO of industry group Hydrogen Europe, was bullish about the prospects for green hydrogen.
He said it would “become a global commodity” before stressing the importance of having an “efficient delivery system.”
Chatsimalkakis also stressed the need for a certification program as “green hydrogen needs to prove that it comes from renewable sources.”
Partnerships and programs related to the supply and distribution of green hydrogen are beginning to take shape, despite some obvious major hurdles.
For example, earlier this year Greenergy and Octopus Hydrogen (the latter part of Octopus Energy Group) were formed. announced They had launched a “Green Hydrogen Delivery Partnership”.
Another is the German company Enertrag To tell From 2021, the company will “operate tankers and transport trailers to deliver large quantities of green hydrogen to its customers.”
And way back in 2022, Madrid-based energy company Cepsa announced that it would work with the port of Rotterdam to develop a “first energy system.” green hydrogen corridor between Southern and Northern Europe. ”
Although the technology and knowledge of hydrogen production and delivery exists, there is still one problem.
“The industry knows how to transport hydrogen,” said Douglas of Wood Mackenzie, adding that the energy and chemicals sector “has been transporting hydrogen for a long time. It’s not new, it’s just expensive.” added.
Douglas extended his argument further, saying that lowering production costs is the key. The lower these are, the more manageable the shipping costs will be.
“I don’t know if there will be any magical cost-saving technology on the transportation side,” he added.
“We’re not going to suddenly find a better material to transport hydrogen,” he said.
“If it liquefies, it needs to be very chilled, and that just costs money,” he continued. “If you turn it into ammonia, it’s expensive and there are a lot of toxicity issues.”
“They know how to do all these things,” he continued. “At the end of the day, it is a question of cost.”