Updated: The European Commission has just announced its strategy to kickstart a long-awaited hydrogen economy in Europe as part of its Covid-19 recovery package. Angeli Mehta reports on how the ‘future fuel’ is on the threshold of lift-off
It’s been more than 50 years since hydrogen helped put man on the moon. Nasa has continued to use it to put crew and cargo into space, and hydrogen plays a role in life-support systems on the international space station.
Could it now play a role in Earth’s life-support systems, helping us avoid runaway climate change by providing a key zero-carbon fuel?
Today, hydrogen is mainly produced from fossil fuels and used to make ammonia for fertilisers and to remove sulphur from natural gas and refinery products like petrol, as well as in the food and electronics industries.
Governments have a once-in-a-lifetime opportunity to reboot their economies while accelerating the shift to a cleaner energy future
But it can also be created using renewable power like solar and wind, (so-called green hydrogen) potentially playing an important role in hard-to-decarbonise sectors like heat and heavy-duty transport, and industries such as steel.
Japan has led the charge on hydrogen, but some European nations – most recently Germany and Portugal – have made plans to ramp up hydrogen’s place in the energy mix.
The European Commission has just launched an ambitious hydrogen strategy to increase capacity to produce green hydrogen six-fold by 2024, and use it to decarbonise existing sectors like the chemicals industry. A 40-fold increase by 2030 to produce up to 10 million tonnes of green hydrogen, would see its use expanded to sectors such as steel-making and heavy duty transport. It sees such large-scale deployment at pace as key to the EU’s goal of cutting greenhouse gas emissions by at least 50% by 2030, as well as enabling the Green Deal.
Between €180 billion and €470 billion will be required to increase production capacity, with hundreds of millions more to convert aging steel plants and roll out hydrogen refuelling infrastructure for buses and trains. But with the additional sums of money the Commission will make available for clean energy technologies like hydrogen, through the EU’s proposed €750bn recovery fund, there’s an opportunity to provide the boost needed.
It is a strategy endorsed by the International Energy Agency (IEA), which says new industries such as hydrogen could generate between six and eight jobs for every $1m invested, as well as ticking boxes on energy sustainability and resilience.
“Governments have a once-in-a-lifetime opportunity to reboot their economies and bring a wave of new employment opportunities while accelerating the shift to a more resilient and cleaner energy future,” says Fatih Birol, the IEA’s executive director.
Klaus-Dieter Borchardt, the Commission’s deputy director-general, emphasised the importance of hydrogen to the EU’s clean energy strategy in a video interview during Ethical Corporation’s Virtual Responsible Business Week last month (see below): “What we now rapidly need is [a] robust project pipeline, because we cannot wait. We need the most mature projects to be implemented now. The funding will be there. I think the projects are there, but we have to line them up in the different areas,” to make the best use of the money and time available.
Industry needs to show leadership; the same is needed from the regulatory and government side
A European Clean Hydrogen Alliance covering the key components of the hydrogen value chain will bring together investors with governmental, institutional and industrial partners. There will be a new research and innovation platform to address the whole hydrogen supply chain, as well as policy to make sure resources are allocated, and hydrogen used, where it’s most needed.
The EU’s strategy also considers the need for strong price signals and functioning markets to get hydrogen to where it is most valued. Incentivising demand for hydrogen could be achieved through sector targets and blending into gas grids.
It also proposes a contracts for difference financing scheme, a mechanism that protects developers of projects with high upfront costs and long payback times from volatile wholesale prices so they have a stable income; robust certification; and opportunities to repurpose existing gas infrastructure to carry hydrogen.
The Commission wants a coordinated approach across Europe, as well as cooperation beyond the bloc’s borders, in order to boost the use of hydrogen in long-distance shipping.
“Industry needs to show leadership; the same is needed from the regulatory and government side. I’m positive that we’ll get there… everyone is at the stage where they see it’s needed, but also that it’s not a simple, quick fix,” says Marcel Galjee, director energy and new business at Nouryon Industrial Chemicals.
Most hydrogen used in industry is made by reforming natural gas, but that route produces carbon emissions, and is disavowed by the EU. Employing carbon capture utilisation and storage (CCUS) to make low-carbon hydrogen – so called blue hydrogen – is envisaged as a means to develop a hydrogen infrastructure and create demand. Environmental campaigners dislike this approach as they see it perpetuating fossil fuels.
We have got to take carbon out of hydrocarbons, and we have to stop comparing gas to coal and start comparing gas to zero
Indeed, while energy major BP anticipates having to leave oil in the ground, it sees demand for gas growing.
Last month, BP’s chief executive Bernard Looney told energy expert Daniel Yergin that “with the advent of hydrogen and the potential for blue hydrogen and how gas can play a role in there, it may be more than a transition fuel. It will have to be decarbonised. That's absolutely essential. We have got to take that carbon out of hydrocarbons, and we have to stop comparing gas to coal and start comparing gas to zero.”
In the UK, the Committee on Climate Change sees blue hydrogen as an essential tool to get to net-zero. A new analysis by energy research group Aurora, suggests both blue and green hydrogen could provide up to 45% of Britain’s final energy demand by 2050; and that there are some low-regret options the UK government could explore as part of its post Covid-19 recovery plan, including the stimulation of hydrogen demand in key sectors.
Australia has seized on the technology as a means to use its reserves of coal and gas to produce hydrogen. Japan, one of the foremost proponents of hydrogen, is the first taker for liquefied hydrogen, launching a ship that will bring the fuel from Australia.
To eliminate emissions, hydrogen needs to be produced using renewable energy to split water into its constituent components of hydrogen and oxygen. This is called green hydrogen. While the cost of renewables is falling and there are big advances in the efficiency and cost of electrolysers, it’s still a more expensive route.
The EU’s consultation document envisaged scale-up projects to get green hydrogen below €1.5-3/kg by 2030. The top end of that range is less than half of some estimates of current costs. But the strategy itself stopped short of setting an explicit target – rather, it expects green hydrogen to gradually become cost-competitive with other forms of production between 2025 and 2030.
“The market is being driven by net-zero – we have to get to net-zero. Hydrogen made with renewable power and electrolysis is the only net-zero energy gas,” asserts Graham Cooley, chief executive of hydrogen energy equipment maker, ITM Power.
Overlapping and different applications with different cost structures is an important strategy for green hydrogen introduction
Today, Europe’s biggest electrolyser project is run by Nouryon and weighs in at 10MW. However, a number of projects are on the threshold of being built that will extend that scale, and the EU will put a call-out in September for proposals for a 100MW electrolyser.
The EU-backed Refhyne project sets out the first building blocks to get there: a 10MW plant using the latest electrolyser technology, a polymer electrolyte membrane (PEM), will be operational early next year at Shell’s Rheinland refinery in Germany.
ITM Power, which built the electrolyser, will open the world’s biggest PEM electrolyser factory in Sheffield, UK, at the end of the year. It’s been working on scaling up its electrolyser modules to 5MW, such that fewer stacks have to be combined to reach the 100MW scale. Cooley anticipates that the advances it has made in stack design and materials, together with some factory automation, will bring electrolyser costs down by half by the mid-2020s.
Cutting costs also requires demand, and that will come from providing hydrogen to clusters of industrial users. “Overlapping and different applications with different cost structures is an important strategy for green hydrogen introduction. One application provides you with a baseload volume; that’s the chemical industry. And one that is smaller volume provides higher value; that’s the transport industry. If you combine those two together you get a very viable scheme,” suggests Cooley.
This approach is being pursued in northern Europe. In the UK, several clusters are vying for government backing to enable them to decarbonise. ITM Power is involved in scoping out the decarbonisation of the Humber region, the country’s most carbon-intensive industrial area, emitting 14m tonnes of CO2 each year. Here, Orsted’s giant wind farm in the Humber estuary could provide energy for a 100MW electrolyser to meet demand from a refinery owned by Philipps 66.
The project will also look at the market and regulatory conditions needed to reach achieve scale.
Everyone focuses on hydrogen as being the solution in the energy transition – but it’s a key enabler for a bio-based and circular industry
Container shipping line Maersk, ferry operator DFDS, and airline SAS are amongst the partners exploring an ambitious project to develop a hydrogen facility outside Copenhagen. A staged approach involves using green hydrogen, and CO2 captured from industrial sources in the region, to make renewable methanol for the maritime sector, and sustainable aviation fuel.
“It’s not that we only want the green hydrogen, it’s that we want to build green molecules. If we look at the difficult-to-decarbonise sectors – aviation, shipping, steel – we need them today, and we’ll also need them in 2050,” says Galjee of Nouryon. “Today all these value chains are based on fossil fuel, that’s where we need to create the alternative, and hydrogen will play a pivotal role.”
In the Netherlands, Nouryon – together with partners including the Dutch gas network operator Gasunie – plans to take the final investment decision by the end of the year to start building a 20MW facility at Delfzijl. The hydrogen will displace some of the natural gas currently being used by methanol producer BioMCN. Nouryon already provides hydrogen from one of its existing industrial processes for a hydrogen tanking station for buses, as well as for its own energy facilities.
Nouryon and Gasunie are also investigating a scale-up to 60MW, to meet demand from SkyNRG, a producer of sustainable aviation fuel. The hydrogen would be combined with waste (such as used cooking oil) to produce aviation fuel and bioLPG. Another project with Tata Steel Europe and the Port of Amsterdam envisages a 100MW hydrogen facility that will begin to decarbonise Tata Steel’s IJmuiden site.
If it gets the go-ahead, the initial unit could save up to 350,000 tonnes of carbon dioxide each year, as much as the emissions of 40,000 households. The companies are also exploring using the off-gases from steel production to make other chemicals, as part of a circular value chain.
‘It’s a great example of how hydrogen is always an enabler for something else. Everyone focuses on hydrogen as being the silver bullet – the solution in the energy transition – but it’s a key enabler for a bio-based and circular industry. That’s where the great opportunity also lies for Europe,” suggests Galjee.
The northern Netherlands is seizing that opportunity to create a Hydrogen Valley - thanks to a €90 million grant from the EU and public/ private backers. Project Heavenn aims to create an entire hydrogen value chain by the end of 2025.
As the cost of renewable power comes down and the volumes go up, green hydrogen becomes more and more viable
Heat is another sector proving hard to decarbonise. Work is under way in France, Italy and the UK to blend hydrogen into the gas grid. A project at Keele University to inject 20% hydrogen into its campus network was working safely until its temporary suspension by the pandemic. In Italy, energy infrastructure company Snam has been experimenting with a 10% mix. Snam and its partners are also exploring hydrogen as a means to store energy, to handle intermittent renewable generation.
The EU anticipates blending in a transitional phase, but is concerned it is less efficient and diminishes the value of hydrogen, so wants to see careful consideration of all the implications. Using hydrogen for storage would help balance the grid and avoid grid operators having to pay wind and solar farms to stop generating when energy supply exceeds demand. In the UK alone, the lower energy requirements caused by lockdown – combined with ideal weather conditions for renewables – will likely push those grid-balancing costs up by £500m this summer.
“As the cost of renewable power comes down and the volumes go up, green hydrogen becomes more and more viable, and you’ll need more and more energy storage and more grid balancing – which is what you can do with electrolytic hydrogen. The two industries, renewables and green hydrogen, are mutually supporting,” says Cooley.
He maintains that hydrogen storage is now cheaper than battery storage for durations of longer than 2.5 hours. For seasonal storage, hydrogen could be deposited in underground salt caverns.
“Electrons are incredibly difficult to store. What you do is turn electrons into hydrogen molecules – and we know how to store molecules. The chemical and gas industry has been doing it for 100 years. It’s the best long-term energy storage,” adds Cooley.
The EU-backed HyflexPower project seeks to demonstrate that green hydrogen can be used to store energy, and in turn be used to generate power. It’s hoped that in 2023 it will be able to demonstrate carbon-free energy production at one of Smurfit Kappa’s packaging manufacturing plants in France.
Hydrogen has long been touted as a future fuel. The sheer number of projects and commitments from governments around the world suggest that future is closer than ever. If we’re to put a lid on global warming and reach net-zero emissions by 2050, those commitments need to turn into concrete action.
Angeli Mehta is a former BBC current affairs producer, with a research PhD. She now writes about science, and has a particular interest in the environment and sustainability. @AngeliMehta
This article is part of our in-depth Energy Transition briefing. See also: