3 Pros & Cons of Hydrogen to become a key enabler in the Energy Transition

Hydrogen is the simplest element and the most abundant substance in the universe. It is colorless, odorless, and has good environmental credentials because it burns cleanly, producing nothing but water. It is used as a feedstock in the chemical industry and refineries, as part of a mix of gases in steel production, and in heat and power generation. Today, Hydrogen is produced on a commercial basis, however, we usually make it in an emissions-intensive process.

Global production stands at around 95 Million Tons of hydrogen per year (MtH2/yr) as pure hydrogen and an additional 50 MtH2/yr as part of a mix of gases.

At present, below 1% of hydrogen is renewably produced worldwide. From the other 99% of global hydrogen production, 48% comes from natural gas (aka “grey” hydrogen), 28% from coal (aka “black” or “brown” hydrogen), and 23% from oil as a by-product.

Despite the international price volatility of natural gas, it is estimated that it will remain the cheapest way to produce hydrogen so it will keep the lead. For the future, its production with fossil fuels power plants where emissions are captured through carbon capture, usage, and storage (CCUS) will help to decrease the CO2 footprint of H2 generation (aka “blue” hydrogen).

Methods to produce hydrogen without using fossil fuels involve water splitting, or splitting the water molecule (H2O) into its components oxygen and hydrogen, by an electrolyzer. When the energy source for water splitting is renewable, the hydrogen produced is sometimes referred to as “green” hydrogen.

Getting on track with the Net Zero Emissions (NZE) Scenario requires a rapid scale-up of low-emission hydrogen, with around 50?Mt of hydrogen annual production based on electrolysis and more than 30?Mt produced from fossil fuels with CCUS by 2030, for a total of more than 50% of hydrogen production, see Figure 1. This will require an installed capacity of more than 550 GW of electrolyzers, which in turn requires both a rapid scale-up of electrolyzer manufacturing capacity and significant deployment of dedicated renewable capacity for hydrogen production and enhancement of the power grid.

So, is hydrogen able to become a Key Enabler of Energy Transition?

We can identify 3 Top Pros and Cons that support or not this idea:

Depending on the regional context, the local regulations, the electric system, and many other factors, those negative factors could be minimized and the positive vectors could be maximized to ensure a great potential for hydrogen. Or they could not...

1st CON: Water Availability

The production of one ton of hydrogen through electrolysis requires an average of 9 tons of purified water, but most modern water purification and treatment systems require about two tons of impure water to produce one ton of purified water, i.e., one ton of hydrogen actually needs not nine but 18 tons of water. Allowing for losses, the ratio is closer to 20 tons of water for every ton of hydrogen.

The Spanish Ministry of Ecological Transition intends to build a H2 grid and an international pipeline, "H2MED" project, driven by France to bring hydrogen to Germany through the Mediterranean. It will be operational by 2030, with a transport capacity of up to 2 million tons per year of green hydrogen, which would mean extracting 40 hm3/year of water from the Spanish water system. However, the increasing drought in the country has forced to issue a new regulation that would limit the water consumption for this use. See Picture below:

As another example, India has presented its roadmap and vision for Hydrogen in the policy document of the National Green Hydrogen Mission. Under this mission, the government plans to achieve 5 MtH2/yr by 2030. At that rate, they would need 100 billion liters of water. This poses a major ecological and social challenge, with falling groundwater levels already causing water stress across the country.

The increasing drought in many areas of the world stresses the local resources and forces regulations changes to prioritize some uses of water, limiting the growth of Hydrogen.

Thus, the intentional siting of green hydrogen projects is a proactive measure to avoid adding strain on water systems. Permitting processes should include an assessment of local (and downstream) water availability, competing uses, and rights too. This will ensure that projects are not committed to locations that cannot support their water needs and are built in accordance with local water policy. Synergies could be seen in pairing newly built green hydrogen plants in locations of retired coal plants or water-intensive industries, providing continuity of water allocation at a local level.

2nd CON: Lack of available infrastructure to deliver H2 to end users

Today, hydrogen is mostly produced and consumed in the same location, without the need for transport infrastructure. With the demand for hydrogen increasing and the advent of new distributed uses, there is a need to develop hydrogen infrastructure that connects production and demand centers.

One of the major concerns inhibiting the scalability of hydrogen is the huge logistics costs involved in transportation. Hydrogen is a flammable gas which needs to be transported in cryogenic tankers.

Pipelines are the most efficient and least costly way to transport hydrogen up to a distance of 2,500 to 3,000?km, for capacities around 200?kt per year. About 2,600?km of hydrogen pipelines are in operation in the United?States and 2,000?km in Europe, mainly owned by private companies and used to connect industrial users.

Several countries are developing plans for new hydrogen infrastructure, with Europe leading the way. The European Hydrogen Backbone initiative established in 2020 groups together 32?gas infrastructure operators to establish a pan-European hydrogen infrastructure. In June 2022, the Dutch government announced a plan to invest EUR?750?million in the development of a national hydrogen transmission network of 1,400?km.

Staying on track with the NZE Scenario would require around 15,000?km of hydrogen pipelines (including new and repurposed pipes) by 2030, and this is a billionaire investment that is unlikely budgeted yet.

The other concern is the required infrastructure to produce green hydrogen. In the Net Zero Scenario, we would need to grow x200 times de current capacity of electrolyzers in just seven years (see Figure 2). The current industry forecasts do not plan the delivery of such a number of equipment, which could kill the expectations. Technology can indeed improve efficiency and capacity but despite the investment required, the deployment into real projects seems challenging.

3rd CON: Cost of green hydrogen

The costs associated with hydrogen are usually production and transportation costs. However, there are many hidden costs included in the final price such as access to finance, bankability of the projects, permitting and complexity of administrative processes, innovation, and even geopolitical factors among others.

A 100%-efficient rotating electrolyzer, where centrifugal force helps separate gas bubbles from water, would consume 50 kilowatt-hours per kilogram at 15 bar pressure, and a further 15 kilowatt-hours if the hydrogen is compressed for use in hydrogen cars.

The cost of hydrogen by electrolysis is around $4–8/kg. Considering the industrial production of hydrogen, and using current best processes for water electrolysis (PEM or alkaline electrolysis) which have an effective electrical efficiency of 70–82%.

"The process of producing hydrogen, compressing it, and then turning that compressed hydrogen back into electricity or mechanical energy is grossly inefficient"

according to Paul Martin, a chemical process development expert and member of the Hydrogen Science Coalition.

“It’s worth putting up with a lot of problems with a battery because, for every one joule you put in, you get 90% of it back. That’s pretty great,” Martin said.

In producing and storing hydrogen, you get only 37% of the energy back out.

“So 63% of the energy that you said, is lost. And that’s best case.”

Levelized cost of green hydrogen is anticipated to fall by 2030 due to a reduction in the levelized cost of electricity (LCOEs) over the past decade and an expected reduction in the cost of electrolyzers. Ongoing technological innovation and economies of scale are also likely to contribute to this price decline.

"Making hydrogen from natural gas costs about $1.50 per kilogram", said Sunita Satyapal, who oversees hydrogen fuel cell technology for the US Department of Energy. This is the main reason to maintain a high fossil-fuel-based production.

With elevated oil and gas prices, the cost parity between green and blue hydrogen has already been achieved in some parts of Europe, making green hydrogen more feasible. It is forecasted that, by 2050, the levelized cost of hydrogen (LCOH) of green hydrogen will be slightly lower than that of blue one.

1st PRO: Energy Carrier

Hydrogen is a versatile energy carrier (not an energy source). It can be produced from multiple feedstocks and can be used across virtually any application.

Hydrogen is often called the Swiss Army knife of energy

The full value of hydrogen, however, is only fully realized when it is further converted to derivatives. Hydrogen can be combined with carbon from CO2 to produce hydrocarbons and virtually any molecule. Clean hydrogen can help to decarbonize a range of sectors where it has proven difficult to reduce emissions. It can be used to produce ammonia, which can be used as feedstock for fertilizers (the majority of current use) or as fuel for new applications such as shipping or long-haul transport. It can also be used to produce methanol, synthetic fuels, or even as a reducing agent to replace coal in iron or steel production (see Figure 3).

Once it is converted to these commodities, the energy density is increased further, making long-distance transport and long-term storage cost-effective. Thus, the conversion to hydrogen derivatives effectively unlocks the global renewable energy trade. For instance, liquid ammonia has almost eight times the energy density (MJ/m3) of lithium-ion batteries and more than 20 times the gravimetric energy density (MJ/kg)

2nd PRO: Energy Storage Capability

Renewable electricity can be converted to hydrogen via electrolysis, which can couple continuously increasing renewable energy with all the end uses that are more difficult to electrify. This coupling also allows electrolyzers to provide flexibility to the grid, complementing alternatives such as batteries, demand response and vehicle-to-grid in smart electrification.

Hydrogen can also support the integration of variable renewables in the electricity system, being one of the few options for storing energy over days, weeks or months.

Curtailment—or, what happens when more renewable energy is available than can be delivered to customers—has gained a negative connotation in the energy community for wasting clean, free electricity. E.g. CAISO (CAlifornia Independent System Operator) monitors this curtailment on an hourly basis and some days they waste around 90 GWh. This electricity could be used with no incremental electricity cost to produce hydrogen and store it to use it later.

The development of infrastructure for hydrogen storage will also be needed. Salt caverns are already in use for industrial-scale storage in the United?States and the United?Kingdom. Several research projects are ongoing for the demonstration of large-scale hydrogen storage, including the potential for repurposing natural gas salt caverns for hydrogen storage. Research and demonstration is also progressing in the development of other types of underground storage sites (such as depleted gas fields, aquifers and lined hard rock caverns).

In the NZE Scenario, global bulk storage capacity rises from 0.5?TWh today to 70?TWh by 2030.?

3 PRO: An Infinite Resource

Today, oil and gas is an international, multi-trillion-dollar industry.

Even though the earliest known oil wells were drilled in China in 347 AD, the modern history of the oil and gas industry started in 1847, with a discovery made by Scottish chemist James Young. The first oil well drilled was in the town of La Brea, Trinidad in 1857. The late 18th century and the early 19th century marked the creation of major oil companies that still dominate the oil and gas industry today.

But what is the relationship with Hydrogen?

In the mountains of Oman or the Spanish Pyrenees – and places with similar geology across the world – Hydrogen is naturally generated underground, potentially in vast quantities. This is called “white” hydrogen.

In 150 years, oil and gas become the energy standard by starting from scratch. It took dozens of years to start researching oil reserves worldwide.

With much more advanced technology today, looking for hydrogen wells could be a real disruption. Getting directly natural hydrogen would avoid the need for massive water availability, the investment in additional renewable capacity, and the limitations of electrolyzer production. Only a good transport and distribution network would be required. This could be the cheapest and largest way to provide hydrogen, becoming a game changer in the energy transition.

Summarizing, the hydrogen path has plenty of challenges and opportunities. Depending on the results of some of the investments and policy regulations, hydrogen could remain as just hype or become The Key Enabler for a fair and just Energy Transition.