Hydrogen Industry – a Closer Look
Last week we looked at the various colours of hydrogen. The colours indicated a variety of techniques of producing hydrogen; from Black Hydrogen (most polluting) to Green Hydrogen (most eco-friendly).
While the colours are fine, we want to know more about the Hydrogen (H2) industry. So this week we are looking into the story so far and what is planned in the future.
The Story so Far: Consumers – Nations and Industries
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In 2021, global hydrogen production and demand was at 94 million tons[1].
5 regions consumed the bulk of it:
[1] Ibid.
Figure 1: Major Hydrogen Consuming Regions[2]
The bulk of this hydrogen was used in the traditional industries of Refining and Chemicals. H2 was used sparsely in the new applications in heavy industry, transportation, power generation and buildings sector.
H2 was used in the following major industries:
Figure 2: Hydrogen consumption in Industry, 2021
DR-Iron (Direct Reduced Iron) production is incidentally quite concentrated in Middle East and India accounting for 40% and 30% of DRI in the world.
Almost all the H2 was produced from fossil fuels, leading to 200 million tons of CO2 emissions. Now all of this is black hydrogen. To put that in perspective the total emissions in the world is at about 37,100 million tons[3].
Now, since H2 is expected to assist in a big way in achieving the world’s NetZero goals, H2 will find demand in newer applications. If traditional industries will continue to have high demand in the coming years and we are expecting newer applications to demand more H2, then it is imperative the shift from Black H2 to Green H2 happen at an unprecedent rate.
Figure 3: H2 applications: Old and New[4]
From Fig. 3 we see that demand for H2 will spread from traditional applications of H2 (Refining, Chemicals, Fertilisers and Metallurgy) to other newer applications. It will be noted, besides being used as a chemical by its own right, H2 will be used for heating, transportation and electrical requirements.
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[1] IRENA, Geopolitics of Hydrogen, 2022
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Figure 4: H2 applications - prioritised as per policy[5]
Fig. 4 shows where the policy priority is right now. Large centralised applications of H2 will be focused to achieve of economies of scale and lower CO2 emission intensities. For example, in the Chemicals industry, as we have seen ammonia production requires 34 million tons of H2. 1 ton of Ammonia requires about 180 kgs of H2 and emits about 2.2 tons of CO2. Almost all feedstock for H2 comes from fossil fuels. Ammonia production accounts for 1.3% of global energy demand and 1% of energy-related CO2 emissions.
The policy focus therefore globally is to increase the supply of Green H2 in traditional industries. Ammonia Industry offers perhaps the quickest demand for such Green H2. It also helps that Ammonia is also a more stable method of “storing & distributing” H2.
The Way forward: Electrolysers and CCUS
Let’s for now assume that the entire policy mechanism is aimed at converting Ammonia production through 100% green H2 methods. Then, what are the strategies available? There are primarily 2 possible strategies.
Recall, that Green Hydrogen in its strictest sense means zero emissions when Hydrogen is produced. But practically, Green Hydrogen will have very low-emissions and won’t be zero. That offers 2 ways:
1.?????? Either produce hydrogen through clean energy means – produce green hydrogen from the start using perhaps, renewable energy;
2.?????? Or, capture the emissions after hydrogen is produced – produce black hydrogen, then capture & store the “black” emissions converting it into green hydrogen
Given these 2 strategies, various regions have announced plans to invest and construct low-emission hydrogen production capacity for Ammonia. In 2021, 190 million tons of Ammonia was produced. By contrast, the planned investment for low-emission Ammonia production is split between approximately 1.2 million tons of Electrolyser based production largely focused in Europe and 0.8 million tons of CCUS based production largely centred in North America (USA). This is barely 2% of the current and estimated global demand of Ammonia.
There is similar plans for methanol production, for transportation and the like. If all the planned projects were to come to fruition, then by 2030 the production of low-emission H2 could be between 16 and 24 million tons. Of these between 9 and 14 million tons would be based on electrolysis and between 7 and 10 million tons from fossil fuels with CCUS.
In the case of electrolysis, the realisation of all the projects in the pipeline could lead to an installed electrolyser capacity of 134- 240 GW by 2030.
In the next week we will look at the electrolyser technology more closely and what it means when we say the world will have about 200GW of capacity by 2030.
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With over 18 years of advisory and engineering experience across 25GW of renewables, Arbutus Consultants Pvt Ltd. could be your partner of choice in your renewable energy journey. Please reach out to us at [email protected] to find out how we may be of assistance.
[1] IEA, Global Hydrogen Review, 2022
[2] Ibid.
[3] https://ourworldindata.org/grapher/annual-co2-emissions-per-country?facet=none&country=~OWID_WRL
[5] IRENA, Geopolitics of Hydrogen, 2022
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