Hydrogen storage tanks in Spain, May 2022. Hydrogen has a wide range of applications and can be deployed in a wide range of industries.
Angel Garcia | Bloomberg | Getty Images
Discussions around hydrogen have grown louder over the past few years – with many seeing it as an important tool for reducing heavy industry’s environmental footprint and helping the economy reach net-zero goals.
The green hydrogen industry, centered on the production of hydrogen from renewable sources such as wind and solar, is of particular interest and has some high-profile backers.
These include German Chancellor Olaf Scholz, who in 2022 called it “one of the most important technologies for a climate-neutral world” and “key to the decarbonisation of our economy”.
In the business world, multinational corporations come from Iberdrola arrive Siemens Energy It is also looking to play a role in the green hydrogen space.
While hydrogen’s potential is exciting — the International Energy Agency describes it as a “multifunctional energy carrier” — there are undeniable challenges.
First, the vast majority hydrogen production Still based on fossil fuels, not renewables – a fact that is clearly at odds with the net zero goal.
Especially when it comes to green hydrogen, the cost of production is a major issue that needs to be brought down in the coming years.
Transporting hydrogen from the production site to the user is another equally important consideration.
“Hydrogen is pretty expensive to ship,” Murray Douglas, director of hydrogen research at Wood Mackenzie, told CNBC in an interview.
“It’s harder to transport than gas … technically, from an engineering perspective … it’s just harder,” he added.
Douglas isn’t alone in highlighting some of the hurdles in hydrogen delivery.
Take the U.S. Department of Energy as an example, point out the main challenges “Including reducing costs, improving energy efficiency, maintaining hydrogen purity, and minimizing hydrogen leakage.”
The DOE added that more research is needed to “analyze the tradeoffs of hydrogen production options and hydrogen delivery options when considered together as a system.”
Especially with respect to logistics related to green hydrogen, an area Something to note is the location of the production facility.
Typically, these projects are earmarked for renewable energy-rich regions such as Australia, North Africa and the Middle East, but are many miles away from where hydrogen will actually be used.
Wood Mackenzie’s Douglas mentions transport options as he ponders the investment landscape for the next 10 years.
“You could obviously pipe it, but you’d probably need a dedicated pipe,” he said, noting that that would likely require a new build and be close to the end user.
The only other realistic option within this investment range is to export the hydrogen as ammonia, he said.
“You produce hydrogen, green hydrogen, and you combine that with nitrogen to make ammonia,” he said.
Douglas noted that shipping ammonia is “a fairly mature technology and industry — there are already a lot of receiving ports.”
This ammonia can then be sold directly to end users, such as fertilizer producers.
Another option is to “crack the ammonia back into hydrogen”, although this has its own problems.
“Once you start ‘returning’ hydrogen use, you start to have some … considerable energy losses,” Douglas said.
In a statement to CNBC, Jorgo Chatzimarkakis, CEO of the European Hydrogen Industry Association, expressed optimism about the prospects for green hydrogen.
He said it would “become a global commodity”, before stressing the importance of having “an efficient delivery system”.
Chazy Markakis also highlighted the need for a certification scheme because “green hydrogen needs to prove that it comes from renewable sources.”
Partnerships and initiatives related to the supply and distribution of green hydrogen are starting to take shape, despite some clearly significant hurdles.
For example, earlier this year, Greenergy and Octopus Hydrogen — the latter part of the Octopus Energy Group — Announce They have started a “Green Hydrogen Supply Partnership”.
Elsewhere, German firm Enertrag explain Since 2021, the company has been “operating tanker trucks and transport trailers to deliver large volumes of green hydrogen to customers”.
As early as 2022, Madrid-based energy company Cepsa said it would work with the Port of Rotterdam to develop “the first green hydrogen corridor between Southern and Northern Europe”.
Although the technology and knowledge for hydrogen production and delivery already exists, a sticking point remains.
“The industry knows how to transport hydrogen,” said Wood Mackenzie’s Douglas, adding that the energy and chemicals industries have been transporting hydrogen “for a long time – it’s not new, it’s just expensive.”
Elaborating on his point, Douglas said lowering production costs is key. The lower these are, the more manageable shipping costs will be.
“I’m not sure there’s some kind of magical … cost-reducing technology that’s going to find its way into transportation,” he added.
“We’re not going to suddenly find … better materials to transport hydrogen,” he said.
“If you’re going to liquefy it, you have to get it really cold, and that’s expensive,” he went on to add. “If you convert that to ammonia, there’s a cost, and there’s a whole host of toxicity challenges.”
“They know how to do all these things,” he went on to conclude. “It still depends on the cost.”