In the last five years, there has been speculation about hydrogen as an energy pathway for transition to a low-carbon world. Hydrogen as an energy pathway was always going to be a difficult route, due to physics. Molecular hydrogen (H₂) doesn’t naturally exist on earth in substantial quantities or purities. Some recently published hydrogen strategies make a lot of assumptions and don’t seem to consider the physical realities that impact the economic value of hydrogen as an energy carrier.
Because hydrogen needs to be manufactured before it can be used as an energy carrier, there is an energy cost to doing so. The two primary routes to making clean hydrogen are via the electrolysis of water (green) or reforming of a hydrocarbon (grey) with the potential additional step of carbon capture and sequestration (CCS) to remove the CO₂ emissions (blue). For these routes, unless the input costs are very low, the cost of hydrogen as a fuel will generally be higher than other energy sources. This is a simply a consequence of the laws of thermodynamics.
Production of low-carbon hydrogen is generally expensive on a per energy unit basis. This is because the path of hydrogen production, storage and utilization have thermodynamic efficiencies of between 25 and 55%. This means that even when ignoring capital costs, the cost of energy for end uses via hydrogen as a carrier is between two and four times the value of the input energy used to manufacture, store and transport it. Green hydrogen via electrolysis is very expensive if production is based on average power market costs. There may be an opportunity in certain circumstances for production based on stranded or excess power—such as when renewable production is larger than the grid can accept—but the potential low utilization of the electrolyzers in such situations factor against justifying such investment.
Additionally, hydrogen has a very low volumetric energy density, making transportation and storage difficult. Storing hydrogen must either be done at very high pressures, or as a liquid at very low temperatures (20 K, or -253°C), neither of which are cheap transportation nor storage methods.
So where do we go from here?
Today, the primary commercial scale application of lower carbon hydrogen is converting or replacing existing grey hydrogen manufacturing with blue. This commercial scale hydrogen is not valued on its energy content, but rather the value as an industrial chemical. Hydrogen is used in turning lower quality oil into refined products, or in the manufacture of chemicals such as ammonia fertilizer. Chemical processing facilities can better justify investments to reduce emissions in hydrogen manufacturing because the end use hydrogen is directly used in manufactured products. That is not to say that some hydrogen-as-fuel projects aren’t happening. The Dow Path2Zero project, as an example, is using hydrogen, some of which is a byproduct of ethylene manufacturing, as fuel. The hydrogen is being produced primarily from natural gas utilizing carbon capture and sequestration to reduce the carbon intensity of the ethylene manufacturing process. But again, this hydrogen is being justified solely to the fuel value since in aggregate it is being used to produce a lower carbon polymer product.
Studies of other potential use cases for hydrogen have shown that another potential use case that appears to make economic sense is displacing diesel in long haul trucks and perhaps trains with blue hydrogen. Again, the overall efficiency isn’t optimal turning power or natural gas into hydrogen, but the per unit of energy cost is reasonable when compared to liquid fuel prices, which are based on oil, and for which the per unit of energy is multiples of the cost of natural gas. There are still many challenges to making this a viable option, primarily around the infrastructure needed to provide and store hydrogen fuel at truck stops.
There are still many opportunities to advance low-carbon hydrogen projects, but the ambitious targets set out in national or regional strategy documents may be difficult to achieve commercially.