Ultimate Resource On Blue And Green Hydrogen As Alternative Energy
The country’s effort to be carbon-free by 2050 relies on a fuel source many see as too expensive and unrealistic. Ultimate Resource On Blue And Green Hydrogen As Alternative Energy
Japan built the world’s third-largest economy on an industrial base powered by imported oil, gas and coal.
Now, it is planning to shift a big chunk of that power to hydrogen, in one of the world’s biggest bets on an energy source long dismissed as too costly and inefficient to be realistic.
The change is a vital piece of the country’s plan to eliminate carbon emissions in 30 years. If it succeeds, it could also lay the groundwork for a global supply chain that would finally let hydrogen come into its own as an energy source and further sideline oil and coal—similar to the way the country pioneered liquefied natural gas in the 1970s, some experts say.
Hydrogen has been hyped before, and there are still big economic and technical challenges to overcome. Japan’s approach is likely to be a gradual process of moving away from fossil fuels over many years, so it won’t cut carbon emissions quickly at first. Nor will it resolve its dependence on foreign energy. The country is planning to use hydrogen produced largely from imported fossil fuels initially.
But like many countries, Japan is realizing it can’t achieve its goal of zero emissions by 2050 with renewable sources like solar and wind alone. Hydrogen emits water vapor when used, rather than greenhouse gases seen as the main causes of global warming like carbon dioxide. It can be used to replace fossil fuels in industries where renewables don’t work as well.
The Japanese government more than doubled its hydrogen-related research-and-development budget to nearly $300 million in the two years to 2019, a figure that doesn’t include the millions invested by private companies.
In December, Japan published a preliminary road map that called for hydrogen and related fuels to supply 10% of the power for electricity generation—from virtually zero now—as well as a significant portion of the energy for other uses like shipping or steel manufacture by 2050. The government is honing a final energy plan now, which could contain official targets for hydrogen development and an estimate of how much it will cost.
Eventually, the government is expected to provide subsidies, as well as disincentives for carbon-emitting technologies. Japan’s industrial powerhouses are building ships, gas terminals and other infrastructure to make hydrogen a big part of everyday life.
Japan’s biggest power company, JERA Co., is planning to reduce carbon emissions by mixing the hydrogen compound ammonia into its coal-fired plants, and in May signed a memorandum of understanding with one of the world’s biggest ammonia manufacturers to develop supply.
The country’s conglomerates are seeking out places to source ammonia and hydrogen. Shipping companies like Nippon Yusen Kabushiki Kaisha are designing boats that run on those fuels.
The world’s first liquefied hydrogen carrier—a 380-foot vessel bearing the letters “LH2” in blue and black—sits at the port of Kobe in southwest Japan, preparing for its trial run to Australia, around 5,600 miles away.
“The real game-changer here is that if there is a breakthrough in Japan and the entire value chain is figured out to service the Japanese market, I think there will be rapid adoption” of hydrogen globally, says David Crane, the former chief executive of U.S. power producer NRG Energy Inc., who sits on the board of JERA.
Hydrogen has key advantages. One is that it can be used in modified versions of existing power plants and other machinery designed to run on coal, gas or oil. That will help countries avoid scrapping billions of dollars of legacy assets as they transition to a new-energy future.
It can also be stored and used in fuel cells, which pack more power into the same amount of space than electric batteries. That makes hydrogen better suited for airplanes or ships that have to carry energy supplies long distances.
Another advantage is that hydrogen is a technology in which Japan can take the lead and reduce reliance on China, which is emerging as a major alternative energy power and the world’s biggest supplier of solar panels and electric batteries.
With 80% of solar panels now coming from China, “we have some concern” about future energy security, says Masakazu Toyoda, chairman of the Institute of Energy Economics, Japan, who also sits on a committee advising the government on energy strategy.
The International Energy Agency said in May that hydrogen would be needed, along with solar and wind energy, if the world is to reach net-zero carbon emissions by 2050. Its road map for the most “technically feasible” way of getting there predicted hydrogen and related fuels would make up 13% of the total energy mix that year, while investment could exceed $470 billion annually.
In the U.S., some states and companies are investing in hydrogen projects like fuel stations, although the efforts are still sporadic.
The European Union last year rolled out its own hydrogen strategy and estimated investment in the industry could reach hundreds of billions of dollars by 2050. Several European oil companies, including Royal Dutch Shell PLC and BP PLC, are backing new hydrogen projects. Airbus this year unveiled plans for three hydrogen-fueled airplanes.
Elsewhere in Asia, a consortium of South Korean conglomerates including Hyundai in March announced $38 billion in hydrogen-related investment by 2030. China plans to have hundreds of hydrogen buses ready for the Beijing Winter Olympics in early 2022.
A key problem is that hydrogen isn’t found by itself in nature, which means it must be extracted from compounds such as water or fossil fuels. That takes energy. More energy goes into producing pure hydrogen than comes out when that hydrogen is consumed.
The most common ways of making hydrogen, by extracting it from natural gas or coal, also produce a lot of carbon dioxide. The long-term goal is to make hydrogen the “green” way, using electricity from renewable-energy sources, but for now that is pricier.
Storing and carrying hydrogen is tough, too. The gas is so light and takes up so much space at normal temperatures that it has to be compressed or liquefied to be transported efficiently. Hydrogen doesn’t turn into liquid until it is cooled to minus 253 degrees Celsius, just 20 degrees warmer than absolute zero.
Japan’s plan could be one of the world’s most consequential because of its bold idea of using ammonia. Ammonia, a compound of nitrogen and hydrogen that also emits no carbon dioxide, solves some of hydrogen’s problems. It is more expensive to make, but much easier to transport and store—and thus trade—than pure hydrogen. And it is already produced in large quantities world-wide, mostly for fertilizer.
Critics say hydrogen and related fuels aren’t worth the effort. Generating electricity from pure hydrogen in Japan would currently cost around eight times as much as from natural gas or solar and nine times more than coal, according to some estimates.
Greenpeace has panned Japan’s ammonia power-generation plans. It concluded in a March analysis that the idea was “expensive greenwash,” because it will likely still involve some greenhouse gas emissions and cost more than producing power with renewable energy.
Volkswagen estimates hydrogen-powered electric vehicles use as much as three times more energy than battery-powered ones. Tesla chief executive Elon Musk has called hydrogen fuel cells for cars stupid.
But Japan’s circumstances mean it has limited options. It imports almost 90% of the energy it uses, and has limited room to build out solar or wind arrays. Japan shut down most of its nuclear plants after a 2011 tsunami caused meltdowns at one in Fukushima; the public remains largely opposed to nuclear power.
The zero-carbon road map that Japan’s Ministry of Economy, Trade and Industry unveiled in December called for importing millions of tons of ammonia.
“It is a huge endeavor,” says Ryo Minami, director general of METI’s oil, gas and mineral resources department, which is leading its ammonia strategy. “Japan is embarking on something that’s never been done anywhere in the world.”
Although Japan has been plugging hydrogen since the 1970s, commercialization was slow. Attitudes started changing a few years ago, after a government-sponsored research project led by Shigeru Muraki, a former vice chairman at Tokyo Gas Co. Mr. Muraki proposed starting with ammonia until technologies using pure hydrogen matured.
Mr. Muraki’s group found it could be burned in existing coal- and gas-powered thermal plants, which currently produce three-quarters of Japan’s electricity. Although the combustion emits nitrous oxide, a greenhouse gas, Japanese engineers have worked to get the emissions down and say the rest can be filtered out so it doesn’t get released.
Japanese utilities could first secure ammonia made from fossil fuels and find ways to capture or offset the carbon dioxide emitted during that process, Mr. Muraki reasoned. They could switch to “green” ammonia as demand grows and prices come down.
Mr. Muraki talked up the idea to government officials, like the economy ministry’s Mr. Minami. The problem was that Japan needed economies of scale to bring down hydrogen or ammonia prices, and no big consumer had emerged.
That is where JERA came in. The power producer was formed after the Fukushima nuclear plant disaster left its operator, Tokyo Electric Power Co., in bad financial straits. In 2019, Tepco and another major utility transferred their thermal power plants to JERA, leaving it with facilities that supplied around a third of Japan’s electricity.
JERA calculated that switching Japan’s power to entirely renewable energy would mean rebuilding the country’s electric grid, a costly and time-consuming process, says Hisahide Okuda, head of JERA’s strategy department. But the existing grid could support enough renewable power to meet half the country’s demand.
To decarbonize the rest, Mr. Okuda turned to ammonia and won over skeptical board members. JERA unveiled its plan to shift its coal plants to an ammonia mix in October.
In Yokohama, heavy-industry manufacturer IHI Corp. is adapting gas turbines to burn an ammonia-gas mix.
All you have to do is replace the burner, says Masahiro Uchida, an IHI senior researcher, pointing to a bronze-colored cylinder atop the main turbine chamber. IHI has also figured out how to retrofit coal furnaces, and hopes to sell them in countries like Australia or Malaysia, as well as Japan.
JERA and IHI are starting a government-sponsored trial to burn a 20% ammonia mix at one of JERA’s biggest coal-burning plants. If that goes well, JERA says it hopes to roll out the technology at all its coal plants by 2030, and then gradually raise the percentage of ammonia used, reducing the carbon emitted.
That would require a massive boost in ammonia supply. JERA’s initial test calls for around 500,000 tons a year—around half of what Japan consumes now. By 2050, Japan could consume 30 million tons of ammonia and 20 million tons of hydrogen a year, according to projections from METI and an advisory group. Roughly 20 million tons of ammonia are traded globally now.
The task of figuring out how to develop that supply is falling to companies like Mitsubishi Corp. and Mitsui & Co. that import much of the fuel and chemicals Japan uses today.
The biggest challenge is price. Government officials and industry executives estimate it would cost around 24% more to produce electricity if utilities mixed in 20% ammonia than by just burning coal. Industry executives say that price gap could be manageable with government support and incentives.
Mitsui is discussing the possibility of a big new ammonia plant in Saudi Arabia, which the conglomerate has concluded is the cheapest source. Mitsubishi is in talks with potential suppliers in North America, the Middle East and Asia, and is also talking to Japanese shipping companies about building bigger ammonia carriers.
Shipping firm Nippon Yusen is seeking preliminary approval for a massive ammonia tanker that would be fueled by ammonia as well, and hopes to have it ready for delivery by 2028.
Meanwhile, companies are making investments they hope will hasten the day when pure hydrogen can be used. Japanese car, truck and heavy equipment makers including Toyota Motor Corp. are pushing for more hydrogen-powered vehicles. High prices and a dearth of fueling stations have limited adoption so far.
Kawasaki Heavy Industries Ltd. is developing the technology needed to handle liquefied hydrogen, including tanks and pipes made from double-layered stainless steel, with a vacuum between layers for insulation.
On a windy day in April, the world’s first liquefied hydrogen carrier was preparing for an inaugural run to southern Australia, where the government has built a trial project to make hydrogen out of coal.
The tank sits on sliders that let it expand and contract from extreme temperature changes from storing hydrogen without breaking the struts that hold it to the boat. The tangle of pipes above the deck are also engineered to withstand expansion and shrinkage, running in a series of right angles rather than straight.
Farther out in the bay, Kawasaki has built a globe-shaped storage tank and what could become Japan’s first liquefied-hydrogen loading terminal.
“We’re coming into the critical period” for hydrogen development, says Motohiko Nishimura, the executive officer in charge of Kawasaki’s hydrogen push. “At the very least, it is our job to show that this is all technically possible.”
A Gigafactory For Hydrogen Could Be A Game-Changer
Indian energy billionaire Mukesh Ambani is planning to invest big in both the present and the future of renewables.
Asia’s richest person, Mukesh Ambani, has a $10 billion plan to scale up zero-carbon hardware in India. Reliance Industries, the oil- and refining-heavy conglomerate that he controls, intends to develop four huge “ giga factories” to manufacture photovoltaic modules, batteries, fuel cells, and—importantly—electrolyzers to produce hydrogen.
It’s a big plan, but short of details. Still, it bridges two aspects of decarbonization: technologies that exist today and are economical at scale, and those that need a major effort to get to that point.
A factory capable of manufacturing 100 gigawatts of solar panels in nine years is impressive, certainly, but it’s not out of the realm of today’s possibilities. A number of companies already manufacture more than 10 gigawatts of modules a year.
Scale exists for batteries too, and manufacturing expansions that will more than double today’s production capacity are already underway. Those technologies plug right into our electrical grid, as do fuel cells.
Hydrogen is different. It can play a role in the power sector as a zero-carbon fuel, but it probably has more value in industrial processes that need high heat, historically supplied by natural gas, coal, or oil. Swedish steelmaker SSAB AB is planning to make zero-carbon steel within five years using hydrogen.
Doing so in a zero-emissions way—that is, using electrolyzers powered by renewables to isolate hydrogen atoms from water molecules, rather than deriving hydrogen from fossil fuels—depends on a number of factors, beginning with competitive cost. Cost is a function of supply, which is in turn a function of manufacturing cost—which is where Ambani’s gigafactory-sized ambition comes in.
Two of our most essential modern industries—steel and cement production—are still very far from decarbonization. Global greenhouse gas emissions from these two sectors have risen tremendously since the middle of the last century. Steel, thanks to an extraordinary surge in production in China, doubled its emissions from 2000 to 2015. Cement emissions have risen more than 20-fold since 1950.
Zero-carbon electricity will be instrumental in decarbonizing, but it can only go so far, and we’re still quite a ways away from there. Power sector emissions flattened out early last decade, and almost certainly peaked for good in 2018.
Greater demand for renewable power will drive that curve down further, which will in turn incentivize its use in any process that can substitute electricity for something that creates greenhouse gas emissions.
In steel, that could mean replacing the coking coal used in blast furnaces with renewably-produced hydrogen, as SSAB plans to do. For cement, that could mean replacing some of the natural gas burned in the production process with green hydrogen.
Ideally, this is all a virtuous cycle—their success creates demand, which incentivizes more supply, which in turn drives down prices, which in turn creates more demand.
Cement has more than just a heat problem; it also has a chemistry problem too. The molecular transformation of limestone into cement releases carbon dioxide, which is a problem renewable electricity can’t solve. There’s innovation underway on the chemical side of things too, though. This week, California-based startup Fortera raised $30 million to fund the invention of lower-carbon cement.
Today’s gigafactory era shows us just how far we’ve come. In 2009, an investor-sponsored report with the somewhat cringe-y name Gigaton Throwdown 1 asked “entrepreneurs, business leaders, and policy makers to ‘think big’ and understand what it would take to scale up clean energy massively over the next 10 years.” Hydrogen was barely mentioned, i.e. was definitely not seen as a technology with the potential to scale.
Back then, hydrogen was probably not even a glimmer in Mukesh Ambani’s eye, either. Perhaps Reliance’s gigafactories can deliver hydrogen at a scale that late-aughts venture capital investors and policymakers wouldn’t have been able to comprehend. If it can, it will push decarbonization into new frontiers, too.
INEOS To Back Clean Hydrogen Fund In London Listing
HydrogenOne Capital Growth will receive a minimum of £25 million ($34.6 million) pounds as a cornerstone investment from INEOS Energy amid plans to list on the London Stock Exchange’s main market, the companies said on Monday.
The fund, which will predominately invest in private clean-hydrogen assets, aims to raise £250 million ($346 million) in an initial public offering
“We want to be able to compete in the energy transition,” Ineos Energy Chairman Brian Gilvary said in an interview with Bloomberg on Monday. The investment into HydrogenOne “gives us a lens into how the market will unfold,” as Ineos will have a board seat as well as investment rights.
While hydrogen remains a relatively small part of the global energy mix, it is expected to gain prominence as part of the energy transition. Today, most hydrogen is made from emissions-emitting fossil fuels, but governments worldwide are offering funding for green hydrogen projects — the cleanest variety of the gas which is produced using renewable energy — with Royal Dutch Shell Plc beginning production at a German refinery last week following investment from the European Commission.
“This will be a platform to potentially scale up investment as economic returns become available,” which could happen by the end of the decade, Gilvary said.
HydrogenOne was set up last year by energy veterans JJ Traynor and Richard Hulf. The fund will place ordinary shares of 1 pence each at an issue price of 100 pence apiece. Panmure Gordon is acting as sponsor, financial adviser and joint bookrunner, while Kepler Cheuvreux is also acting as a bookrunner.
Ineos Energy was set up by Ineos Group late last year and incorporates the company’s oil and gas assets as well as low-carbon technologies. Earlier this year it bought Hess Corp.’s oil assets in Denmark and sold its business in Norway as it sought to lower its exposure to gas in its portfolio.
Europe Debuts Hydrogen Passenger Trains In Zero-Carbon Push
The trains will ply a regional line between Buxtehude, outside Hamburg, and the beach town of Cuxhaven.
The first hydrogen-powered passenger trains built by Alstom SA are set to debut in Germany and establish a toehold for the technology in Europe.
After a lengthy trial period on a 123-kilometer (76-mile) track in Lower Saxony, Germany, commercial operations will begin next March, according to Carmen Schwabl, managing director at rail operator LNVG. Alstom’s 14 Coradia iLint passenger trains will ply a regional line between Buxtehude, outside Hamburg, and the beach town of Cuxhaven.
Alstom has been promoting trains that run on fuel cells for more than five years as an alternative to carbon-emitting diesel engines. In addition to the German project, the world’s second-biggest rail equipment supplier won an order earlier this month from France’s national railroad for a dual hydrogen-electric train and has garnered other contracts in Germany and Italy.
Its rival Siemens AG is also developing hydrogen trains and the European market is estimated to grow to tens of billions of dollars in the coming years as emissions rules get tougher. While battery packs or power lines can also be used to electrify rail travel and cut pollution, this isn’t always a practical solution depending on the route.
European Union lawmakers reached a deal this week to make the bloc’s ambitious climate goals legally binding, and stronger rules are expected to affect industries ranging from transport to energy production. The region’s railways are on average only about 54% electrified and state-owned operators could face more pressure to replace polluting engines.
“Europe will definitely be the main market,” Alstom Chief Executive Officer Henri Poupart-Lafarge said Wednesday during a company webinar, citing France, Germany, Italy and the U.K. as countries with large diesel fleets. Fuel supply and infrastructure need to be expanded, he said, but “the trains are ready.”
There are substantial growth prospects for hydrogen trains in Europe, according to Morgan Stanley analysts. They estimate that by mid-century, the sector could be worth between $24 billion and $48 billion. By2030, trains running on hydrogen could make up one out-in-10 of those not already electrified.
Alstom expects more than 5,000 passenger trains running on diesel in Europe will have to be replaced by around 2035. It also says a quarter of all trains in the region use the fuel and will have to retired by around mid-century to meet climate goals.
European nations are already pouring money into subsidies for companies developing battery and hydrogen technology for vehicles. This could also be extended to the rail industry to replace diesel train engines.
“We will no longer buy any diesel units,” said LNVG’s Schwabl during the webinar. The railway operates 126 trains running on the fuel and is looking for alternatives.
In Austria, the federal railway OBB tested Alstom’s hydrogen train last year near Vienna and is evaluating how it compares with other systems for replacing diesel, Chief Technical Officer Mark Topal Goekceli said during the same forum.
“For longer distances and areas where we need more power, hydrogen has an advantage,” he said. “It seems that battery trains could have an advantage for short distances, but we need to sort this out.”
The costs to an owner of a regional passenger train are cheapest when it is powered by electric batteries, followed by diesel, hydrogen and then electric lines, according to clean energy research group BloombergNEF. The choice between batteries or fuel cells to replace diesel depends on factors like the length of the tracks, frequency of service and number of stops.
Saudi Arabia’s Bold Plan To Rule The $700 Billion Hydrogen Market
The kingdom is building a $5 billion plant to make green fuel for export and lessen the country’s dependence on petrodollars.
Sun-scorched expanses and steady Red Sea breezes make the northwest tip of Saudi Arabia prime real estate for what the kingdom hopes will become a global hub for green hydrogen.
As governments and industries seek less-polluting alternatives to hydrocarbons, the world’s biggest crude exporter doesn’t want to cede the burgeoning hydrogen business to China, Europe or Australia and lose a potentially massive source of income. So it’s building a $5 billion plant powered entirely by sun and wind that will be among the world’s biggest green hydrogen makers when it opens in the planned megacity of Neom in 2025.
The task of turning a patch of desert the size of Belgium into a metropolis powered by renewable energy falls to Peter Terium, the former chief executive officer of RWE AG, Germany’s biggest utility, and clean-energy spinoff Innogy SE. His performance will help determine whether a country dependent on petrodollars can transition into a supplier of non-polluting fuels.
“There’s nothing I’ve ever seen or heard of this dimension or challenge,” Terium said. “I’ve been spending the last two years wrapping my mind around ‘from scratch,’ and now we’re very much in execution mode.”
Hydrogen is morphing from a niche power source — used in zeppelins, rockets and nuclear weapons — into big business, with the European Union alone committing $500 billion to scale up its infrastructure. Huge obstacles remain to the gas becoming a major part of the energy transition, and skeptics point to Saudi Arabia’s weak track record so far capitalizing on what should be a competitive edge in the renewables business, especially solar, where there are many plans but few operational projects.
But countries are jostling for position in a future global market, and hydrogen experts list the kingdom as one to watch.
The U.K. is hosting 10 projects to heat buildings with the gas, China is deploying fuel-cell buses and commercial vehicles, and Japan is planning to use the gas in steelmaking. U.S. presidential climate envoy John Kerry urged the domestic oil and gas industry to embrace hydrogen’s “huge opportunities.”
That should mean plenty of potential customers for the plant called Helios Green Fuels. Saudi Arabia is setting its sights on becoming the world’s largest supplier of hydrogen — a market that BloombergNEF estimates could be worth as much as $700 billion by 2050.
“You’re seeing a more diversified portfolio of energy exports that is more resilient,” said Shihab Elborai, a Dubai-based partner at consultant Strategy&. “It’s diversified against any uncertainties in the rate and timing of the energy transition.”
Blueprints are being drawn and strategies are being announced, but it’s still early days for the industry. Hydrogen is expensive to make without expelling greenhouse gases, difficult to store and highly combustible.
Green hydrogen is produced by using renewable energy rather than fossil fuels. The current cost of producing a kilogram is a little under $5, according to the International Renewable Energy Agency.
Saudi Arabia possesses a competitive advantage in its perpetual sunshine and wind, and vast tracts of unused land. Helios’s costs likely will be among the lowest globally and could reach $1.50 per kilogram by 2030, according to BNEF. That’s cheaper than some hydrogen made from non-renewable sources today.
It’s more expensive to produce renewable energy in Europe, and the continent’s anticipated demand while implementing a Green Deal should exceed its own supply, Terium said. That $1 trillion-plus stimulus package will try to make the continent carbon-neutral.
“By no means will they be able to produce all the hydrogen themselves,” he said. “There’s just not enough North Sea or usable water for offshore wind.”
Terium, who is Dutch, joined Neom in 2018 to design its energy, water and food networks. His enthusiasm for technologies such as electric vehicles and digital networks wasn’t matched by Innogy’s investors, but it is by the backers of Neom.
The most important of those is Crown Prince Mohammed bin Salman, the 35-year-old de facto ruler, who envisions Neom as a zero-emissions exemplar helping transform society and the economy. The hydrogen plant is part of that vision. But while Neom’s $500 billion price tag prompts questions about whether it will go ahead exactly as planned, the hydrogen effort doesn’t depend on the megacity’s overall success.
There are other challenges, too: The country produces one-eighth of the world’s oil supply, but its operational renewables capacity is small by regional standards, and it’s starting from zero with green hydrogen.
The government is partnering with Acwa Power, a Riyadh, Saudi Arabia-based power developer partly owned by the kingdom’s sovereign wealth fund, and Air Products and Chemicals Inc., a $58 billion company based in Allentown, Pennsylvania, to build the green hydrogen plant.
The trio is splitting the costs of Helios, which will use 4 gigawatts of solar and wind power.
“As the first gigawatt plant, we will have an advantage in developing further innovation,” Terium said. “This is not going to be the end of the game.”
For starters, Helios will produce 650 tons of hydrogen a day by electrolysis – enough for conversion to 1.2 million tons per year of green ammonia. Air Products will buy all of that ammonia, which is easier to ship than liquid or gaseous hydrogen, and convert it back upon delivery to customers.
Enough green hydrogen will be produced to maintain about 20,000 city buses. There are about 3 million buses operating worldwide, and Air Products wants to be a mainstay in depots switching to hydrogen, said Simon Moore, vice president of investor relations.
“We’re not going to wait until this project comes on-stream in 2025 to think about additional capacity,” he said.
Fuel-cell vehicles could capture as much as 30% of bus-fleet volume globally by 2050, with growth coming primarily from China and the European Union, according to BNEF. Moore declined to identify Helios’s clients.
Hydrogen will cost more than polluting alternatives at first, but enough governments and businesses face stringent carbon targets that need the gas to meet them, Moore said. Thirteen nations have hydrogen strategies in place, and another 11 are preparing theirs, according to BNEF.
Germany said it needs “enormous” volumes of green hydrogen, and it hopes Saudi Arabia will be a supplier.
“The interest Saudi Arabia has had from investors leads us to believe that there is a sound economic case for hydrogen, even at current prices,” a spokesman for the Energy Ministry said.
At the same time, the government is trying to boost its own scant use of renewable energy. Currently, under 700 megawatts operate nationwide — less than 2% of Spain’s installed capacity. The nation plans to meet half of its power needs from renewables by 2030 and has several projects under construction or soon to start.
Saudi Arabia also is one of the few countries regularly burning crude to make electricity. The highly polluting practice reached a four-year peak in August, and critics say the energy used by the Neom plant should be diverted into the national grid instead.
Yet the focus remains on exports. Petrostates stand to lose as much as $13 trillion by 2040 because of climate-change targets, and Saudi Arabia is among those expected to be most affected.
The hydrogen plant will produce 15,000 barrels of oil equivalent per day at most, hardly a match for the 9 million barrels of crude the kingdom pumps daily. Even so, finding a way to corner part of the clean-fuels market represents a necessary economic lifeline.
“It’s sponsored at the highest possible level, so if any project happens, it’s got to be this,” Elborai said.
Aramco Aims To Partner With China On Blue Hydrogen, CEO Says
Saudi Aramco plans to “expand and intensify” cooperation with China on research in areas including hydrogen and ammonia production from natural gas, according to Chief Executive Officer Amin Nasser.
Aramco is looking to work with China on blue hydrogen and ammonia, synthetic fuels and carbon capture utilization and storage, Nasser said at the China Development Forum in Beijing. “All of these are essential to achieving our long-term, low-carbon ambitions,” he said.
The oil major is also sizing up possible investments in Chinese projects despite spending constraints arising from a period of low oil prices as a result of the coronavirus pandemic.
“We see opportunities for further investments in integrated downstream projects to help meet China’s needs for heavy transport and chemicals, as well as lubricants and non-metallic materials,” Nasser said.
Oil companies globally reported losses or falling profit for 2020 as plunging demand due to the coronavirus pandemic led to lower prices and forced producers to shut in output. Aramco, the world’s biggest producer, was no different, reporting Sunday a 44% drop in profit and further investment reductions. Still, some advanced or strategic projects are going ahead.
Domestically, the Jazan refinery is “on stream,” Nasser told reporters on a separate conference call to discuss earnings on Sunday. The planned 400,000 barrel-a-day crude-processing plant on Saudi Arabia’s southern Red Sea coast was set to start running at about half capacity after taking crude in the first quarter this year, Aramco said in August.
Nasser didn’t provide updates on the schedule or capacity for the plant that’s meant to bolster employment in the remote and less-wealthy regions along Saudi Arabia’s border with Yemen.
Green Hydrogen Plant In Saudi Desert Aims To Amp Up Clean Power
Developers behind the world’s largest planned green hydrogen project hope a growing global thirst for emission-free fuels will pay dividends.
Can a multibillion-dollar project in the Saudi desert jump-start the demand for green hydrogen, an elusive energy source that could help eliminate carbon emissions from vehicles, power plants and heavy industry?
The allure of hydrogen is undeniable. Unlike oil and natural gas, it doesn’t emit carbon dioxide and other greenhouse gases when burned. It’s more easily stored than electricity generated by wind turbines and solar farms, and it can be transported by ship or pipeline. Green hydrogen, which is produced using renewable energy sources, is especially attractive as a fuel. It’s made from water rather than methane or other hydrocarbons.
But those who foresee a green hydrogen future face a quandary: The high cost of producing the odorless, colorless, flammable gas can be mitigated only by large-scale projects, which in turn make economic sense only if there is a widespread market for green hydrogen. That doesn’t yet exist.
In Neom, a planned megacity of the future now taking shape in northwestern Saudi Arabia, the investors behind the green hydrogen project think they can deliver the chicken and the egg.
The initiative—a joint venture of Neom, U.S. chemical company Air Products & Chemicals Inc., and Saudi Arabia’s ACWA Power—will invest $5 billion to build what will be the world’s largest green hydrogen production facility.
Another $2 billion will be invested in distribution infrastructure in consumer markets around the world, primarily to fuel industrial vehicles and public buses.
Plans call for the sprawling facility, which isn’t yet under construction, to produce 650 tons of green hydrogen a day starting in 2025. The facility’s output will dwarf that of a green hydrogen plant in Québec that produces about nine tons a day, making it the largest such facility in the world.
The Neom project exemplifies the Kingdom’s ambitious plan to diversify away from oil and natural gas and showcase Neom as a global hub for technology and green energy.
Green Hydrogen Seen Fueling Heavy Trucks And Buses By 2030
Long heralded as the clean energy fuel of the future that will play a key role in decarbonization, attractive hydrogen prices could finally be in sight.
Green hydrogen — the cleanest form of the fuel — is approaching cost competitiveness for heavy trucking, buses and remote power, and could be commercially viable in transportation by 2030, according to a study commissioned by Australia’s government-backed Clean Energy Finance Corp.
The findings come as countries seeks ways to cut emissions to meet Paris Agreement targets. China is set to release a plan for the sector’s development, while the European Union has said its investment in hydrogen could hit 470 billion euros ($565 billion) by 2030. Australia is among the world’s most-active hydrogen developers with more than a dozen technology clusters for the fuel.
The cost of delivered green hydrogen will slump 40% over the next decade to A$3.48 ($2.70) a kilogram by 2030, according to the report’s base scenario. The falling costs of electrolyzers and continued declines in solar and wind costs are expected to help green hydrogen compete with fossil fuels.
Renewable hydrogen production costs not including delivery should fall below $2 a kilogram by 2030 and be less than $1 a kilogram by 2050 in most markets, energy researcher BloombergNEF said in a note last month.
Hydrogen is closest to achieving parity with petroleum products, although it could also displace natural gas, according to the report, which was compiled by energy consultant Advisian, and surveyed 25 Australian industry sectors.
Hydrogen Plan Isn’t Very Green Under U.S. Infrastructure Deal
Building a hydrogen-based energy system in the U.S., which some analysts call key to fighting climate change, would be based largely on fossil fuels under the bipartisan infrastructure bill heading for a Senate vote.
The legislation provides for $8 billion in spending to establish at least four “regional clean hydrogen hubs” producing and using the fuel for manufacturing, heating and transportation. At least two would be in U.S. regions “with the greatest natural gas resources,” according to the bill. One hub would demonstrate production from fossil fuels, one would use renewable power, and one would use nuclear power. Coal also is listed a potential source.
Such variations underscore how hydrogen is only as green as the underlying sources and processes used to produce the fuel.
Hydrogen could play a pivotal role in a zero-carbon future because it can power turbines, furnaces and fuel cells without producing greenhouse gases. But the vast majority of the fuel used today is stripped from fossil fuels, usually natural gas, in a process that releases carbon dioxide. Those emissions must be captured and either used in other products or stored permanently in order for gas-based hydrogen to truly fight climate change. The bill also would invest in such capture technologies and facilities
The fuel can also be stripped from water using electrolyzer devices, and if the electricity powering them comes from renewable sources, the process does not generate greenhouse gases. Such “green hydrogen” is pricier than production from natural gas, but as renewable power and electrolyzer costs fall, BloombergNEF predicts green sources will cost less than fossil fuels within a decade. That could make some of the proposed hubs less competitive.
The bill also would authorize $1 billion for grants to improve electrolyzers, making them more efficient and lowering their costs.
U.K. Plans Subsidy-Driven Hydrogen Boost On Path To Net Zero
Hydrogen could be vital to U.K. efforts to eliminate greenhouse gases by changing the way vehicles are fueled, factories are powered and homes are heated, Business Secretary Kwasi Kwarteng said.
Kwarteng on Tuesday unveiled a strategy that aims to unlock 4 billion pounds ($5.5 billion) of investment in hydrogen production by 2030, supporting 9,000 jobs. Ministers are planning to use similar incentives to those that helped boost offshore wind production.
Prime Minister Boris Johnson is under pressure to show how his government will cut emissions to net zero by 2050 after announcing a series of ambitious goals to slash greenhouse gases, without outlining policies to get there. Government analysis suggests hydrogen could help provide as much as 35% of U.K. energy consumption by 2050, meaning it could be pivotal.
“Hydrogen is potentially crucially important,” Kwarteng said in an interview. “It can solve a lot of our decarbonization problems.”
Kwarteng said its use in transport could help decarbonize trains, trucks and bus fleets. Hydrogen could also generate the power for refineries and steel plants, he said, and longer term it could play a big part in heating the nation’s homes.
The U.K. is due to host a major round of United Nations climate talks in Glasgow in November, where Johnson will need to demonstrate leadership if he hopes to persuade other polluters to reduce their emissions.
While the published strategy makes no advance on the government’s existing target of producing 5 gigawatts of low-carbon hydrogen by 2030, it does begin to flesh out how ministers want to get there.
The plan includes both “green hydrogen” — produced using water and renewable power — and cheaper “blue hydrogen,” which has carbon dioxide as a byproduct that needs to be stored permanently underground. Amid concerns about the environmental integrity of the latter, Kwarteng’s department is consulting on an industry standard to ensure minimal carbon leakage.
The minister said pursuing both production methods is vital to help stimulate a new market, which would be much harder to do relying solely on green hydrogen at about twice the cost.
The government will make sure blue hydrogen that’s subsidized “is as pure as we can, as decarbonized as we can,” he said.
But environmental groups criticized the dual approach. Greenpeace called it a “bad idea both environmentally and economically,” while E3G said it could be a “twin track to nowhere, leaving the climate behind.”
The government wants to use so-called contracts-for-difference to incentivize hydrogen production. Since they were introduced for offshore wind in 2015, annual power generation has tripled while costs have come down by two-thirds.
For hydrogen, the government aims initially to negotiate contracts directly with hydrogen producers, at a level that covers their costs and allows them to make a profit. Then, it aims to move on to a system of competitive auctions, as happened with renewable energy in the past decade. Ministers haven’t decided whether it will be paid for from general taxation or consumer levies.
The U.K. plans to finalize the low-carbon hydrogen business model next year with an aim to allocate the first contracts in the first quarter of 2023.
The plan doesn’t model costs for hydrogen production from nuclear power plants, but does envision a role for existing reactors to power electrolyzers this decade. The role for nuclear power to produce hydrogen could be expanded after 2030.
The strategy sees industrial processes forming the bulk of hydrogen demand over the next decade. The government expects smaller take-up in the power sector and for transportation.
It also plans domestic heating trials at the scale of neighborhoods, villages and towns this decade to lay the foundations for wider post-2030 usage.
“If you consider that 85% of U.K. homes essentially use gas, we could decarbonize this essentially through use of hydrogen,” Kwarteng said. “That’s very exciting.”
Hydrogen is seen as the main alternative to heat pumps when replacing the gas-fired boilers that warm the majority of U.K. homes.
The industry sees the potential to blend hydrogen with natural gas to a proportion of up to 20% without the need to modify pipes or home appliances — an option the government said it’s looking at. That could give ministers an easy way to quickly reduce emissions from home heating and cooking, opening the way for the hydrogen industry to increase that blend over time.
But domestic heating is a politically thorny issue for Johnson. Many members of his ruling Conservative Party are concerned about the extra costs associated with replacing gas boilers.
Heating an average U.K. home in 2030 using hydrogen is expected to be about 43% more expensive than using a heat pump, according to BloombergNEF. And heat pumps cost about 10,000 pounds to buy and install — about five times the cost of a gas boiler.
Kwarteng’s department is devising a heat and buildings strategy that’s due as soon as next month, to look at how to decarbonize the country’s housing stock.
The response from British business to the hydrogen strategy was broadly positive. Antony Green, hydrogen director at National Grid Plc, said it will be key to “triggering the investment and buy-in” needed to scale up production of the gas.
Confederation of British Industry Policy Director Matthew Fell said the U.K. stands “perfectly positioned to capitalize on the opportunities provided by hydrogen,” while calling on the government to devise more detailed policy.
Investors See Green Hydrogen Advancing As China Signals Support
Chinese investors see potential for further gains in companies making equipment needed to produce or use green hydrogen, a clean energy source most governments are betting will help them meet mid-century climate targets.
The sector has so far offered a haven from government crackdowns on technology and education companies that Beijing blames for exacerbating inequality and increasing financial risk. As China tightens oversight, industries driving growth through innovation and technology are seen gaining support.
“Hydrogen power is one of the ultimate solutions to achieve net-zero emissions,” said Li Weiqing, fund manager at JH Investment Management, which purchased shares of LONGi Green Energy Technology Co. due to the company’s hydrogen investments. The sector will get “heavy policy support.”
Although a surge in hydrogen-related stocks earlier this month that buoyed shares of companies like fueling-station equipment maker Houpu Clean Energy Co. and fuel cell engine maker Zhongshan Broad Ocean Motor Co. has leveled off, there remains plenty of upside potential, according to Li.
Government support for green hydrogen isn’t likely to come through direct central government subsidies, according to Xiaoting Wang, a BloombergNEF analyst based in San Francisco, who cited the high cost of that approach. Rather, Beijing will support large state-backed firms developing the energy.
However, the sector is benefiting as local governments, including Beijing and Inner Mongolia, introduce strategies aimed at cultivating green hydrogen firms to show compliance with net-zero targets. China will account for about two-thirds of the world’s electrolyzers, the equipment used to produce hydrogen by separating water, by the end of 2022, according to BNEF.
More than 20 provinces and 40 cities in China have published development plans worth trillions of yuan for hydrogen energy facilities, according to the state-run Economic Daily. The country delivered 558 fuel-cell buses in the first six months of 2021, compared with 17,000 battery electric buses deployed in the second quarter of this year alone, according to BNEF.
EasyJet Urges Governments to Back Airbus Bet on Hydrogen
* CEO Warns Focus On SAF Could Deflect From Vital New Technology
* Tax Breaks, Infrastructure Funding Key To Green-Plane Progress
EasyJet Plc said governments need to get behind zero-emission aircraft including hydrogen-powered models envisaged by Airbus SE if they’re to become a reality by the 2030s.
Airlines that operate such planes should benefit from tax breaks and reduced airspace and airport charges, while state support will be key in developing hydrogen supplies and infrastructure, EasyJet Chief Executive Officer Johan Lundgren said Tuesday at an Airbus sustainability event.
The aviation industry has put forward a range of proposals as it seeks to burnish its green credentials before next month’s COP26 climate summit in Scotland. EasyJet said that while it will embrace near-term measures such as sustainable aviation fuel, the most effective long-term solution for short-haul operators is a wholesale switch to zero-carbon hydrogen and electric aircraft.
“It needs to be an effort by everybody including governments to make sure there’s a plan of how to decarbonize,” Lundgren said at the event in Toulouse, France. “One of the things I’m skeptical of is well-meaning attempts by some policy makers that will strangle aviation by impacting demand.”
Airlines are currently reliant on carbon offsets as an immediate response to cutting emissions, with the role of SAF limited by a lack of availability and consequent higher costs. Even so, the CEO said he’s concerned that too much focus on SAF risks hurting investment in true zero-emission technologies.
Commercial aviation’s share of CO2 output from fossil fuels jumped 29% between 2013 and 2019, according to the International Council on Clean Transportation in Washington, and the sector faces renewed scrutiny as flights resume following groundings at the height of the coronavirus pandemic.
In a release before speaking at the event, Lundgren said aviation taxes should be plowed into research and development budgets. Luton, England-based EasyJet has partnered with Airbus on developing a hydrogen plane by 2035 and aims to reach net-zero by 2050.
Airbus said separately that it’s stepping up collaboration with Air France-KLM and French airspace navigation agency DSNA on the development of “most energy efficient flights” following a demonstration trip from Paris to Toulouse at the start of the sustainability forum.
Giant Offshore Irish Wind Farm Planned For Green Hydrogen
* Singapore-Based Enterprize Energy Plans To Build 4GW Project
* Preliminary Offtake Deal Agreed With Green Hydrogen Project
A Singapore-based offshore wind developer has signed an agreement to build a huge $10 billion wind farm off the coast of Ireland to power a green hydrogen facility.
Green hydrogen — produced by renewable electricity — is seen as a clean alternative to natural gas for industries such as steel and chemicals, with energy majors from Equinor ASA to BP Plc piling in to the technology.
Europe has a goal of 6 gigawatts of installed green hydrogen by 2024, and 40 gigawatts by 2030.
Enterprize Energy Pte’s 4-gigawatt wind farm will supply electricity for hydrogen production and consumption in Ireland, or for conversion into ammonia that can exported, Chief Executive Officer Ian Hatton said in an interview.
“We see Europe as being a net consumer of green hydrogen,” Hatton said. “Our overall model is about developing production of green hydrogen in locations where the natural resources are going to give you the lowest cost and then bring it into the market, so Ireland, to us, is a key hub in that strategy.”
Enterprize isn’t seeking a subsidy for the wind farm. It will raise money through project financing arranged by Societe Generale SA as well as from private equity investment, Hatton said.
The project will provide electricity for a 4-gigawatt hydrogen facility in Ireland being developed by E1-H2 and Zenith Energy Ltd. called Green Marlin, which could be generating as soon as 2026. The energy companies have signed a precursor to a power purchase agreement, with EI-H2 off-taking the energy.
The farm will use articulated wind columns, deep-water technology used by the oil and gas industry for exploration and production platforms.
Enterprize has signed deals with oil and gas development company Sapura Energy Berhad and foundation supplier, Offshore Design Engineering Ltd., which will supply the articulated wind columns for the project.
The company is also developing a 3.4-gigawatt offshore wind farm in Vietnam and is looking at Brazil.
“For the past year we’ve been targeting locations where we can effectively play join-the-dots with projects that will bring low-cost hydrogen to Europe and maybe to Japan,” Hatton said.
Also taking advantage of the region’s windy conditions, the U.K. government awarded 9.4 million pounds on Monday to develop an electrolyzer for green hydrogen from the onshore Whitelee Windfarm in Scotland. The funding is for a 10MW electrolyzer and associated four tonnes of storage at the 20MW hydrogen production and storage facility, ITM Power said in statement.
World’s Biggest Climate-Warming Gas Site Turns To Green Hydrogen
Secunda, the South African petrochemicals plant that produces more climate-warming gases than either Portugal or Norway, is looking toward a green future.
The site is the centerpiece of Sasol Ltd.’s plan to slash emissions and focus on the production of so-called green hydrogen, a fuel made using renewable energy, alongside sustainable aviation fuel and chemicals.
Under plans laid out at the company’s capital markets day on Wednesday, Sasol expects to transform Secunda, which currently mainly uses coal to make motor fuels and chemicals, as part of its plan to reach net zero emission status by 2050. That would transform the group into the leading producer of green hydrogen in southern Africa.
The process will be a gradual one, requiring an initial switch from coal to natural gas and then in turn to green hydrogen and sustainable carbon.
“It may be difficult to imagine a future where Secunda” is a major producer of sustainable fuels, said Priscillah Mabelane, Sasol’s executive vice president energy. “We do not underestimate the scale of the challenge ahead of us.”
The World Wants Green Hydrogen. Namibia Says It Can Deliver
Southern African nation rich in wind and sun aims to develop a hydrogen industry from renewable sources to meet growing global demand.
LÜDERITZ, Namibia—This old diamond-mining town, perched on the rocky Atlantic coastline of this sparsely populated desert nation, last boomed at the start of the 20th century, when diamonds were discovered in the nearby dunes.
Now Namibia is positioning itself as a leader in the emerging market for another hot resource: green hydrogen, which is made using renewable electricity.
With bright sunshine 300 days a year and vicious winds that rip along a nearly 1,000-mile coast, renewable experts and government officials say the southwest African nation has outsize potential for renewable energy production. That is piquing the interest of investors seeking to grow their foothold in the mushrooming green-energy asset class.
Namibia is already putting up to €40 million in funding, equivalent to $45.3 million, from former colonial power Germany to use on feasibility studies and pilot projects related to so-called green hydrogen.
That is made by using renewable energy like wind or solar to separate and distill the hydrogen atoms in water, as opposed to making hydrogen from fossil fuels, which is known as gray hydrogen, or blue hydrogen if the emissions from the fossil fuels are captured.
Most hydrogen produced today isn’t green. Hydrogen can be burned in engines to power autos and airplanes instead of petroleum fuels, or in power plants instead of coal or natural gas.
Germany’s government says Namibia’s natural advantages could help it produce the world’s cheapest green hydrogen—a crucial ingredient in policies hoping to cut carbon emissions to the net-zero benchmark by 2050.
Green hydrogen could also provide long-term storage for renewable energy—using green power to make hydrogen, then burning the hydrogen in a power plant, thus “storing” that electricity for later. Namibia expects to be able to export green hydrogen before 2025.
Namibia is one of many countries seeking to cash in on the green energy rush. There are efforts all over the world to increase production of hydrogen, from Morocco to Australia to Chile. The U.S. Department of Energy has said that the race to make clean hydrogen is the equivalent of this generation’s “moonshot.”
Over the last 12 months, there has been a 50-fold increase in announced green hydrogen projects globally, according to consulting firm Wood Mackenzie. But such projects require expensive infrastructure.
The road to widespread use of green hydrogen is a long one: the costly technology needs to be more-widely used to reduce costs and prices.
Another hurdle to overcome is how to export the finished product. Lüderitz will need a new deep water port to export via ship, which the government expects to fund via a public-private partnership.
And as an extremely arid nation, Namibia’s green hydrogen production will include seawater desalination. Desalination plants are typically expensive, though the German government says the process accounts for just 1% of hydrogen production costs.
“The list is quite short of those new potential large renewable capable countries and Namibia is there,” said Noel Tomnay, global head of hydrogen consulting at Wood Mackenzie. But he also pointed to significant challenges. “Infrastructure, suitable water and just the uncertainty associated with someone who’s not been doing that in the past on a large scale,” he said.
Several global players expressed interest after Namibia’s government put out a request for proposals to develop two separate but adjacent sites, where it envisions massive desalination plants. The sites would also include wind and solar farms as well as electrolysers—systems that use electricity to split water into hydrogen and oxygen—which would be used to produce green hydrogen and ammonia for export.
Namibia received nine bids from six developers for the two sites, including South Africa’s Sasol Ltd., Australia’s Fortescue Metals Group Ltd. and Germany’s Enertrag AG—a shareholder in Hyphen Hydrogen Energy (Pty) Ltd., which has been awarded both sites.
Hyphen, a project development company created to develop, build and operate green hydrogen production facilities in Namibia, says the $9.4 billion project is targeting 300,000 metric tons of green hydrogen production a year from 5 gigawatts of renewable generation capacity by 2030.
The international community is also embracing the ambitious plans. Namibia’s government has been invited to present their post-Covid economic recovery plan—in which green hydrogen plays a key role—at January’s World Economic Forum in Davos, Switzerland, for the first time.
Ground zero for the project is Lüderitz, a sleepy seaside town dotted with German art deco architecture. The project sites are about an hour’s drive into the surrounding desert, with each massive block of rolling sand and scrub brush approximately 675 square miles in size.
The Lüderitz Town Council estimates that the approximately 30,000 population will grow by 3,000 for each block and is already making plans to expand services like water, sewage and build more housing.
“The first diamond rush was in 1900,” said Ignatius Tjipura, the council’s technical manager. “Now we are talking about a green hydrogen rush.”
In the global race for green hydrogen, Namibia is the latest sub-Saharan African country with major natural assets to position itself as a potential green energy hub.
The central African nation of Gabon has struck a deal under which it is paid to preserve its vast forests to act as a carbon sink, which absorb more than 100 million tons of the gas annually. In Kenya, 365 wind turbines that make up the country’s Lake Turkana Wind Power Project now account for about 17% of installed electricity capacity in the country.
Namibia has advantages beyond wind and solar: The country ranks sixth out of 49 countries in sub-Saharan Africa on Transparency International’s Corruption Perceptions Index.
“It’s relatively easy to do business in Namibia,” said Margaret Mutschler, director at Tumoneni Hydrogen Energy, a Namibian company owned by CWP H1 Energy, which is part of the CWP group, a renewable energy development company that bid on one of the green hydrogen sites.
The government has also decided to step back and let the private sector lead the green hydrogen projects, rather than try to manage them itself.
“We don’t believe that [government] should be the driver. The private sector can do a better job,” said Ipumbu Shiimi, Namibia’s Minister of Finance.
Tobias Bischof-Niemz, head of the new energy solutions division at Enertrag, which won the bids for both blocks in partnership with Nicholas Holdings, an international sub-Saharan Africa focused strategic infrastructure investor and project developer, said Namibia is well-positioned to export green hydrogen to South Africa to meet its larger neighbor’s growing energy needs and decarbonization goals. South Africa has been pummeled by frequent power outages.
South African petrochemical and energy major Sasol also bid for both sites through Namibia’s request for proposals and is the largest synthetic aviation fuel producer in Africa. Sasol declined to comment specifically on its bids.
But the Namibian government has received interest from various developers including Sasol to explore the potential of building a pipeline between the project in Namibia and Sasol’s plant in Secunda, nearly 1,000 miles away in South Africa, according to James Mnyupe, economic adviser to Namibia’s president.
“Now all of a sudden, the desert has become valuable,” Mr. Shiimi, the finance minister, said.
Can ‘Green Hydrogen’ Clean Up Natural Gas?
A pilot program in Long Island will mix hydrogen produced from renewable power with natural gas to heat about 800 homes and a fleet of town vehicles.
Last week, lawmakers in New York City passed a bill banning natural gas hookups in all new buildings, becoming the largest U.S. city to enact measures restricting builders from installing gas-fueled stoves, furnaces and water heating systems in new construction.
The ban, which is set to take effect in 2023 for buildings under seven stories, joins similar regulations in Berkeley and Seattle; they’re part of the movement to “electrify everything” as a means of bringing down carbon emissions from energy use in buildings. But even as New York City signaled its intentions to move away from fossil fuels, National Grid — a local utility that opposed the city ban — committed to making its existing natural gas infrastructure cleaner and greener.
On Dec. 15, National Grid and the Long Island town of Hempstead announced the “HyGrid Project,” a program to blend zero-emission “green” hydrogen into the natural gas distribution system to heat about 800 homes and fuel at least 10 municipal vehicles.
“We believe that hydrogen can transform the energy industry, and we are on the forefront,” Rudolph Wynter, president of National Grid New York, said in a statement. “This exciting project shows that hydrogen blending can be used to decarbonize the existing networks.”
Green hydrogen refers to hydrogen produced entirely from renewable power sources, such as wind or solar energy, instead of using fossil fuels. (Most hydrogen in commercial use is created using more carbon-intensive techniques.) Hempstead’s existing wind and solar generating equipment produces the hydrogen, which will be blended with conventional natural gas gradually over the next three years, starting with 5% this year and then increasing incrementally to finally reach 20%, Wynter said.
(At higher concentrations, hydrogen can damage natural gas pipelines and appliances that use it.) This natural gas/hydrogen blend can be used in standard home appliances such as furnaces, stoves and clothes dryers. About 60% of U.S. homes rely on gas heating, including three in five houses in New York State, according to the U.S. Energy Information Administration.
Although HyGrid is just a pilot project right now, National Grid, which operates in New York, Rhode Island and Massachusetts, is looking to expand the availability of the hybrid fuel more broadly. The utility is also partnering with Stony Brook University, the New York State Energy Research and Development Authority and the Low-Carbon Resources Initiative to research decarbonization.
The Hempstead pilot is one of the first hydrogen blend projects in the U.S. to go into homes. National Grid U.K. has been doing a similar project in Scotland, and an Australian gas company began powering homes with a 5% green hydrogen blend in May.
Hydrogen blending pilots have also emerged in California and Colorado.
But some environmental advocates are less sold on the promise of mixing green hydrogen with natural gas, fearing such efforts offer only limited decarbonization benefits, and could only delay the electrification process. Peter Iwanowicz, the executive director of Environmental Advocates New York, said hydrogen projects like this could be exploring a dead end:
The state is drafting a climate action plan that promises to decommission its natural gas infrastructure. “New York State made a bold decision almost two years ago to stop combusting fuels for energy-powered systems,” Iwanowicz said, referring to the draft.
“So whether it’s green hydrogen or natural gas in the short term, all the stuff we know is going to be facing a decommissioning.”
Arvind Ravikumar, a research associate professor in the Petroleum and Geosystems Engineering department at the University of Texas at Austin, said pilot projects such as National Grid’s are useful for understanding how to best utilize hydrogen as a fuel.
When burned, hydrogen emits only water vapor, making it an appealing alternative to fossil fuels in power-intensive industries like steelmaking and freight trucking that have proved harder to electrify. But research on the benefits or disadvantages of hydrogen and the role it could play in the energy transition is still lacking, says Ravikumar.
“We cannot say this project is a greenhouse gas emission reduction program,” Ravikumar said of the Hempstead pilot. “But this is an important research project to help us better understand how the hydrogen economy could play out and how to solve some of the technical challenges within the hydrogen ecosystem.”
For consumers who use the hybrid gas in Hempstead, participation in the program requires no modifications to their appliances and will come at no extra cost, something Wynter said was most important to him when thinking of the energy transition.
Antony Green, National Grid U.K.’s hydrogen project director told Green Tech Media in October 2020 that users weren’t able to tell a difference between the 20% hydrogen blend and regular natural gas.
“We have to have an energy transition where people can afford the energy at the end of the day. A great way of doing that is how do you utilize existing networks, but decarbonizing that,” Wynter said.
“To us, hydrogen has always been a way of decarbonizing the existing networks to provide a low carbon fuel that also puts us on a track to making sure that it’s equitable and affordable.”
Biden Energy Loan Revamp Starts With $1 Billion For Hydrogen
* $1.04 Billion Loan Guarantee Goes To Nebraska Hydrogen Project
* Government Loan Backing Seen Vital To Clean Energy Deployment
The U.S. Energy Department said Thursday it would back a Nebraska project to convert natural gas into hydrogen, marking the first conditional loan guarantee of its kind under President Joe Biden.
With an up to $1.04 billion loan that would be guaranteed by the Energy Department, the commercial-scale venture by Monolith Nebraska LLC aims to supply hydrogen to the agriculture sector. Carbon black also produced at the site would be put to use in tires, plastic production and other materials.
The move represents a revival of the Energy Department’s loan programs office, which aims to use more than $40 billion in loan authority to accelerate the development and deployment of clean-energy technologies.
The conditional loan guarantee is the first of its kind offered under the Biden administration and the first to go to a non-nuclear project since 2016.
Although the office was mostly dormant under former President Donald Trump, it previously provided a $465 million loan to Tesla Inc., helped finance the country’s early large-scale solar photovoltaic projects and provided a $535 million loan guarantee to Solyndra LLC, a California company that flopped in 2011.
The program also provided critical support to Southern Co.’s Vogtle nuclear plant in Georgia.
Loan Programs Office Director Jigar Shah, a clean-tech pioneer who helped usher solar power to the mainstream, has stressed the importance of providing a bridge for the rapid deployment of clean-energy technologies.
“They really see this program as, ‘Can we use this to launch platform technologies, not just individual projects?’” said Rob Hanson, Monolith’s co-founder and chief executive officer.
Monolith intends to expand its Olive Creek facility in Hallam, Nebraska, with the proposed loan. The facility uses methane pyrolysis, a process that subjects methane to high heat in the absence of oxygen. The methane splits into hydrogen and carbon black, a solid form of carbon used in car tires.
The company this month announced a collaboration with the Goodyear Tire & Rubber Co. to potentially use carbon black from the facility, whose expansion is scheduled for completion in 2025. Monolith will use the hydrogen to make ammonia and sell it to area farms.
The methane pyrolysis process gives off no carbon dioxide, Hanson said. If some of the methane comes from renewable natural gas, supplied by landfills or farms, the process can be carbon-negative, removing more carbon from the environment than it produces. Current processes for making carbon black and ammonia emit greenhouse gases.
“Not only are we making the hydrogen cleanly, we’re also cleaning up this other industry many people haven’t heard about but everyone depends on,” Hanson said.
A Bad Year For Hydrogen Stocks Was A Good Year For Hydrogen Companies
The sector’s growth prospects are more sensibly valued after a year of deflating stock prices and industrial progress.
After a gravity-defying 2020, hydrogen stocks have drifted back toward Earth this year. Investor expectations are now better pitched for a sector offering huge growth prospects but on a still-uncertain, subsidy-dependent time scale.
Many shares associated with “green hydrogen,” which is made by splitting water using renewable energy, have more than halved from their early-year peaks. The explanation lies mainly in last year’s wild rally. Over two and three years, stocks such as British electrolyzer maker ITM Power and Canadian fuel-cell specialist Ballard Power Systems are still up strongly.
As Wall Street has cooled on hydrogen, industry activity has heated up. By November 2021, the cumulative number of large-scale projects announced had doubled since January to 522, according to the Hydrogen Council. Nearly three-quarters are expected to be partially or fully commissioned this decade, and of those, two-fifths are already funded or under construction.
After many false dawns, the gas seems to be coming of age, primarily as a low-carbon fuel for sectors that can’t use electricity to decarbonize, such as steel and cement.
Government incentives are still crucial, because in many places carbon prices don’t cover the extra cost and most customers aren’t yet willing to pay more for green steel or cement. In these early stages, policy has power, particularly in coordinating the growth of supply and demand to avoid costly mismatches.
Europe is an early leader, with both the EU and individual countries offering dedicated strategies and generous incentives. The region’s politicians want to ensure their homegrown companies aren’t left behind as they were on solar panels, batteries and digital companies.
Dependency on politicians also comes with drawbacks: Continuing discussions in Brussels on industry rules mean “projects are on hold,” says Pierre-Étienne Franc, chairman of FiveT Hydrogen, an investment fund. Still, he expects the completion of these regulations to release significant financial support for hydrogen projects.
While Beijing is still working on its national hydrogen strategy, it has offered some incentives, and China’s commitment to carbon neutrality by 2060 has already prompted some state-owned companies to invest in the gas.
For example, oil giant Sinopec recently said it was building a solar-powered green-hydrogen electrolyzer that is an order of magnitude larger than European projects.
“The rise of China on hydrogen has been absolutely staggering, and most of the quadrupling to sextupling that we are expecting next year is also coming from China,” says Martin Tengler, hydrogen analyst at BloombergNEF.
Australia is also a leader, with well-developed plans to export hydrogen, which is seen as a fuel for power and transport in Japan and South Korea. While U.S. policy has lagged behind, President Biden’s now-stalled “Build Back Better” bill does include a production tax credit for green hydrogen. This would be a powerful incentive if it makes it through to law.
Electrolyzer makers are among the clearest beneficiaries of the industry’s growth. Adam Collins, an analyst at Liberum Capital, forecasts that ITM, Nel and McPhy could have 10%, 8% and 2% long-term market share, respectively, of what he expects to be a profitable global business boosted by high-margin after-sales, a shortage of production capacity this decade and a possible stimulus-induced pickup in the U.S.
Still, buying these pure-play stocks involves a big leap of faith. Even after this year’s correction, Nel and McPhy trade at roughly 20 times forward revenues; ITM at well over 40 times. How fast they grow into such valuations depends heavily on the pace of subsidies, technological innovation and scaling up.
The one thing patient capitalists can count on is that the hydrogen theme is more likely to reward them after a disappointing year than following a big rally.
Unilever to Start Tests On Switching U.K. Facility To Hydrogen
* Companies Want To Use Cleaner-Burning Fuels Instead Of Gas
* Hydrogen May Be Available From 2026 In A Regional Initiative
Unilever Plc is starting tests on switching one of its U.K. facilities to using hydrogen, as industries eye moving away from using fossil fuels.
The trial is part of an initiative known as HyNet North West, which aims to deliver hydrogen to some homes and businesses in northern England from 2026, with the carbon emissions moved by pipeline for storage in depleted oil and gas fields.
Unilever, a manufacturer of consumer goods such as cosmetics, will be among the first companies to run tests on the feasibility of using hydrogen at its Port Sunlight plant, in northwest England, according to Rachel Perry, one of the group’s project managers.
“We are working on increasing production and increasing storage,” Perry said at a conference on Thursday, adding that to begin with, buyers would use a blend of hydrogen and natural gas.
Industrial users are looking at hydrogen as a substitute for gas to drive turbines or other processes which can’t run on renewable electricity, as Europe’s energy crunch has sent prices soaring in recent months and forced some fertilizer and chemicals companies to halt or scale back output.
Pilkington, a U.K. glassmaker and unit of Nippon Sheet Glass Co., has also been testing hydrogen, Hynet’s Perry told delegates at the conference.
Hynet is one of a handful of so-called clusters in the U.K., where the production of hydrogen could start to change the way vehicles are fueled, factories are powered and homes are heated. A final investment decision on the project is expected in 2023, Perry said. The carbon, capture and storage element of the project is already oversubscribed, she added.
Other clusters are located in industrial areas of the U.K., including south Wales and the east coast of Scotland. There are also several initiatives in northeast England, where BP Plc is looking at a new plant and Phillips 66 is assessing cleaner hydrogen at its Humber refinery.
In that region, three grid companies in the U.K. have proposed a 863 million-pound ($1.2 billion) plan to convert the gas network to use hydrogen.
Ambani’s Reliance Seeks To Be World’s Top Blue Hydrogen Maker
* Reliance Re-modelling Units At Jamnagar To Make Blue Hydrogen
* Potential To Make Blue Hydrogen At $1.2-$1.5 Per Kilogram
Reliance Industries Ltd., helmed by Asia’s richest man Mukesh Ambani, aims to be among the largest producers of blue hydrogen at “competitive cost” in its ambitious green-energy transition plan.
The Mumbai-based company will re-purpose a $4-billion plant that currently converts petroleum coke into synthesis gas to produce blue hydrogen for $1.2-$1.5 a kilogram, according to a presentation.
So-called blue hydrogen is made using fossil fuels but captures the carbon dioxide formed during its production, and Reliance sees the conversion as a temporary measure until the cost of green hydrogen, produced from the electrolysis of water using renewable energy, becomes competitive.
“In the interim, till cost of green hydrogen comes down, RIL can be the first mover to establish a hydrogen ecosystem, with minimal incremental investment, in India,” the company said. “Subsequently, as hydrogen from syngas is replaced by green hydrogen, the entire syngas will be converted to chemicals.”
Ambani, who’s built his fortune on fossil fuels, plans to replace sales of road fuels like diesel and gasoline with cleaner alternatives as he seeks to hit a net-zero target for his conglomerate by 2035. The project would compete with international plants such as one proposed in Saudi Arabia, which is also seeking to boost hydrogen production.
Ambani has vowed to produce green hydrogen at $1 per kilogram, a more than 60% reduction from today’s costs, by the turn of this decade. Last month, he announced plans to invest about $75 billion in renewables infrastructure, which could transform India into a clean-hydrogen juggernaut that’s aligned with Prime Minister Narendra Modi’s mission.
A Gas Giant Maps Out Its Hydrogen Plan
The market for the clean-burning fuel will take a long time to develop. That may give incumbents like Air Liquide an advantage over startups.
Air Liquide shows what a big hydrogen company looks like now. Maintaining its position as the gas becomes a key fuel for decarbonizing the global economy could be tough, but there is time to figure it out.
The company sells about €2 billion, equivalent to $2.2 billion, worth of the clean-burning fuel annually, primarily to oil refiners and fertilizer makers, roughly a 10th of its 2021 revenues.
The Paris-listed company, which launched a new strategy on Tuesday, is one of three global experts in producing and transporting industrial gases, alongside Linde and Air Products and Chemicals.
For price-to-book ratios of around three—modest for stocks with hydrogen links—they offer investors a piece of the clean-gas opportunity coupled with proven business models that have weathered the past two years profitably.
Hydrogen is an important future market for all three and a central pillar of the new four-year plan Air Liquide outlined. Half of its industrial investments through 2025 will be on the energy transition and it aims to triple its hydrogen revenues by 2035. That might seem like a very slow burn, but the market is at a very early stage.
The energy-dense gas could have a $2.5 trillion total addressable market by 2050, say analysts at Bernstein. This assumes hydrogen can be economically produced in a clean way and that it becomes the low-emission fuel for hard-to-decarbonize industries, such as cement, steel, airlines and long-haul transport.
For that to materialize, supply, demand and infrastructure all need to be built. Hydrogen production requires decarbonization; it is currently fueled mainly with coal or gas. Customers will have to convert or replace machines, vehicles and processes to run on hydrogen. Transport infrastructure will need upgrades to cope with the smaller molecules of this volatile gas.
Air Liquide understandably plans to build on existing customer relationships, assets and expertise. It will clean up its hydrogen production not just by building renewable-powered electrolyzes to split water into so-called green hydrogen and oxygen, but also by capturing and storing the emissions from its current gas-fueled process to make less environmentally-friendly “blue” hydrogen.
And the projects it favors aren’t moonshots: For example, it is locating new facilities at industrial hubs which need less transport infrastructure and have a ready supply of potential customers.
There is a significant risk of disruption, particularly with so many small players working on new technologies. The company is hoping to keep up by leading the Hydrogen Council, a group for coordinating the industry’s development, and joining with others in the supply chain, for example through a €1bn clean-hydrogen infrastructure fund with Hy24.
Air Liquide expects hydrogen to be powering buses and smaller commercial vehicles by 2025 and big-rig trucks, trains and cars by 2030. Ships and airplanes will take longer still. The market will need support for years but seems likely to get it. Recent energy shocks have tested the resolve of European and Asian governments, and they have doubled down on hydrogen.
It is still early days for the market. While that increases the chance it develops in unexpected ways, it also gives the likes of Air Liquide time to adapt.
New York Signs Pact To Pursue Hydrogen Hub Plan In Climate Push
* Utilities And Energy Firms Part Of Multi-State Collaboration
* Federal Infrastructure Bill Designated $8 Billion For Hydrogen
New York, New Jersey, Massachusetts and Connecticut agreed to work with about 40 clean power companies, utilities and universities to create plans for a regional hydrogen hub as part of a push to curb greenhouse-gas emissions.
“New York is proud to lead the way in forming bold partnerships to combat the existential threat of climate change,” New York Governor Kathy Hochul said Thursday in a statement. “Expanding the hydrogen market is critical to New York’s aggressive pursuit of clean-energy alternatives.”
Hydrogen is seen as a cleaner alternative to planet-warming fossil fuels that could potentially be used to power trucks, planes and ships. The multi-state agreement aims to develop a proposal to become one of at least four hubs designated under a federal infrastructure act, which earmarked $8 billion for such centers.
The partnership involves utilities including Consolidated Edison Inc. and National Grid Plc as well as companies such as Plug Power Inc. and Bloom Energy Corp. along with schools including Columbia University and Cornell University.
E.ON, Australian Billionaire Aim To Replace Russian Gas With Hydrogen
Joint Venture Could Ship 5 Million Tons Of Hydrogen To Europe A Year
German energy group E.ON and Australian billionaire Andrew Forrest are teaming up to produce green hydrogen to replace Russian gas, showing how the Western push to cut reliance on Russian energy imports in the wake of the Ukraine war is accelerating investments in renewable energy.
The goal is to produce hydrogen in Australia using wind and solar power and begin shipping it to Europe, where it would be distributed through E.ON’s pipelines. Deliveries would begin in 2024 and build up to a volume of 5 million tons of hydrogen a year by 2030.
“The Ukraine war has created a whole new horizon for European energy supply,” said E.ON chief operating officer Patrick Lammers, who signed a memorandum of understanding with Mr. Forrest to launch the project on Tuesday.
Under the preliminary agreement, Fortescue Future Industries—the renewable energy unit of Australian metals group Fortescue Metals Group Ltd.—would produce green hydrogen for distribution in Germany and the Netherlands. Mr. Forrest, a former chief executive of Fortescue Metals, is chairman and founder of FFI.
Green hydrogen, which is produced using electricity from renewable energy, has been touted as a climate-friendly alternative to natural gas but it remains expensive to produce and challenging to transport because it is highly flammable.
Still, Europe has targeted hydrogen as a potential source of power to run factories in the future. Some aircraft manufacturers are testing hydrogen fuel cells as a potential way to power airplanes.
Mr. Lammers and Mr. Forrest outlined the project earlier this month during a meeting in Berlin, at which Mr. Lammers said the two men agreed that Moscow’s invasion had made it impossible to continue business as usual with Russia.
The European Union currently imports about a third of its natural gas from Russia. Germany, the world’s largest importer of Russian gas, has said it aimed to become independent of Russian supplies by 2024.
Unlike natural gas, hydrogen emits water rather than climate-warming carbon dioxide when burned as fuel. Extracting hydrogen is an energy-intensive process that can itself release large quantities of carbon dioxide but green hydrogen is produced using power from wind or sunlight, a process that doesn’t generate such emissions.
Germany has been interested in developing hydrogen as an alternative energy source for some time. Germany’s new government accelerated the plans in the weeks after Russia’s invasion of Ukraine.
Nevada Hydrogen Factory Will Convert Gas From Garbage Into Fuel
Air Liquide plant near Las Vegas will use landfill methane to produce clean-burning gas.
The French industrial gas giant Air Liquide SA is opening a factory near Las Vegas this month that will convert methane from landfills into hydrogen to power emission-free cars and trucks.
The $250 million facility will have capacity to produce up to 30 tons of liquid hydrogen per day, enough for about 40,000 fuel-cell vehicles, Mike Graff, head of Air Liquide’s U.S. operations, said in an interview.
Air Liquide initially plans to ship all of the plant’s output to California, even though there are only about 12,000 hydrogen vehicles registered in the state. Yet the company expects demand for hydrogen as a transportation fuel to surge, particularly in long-haul trucking, as California pushes to decarbonize its economy by 2045.
Battery packs big enough for electric trucks add enormous weight, and fuel cells running on hydrogen are far faster than batteries to refuel—a key consideration for truckers.
“Five minutes later, you’ve taken on a full load of hydrogen and you’re back on the road again,” Graff said.
The plant will use landfill gas as its raw material, preventing the methane in the gas from escaping into the atmosphere and contributing to global warming.
The landfill gas will be purified into renewable natural gas, then hydrogen will be stripped from it using steam reformation. Although steam reformation releases carbon dioxide—another greenhouse gas—Graff said those emissions will be offset by the benefits of keeping the original methane out of the air.
Air Liquide will supply the hydrogen to FirstElement Fuel Inc., a California company that operates hydrogen fueling stations.
Air Liquide invested $12 million in FirstElement in 2019.
Saudi Wealth Fund Weighs Stake In Thyssenkrupp’s Hydrogen Unit
* German Firm’s $5 Billion Nucera Arm Has Been Preparing For IPO
* Kingdom Wants To Become World’s Biggest Hydrogen Exporter
Saudi Arabia’s Public Investment Fund is considering buying a stake in Thyssenkrupp AG’s hydrogen unit as the oil-rich kingdom pivots to greener forms of energy production, people familiar with the matter said.
The sovereign wealth fund is in the early stages of studying a potential investment in the engineering conglomerate’s Nucera business, the people said, asking not to be identified discussing confidential information.
Thyssenkrupp has been preparing a listing of Nucera that could value it at as much as 5 billion euros ($5.4 billion). It plans to retain a majority stake in Nucera after any IPO, Bloomberg News reported in January.
Deliberations are ongoing, and there’s no guarantee PIF will proceed with an investment, the people said. A Thyssenkrupp spokesperson reiterated the company’s plans to pursue an IPO of Nucera, while declining to comment on potential Saudi interest. A representative for PIF declined to comment.
Any deal would feed into Saudi Arabia’s ambition of becoming the world’s biggest exporter of hydrogen, an element billed as key to cutting emissions from carbon-heavy industrial processes and helping the world shift to more sustainable energy use.
Nucera constructs plants that generate hydrogen gas from renewable sources of energy such as solar and wind. Hydrogen converts to electricity without greenhouse gas emissions when fed through a fuel cell or burned in a turbine, and can also be used for energy storage.
Thyssenkrupp is already working with Saudi Arabia to build a green hydrogen plant that will power the $500 billion Neom megaproject — a new city under development on the kingdom’s northwest Red Sea coast.
PIF is in the midst of transforming its investment portfolio to prepare the world’s biggest crude-exporting nation for a post-oil future. Once a sleepy holding company for government investments that hardly anyone outside the kingdom had heard of, it’s now snapping up everything from football clubs to electric carmakers.
The need for investment in more diversified energy sources has been underscored this year by the unprecedented surge in power and natural gas prices. This has been exacerbated by the impact of Russia’s war in Ukraine, a conflict that’s also effectively shut the market for IPOs.
U.S. Earmarks $504 Million To Back World’s Largest Hydrogen Hub
* Developers For Utah Project Gain DOE Conditional Commitment
* Hub To Provide Over 300 Gigawatt-Hours Of Clean Energy A Year
The U.S. is backing a project to create the world’s largest hydrogen production and storage facility in Utah in a push to bring the clean-burning fuel into the mainstream.
The Energy Department issued a conditional commitment for up to $504.4 million in debt financing for a hydrogen hub planned for Delta, Utah that is designed to convert renewable energy into hydrogen, according to a statement Tuesday.
Developers of the Advanced Clean Energy Storage Project, which is expected to start operating in 2025, include Mitsubishi Power Americas Inc. and Magnum Development LLC.
The commitment is the Biden Administration’s latest example of “prioritizing investments in clean energy technologies that will enable deployment if more renewables, modernize our grid, and ultimately, reduce our reliance on volatile energy sources,” Jigar Shah, a solar pioneer who now heads the Energy Department’s loan programs office, said in an emailed statement.
The project is expected to feature 220 megawatts of electrolyzers — machines that split hydrogen from water — powered by wind and solar energy and storage caverns that will initially be able to hold 9 million barrels of hydrogen, Michael Ducker, Mitsubishi Power’s head of hydrogen infrastructure, said in a phone interview. That will add to the global storage capacity of 11 million to 13 million barrels, he said.
The project will initially provide more than 300 gigawatt-hours of clean energy to the region each year. That means excess solar and wind power produced in spring could be stored to help meet the peak daily demand of a typical summer week, when supply tends to be constrained.
“With the unprecedented amount of renewables installed today, we are seeing the need for long-duration energy storage,” Ducker said.
Construction is already underway and Haddington Ventures LLC, sponsor of co-developer Magnum, aims to raise $650 million in equity financing for the project.
Hydrogen Is Every U.S. Gas Utility’s Favorite Future Savior
The lightweight fuel is key to companies’ latest decarbonization plans. Pulling off a transition from gas won’t be easy — or cheap.
Utilities that run on natural gas have been fervently touting hydrogen as a key way to remain relevant in a world rapidly rethinking fossil fuels. The reality is going to be more complicated.
Hydrogen is a lightweight gas often marketed as cleaner than fossil fuels, with even environmental critics agreeing it has a role to play in decarbonizing heavy industry.
Now, U.S. utilities are jumping on the hydrogen bandwagon, announcing over the past two years more than two dozen projects involving its production and distribution.
From Dominion Energy Inc.’s pilot plan to blend the fuel with natural gas supplies in North Carolina to Southern California Gas Co.’s proposed pipeline system to supply pure hydrogen to Los Angeles, outlining a future awash in hydrogen is on seemingly every energy company’s to-do list.
There’s no question why gas utilities whose entire business model appears to be under existential threat would be leaning into hydrogen as a potential savior:
As a whole, they’ve been trading at a discount to electric utilities because investors are worried that anti-gas bans like those in California and New York City will erode their core business.
With gas utilities now talking about decarbonizing their systems by blending in hydrogen or biogas — or even supplying pure hydrogen to industrial users in some cases — investors can more easily envision a future for gas-powered utilities.
Still, gas utilities are far from out of the woods. As exciting as hydrogen sounds on a quarterly earnings call, companies will first need to overcome major roadblocks including high costs and limits on how much of the fuel can be cleanly produced and used in existing gas infrastructure.
And while hydrogen doesn’t emit carbon dioxide when burned, some studies even raise concerns about its impact on the environment.
“Gas utilities may view hydrogen as attractive from an investor standpoint because incorporating hydrogen allows them to continue as business-as-usual to an extent,” said Dan Esposito, a senior policy analyst at Energy Innovation, a San Francisco-based energy policy research group.
But it won’t be so easy. Here’s a look at some of the biggest obstacles standing in the way of utilities integrating hydrogen into their systems:
Challenge No. 1: Costs
While hydrogen is the most abundant element, it’s also very energy intensive to isolate. Most hydrogen is currently produced through a polluting process called steam-methane reforming that uses steam to strip hydrogen from natural gas.
To produce green or “emission-free” hydrogen, renewable energy is needed to power an electrolyzer that can split hydrogen from water molecules.
That Process Is Expensive: Green hydrogen, the only carbon-free version, now costs about four to five times more than natural gas, according to a BloombergNEF report. That said, costs are forecast to fall rapidly between now and 2050, as long as investors are willing to be patient.
In addition to the high cost of production, there will be pricey infrastructure needs for utilities to pull off a hydrogen future. To meet about a quarter of the world’s energy needs by 2050, it will cost more than $11 trillion in investment in production, storage and transportation, according to a report by BloombergNEF.
SoCalGas’s proposed Angeles Link project, which would require the construction of hundreds of miles of new pipelines to deliver green hydrogen to the Los Angeles area, could ultimately cost billions of dollars if approved by regulators.
“Green hydrogen production requires all new infrastructure, from renewable generation sources to electrolyzers to hydrogen transport to storage to end-use application,” said Kenneth Medlock, senior director for the Center for Energy Studies at Rice University.
The hope is that green hydrogen pilots can reveal the potential to reduce costs as well as economies of scale in production, which would make the fuel’s green production cheaper over time.
Challenge No. 2: Pipeline Issues
Replacing natural gas with hydrogen sounds particularly appealing for shareholders at gas utilities for a key reason: That like-for-like swap suggests the existing gas pipelines already in use will find a second life in a post-fossil-fuel world instead of becoming stranded assets.
But hydrogen has much different properties compared to natural gas, and there are limits to how much can be blended into existing pipeline systems.
Hydrogen is the lightest and smallest molecule in the universe, so it can more easily leak out of pipes and other parts of the gas network designed to transport the larger methane molecules that are the main component of natural gas.
In addition, hydrogen behaves differently with certain metals and as result it can degrade and embrittle steel pipelines that are typically found in the nation’s high-pressure gas transmission system, said Jack Brouwer, director of the Advanced Power and Energy Program at the University of California, Irvine.
Compressor stations designed to move natural gas don’t work well with hydrogen either, Brouwer said, so those would also need to be upgraded. Local distribution lines, which are mostly made of plastic, can carry higher levels of hydrogen, but there are still limits on how much of the fuel can be safely delivered to homes and businesses.
Utilities including Sempra Energy’s SoCalGas are now testing how much hydrogen can be safely blended into their existing gas networks.
SoCalGas — which sells natural gas to nearly 22 million homes and businesses and last year committed to becoming carbon neutral by 2045 — said that preliminary testing at its lab shows that up to 20% hydrogen blend can be used in home gas appliances.
Challenge No. 3: Environmental Concerns
An 80-20 gas-hydrogen blend is a step up from 100% fossil fuels — but it still demands 80% of the gas currently in use. That’s hardly a fossil-free future, critics are swift to point out.
“This is an industry that has fought to undermine climate action,” Sasan Saadat, a policy analyst for Earthjustice, an environmental law group, said of the utility sector. The industry “has a vested interest in maintaining a fossil-based energy system.”
Energy Innovation pointed to research that shows blending hydrogen into gas pipelines for use in buildings and power generation would increase customer costs, exacerbate air pollution and cause safety risks while minimally reducing greenhouse gases.
Because hydrogen molecules produce less energy than methane when burned, a 20% hydrogen blend would provide only a 6% to 7% reduction in total greenhouse gas emissions — at a much higher cost, the research found.
As such, some climate advocates say the promotion of hydrogen by gas utilities amounts to greenwashing and provides a justification for extending the life of their existing fossil-fuel infrastructure.
They warn hydrogen’s environmental benefits are limited and its use should be confined to those hard-to-decarbonize sectors of the economy, like industrial uses.
In response, the gas industry said climate change can’t be addressed without using every rational greenhouse gas reduction measure available now, plus any that become possible in the future.
“We don’t start a diet by saying you can’t have low-fat yogurt because we like vegetables only,” said Richard Meyer, vice president at the American Gas Association, an industry trade and lobbying group, referring to the importance of making steps in the right direction.
“We’ve got to keep all of our options on the table and hydrogen blending will be one part of the solution set to help decarbonize electricity, gas and our overall energy system.”
It’s not only blending pilots that utilities are exploring. Some are also hoping to add a new revenue stream by pumping pure green hydrogen for industrial users like power plants, factories and long-haul trucks. SoCalGas’s Los Angeles project aims to displace up to 3 million gallons of diesel per day.
Even pure green hydrogen brings its share of environmental challenges. A recent research paper by the Environmental Defense Fund that’s currently undergoing peer review found that when too much of it leaks into the atmosphere, hydrogen risks contributing to climate change.
Likewise, burning hydrogen in power plants can produce lung-damaging nitrogen oxides as a byproduct that will need to be accounted for, according to studies.
Those emissions could be reduced through advances in pollution control technology or using lower amounts of hydrogen, but that could raise costs and increase inefficiency, an Earthjustice report said. Hydrogen can also be run through a fuel cell to produce electricity without emissions.
Challenges aside, some type of clean fuel will be needed to hit net-zero carbon goals, according to gas utilities, pointing to decarbonization studies. Hydrogen could help backstop renewables on the grid, they say; the fuel will also be needed to reduce emissions from more industrial sectors of the economy such as manufacturing and shipping.
So What Now?
Concerns about hydrogen’s viability will need to be addressed if utilities want it to become the fuel of the future they’re banking on. That’s not stopping them from plowing ahead in the meantime.
California’s SoCalGas is one of the furthest along in exploring the possibilities of hydrogen. And no wonder it’s out ahead: Its position as a gas utility in a state that wants to be net-zero carbon by 2045 puts it in a precarious position.
“I think we need to be investing now in hydrogen to realize its potential in the years ahead,” Maryam Brown, president of SoCalGas, said in an interview. The company’s own analysis shows that using clean fuels can help California reach its climate goals faster while saving customers as much as $75 billion in transition costs.
The utility had earlier fought against the state’s anti-gas movement; in February, it was fined about $10 million for using customer money to advocate against more stringent energy-efficiency standards after it was told to stop the practice years ago.
Now, it’s changed its tune — and the new tune is clean fuels, including hydrogen. As of this year, SoCalGas has more than 10 pilot projects underway testing the possible uses of hydrogen, said Yuri Freedman, senior director of business development for SoCalGas.
“We have a goal,” Freedman said in a interview, “and hydrogen is a major piece of the puzzle to get to that goal.”
German Hydrogen Utility HH2E Wins Investment From UK Firms
Company plans 2.7 billion euros of funding into green energy.
London-based private equity company Foresight Group Holdings Ltd. and investment firm HydrogenOne Capital Growth Plc acquired stakes in HH2E AG and will help the new hydrogen company to develop green energy projects in Germany.
Foresight and HydrogenOne have taken minority equity stakes in HH2E and agreed to co-invest in energy projects, the German company said in a statement on Monday. HH2E — co-founded by Andreas Schierenbeck, former chief executive officer at utility Uniper — plans 2.7 billion euros ($2.8 billion) of investment to build 4 gigawatts of green hydrogen and green heat-production capacity by 2030.
“Germany has one of the largest industrial and manufacturing sectors in the world,” said Schierenbeck.
“Leaders in these sectors know they must secure the supply of energy, control energy costs, and find low- or zero-carbon solutions soon. HH2E will be producing green hydrogen located close to the industries that need it.”
Germany aims to get almost 100% of its electricity from renewables by 2035, and is racing to expand green energy capacities as it tries to pivot away from reliance on Russian natural gas. The country plans to install 10 gigawatts of electrolyzer capacity by 2030 to scale up the hydrogen market.
The two British investment companies will provide most of the capital needed for HH2E’s first five green hydrogen projects, which will need a total of 500 million euros in development costs and have an initial capacity of 500 megawatts. Some of them have the potential to be expanded to 1 gigawatt, according to Schierenbeck.
HH2E seeks to produce green hydrogen cheaper than grey hydrogen — made from natural gas — in the coming years. It is “clear that the economics of green hydrogen are better than the grey and blue, as the latter two depend heavily on the cost of natural gas and carbon,” said Schierenbeck.
“This financing agreement enables a massive acceleration of our development plans,” said HH2E co-founder Mark Page.
Giant Deep Ocean Turbine Trial Offers Hope of Endless Green Power
Tested in one of the world’s strongest ocean currents, a prototype generator could herald the start of a new stream of renewable energy.
Power-hungry, fossil-fuel dependent Japan has successfully tested a system that could provide a constant, steady form of renewable energy, regardless of the wind or the sun.
For more than a decade, Japanese heavy machinery maker IHI Corp. has been developing a subsea turbine that harnesses the energy in deep ocean currents and converts it into a steady and reliable source of electricity.
The giant machine resembles an airplane, with two counter-rotating turbine fans in place of jets, and a central ‘fuselage’ housing a buoyancy adjustment system. Called Kairyu, the 330-ton prototype is designed to be anchored to the sea floor at a depth of 30-50 meters (100-160 feet).
In commercial production, the plan is to site the turbines in the Kuroshio Current, one of the world’s strongest, which runs along Japan’s eastern coast, and transmit the power via seabed cables.
“Ocean currents have an advantage in terms of their accessibility in Japan,” said Ken Takagi, a professor of ocean technology policy at the University of Tokyo Graduate School of Frontier Sciences. “Wind power is more geographically suited to Europe, which is exposed to predominant westerly winds and is located at higher latitudes.”
Japan’s New Energy and Industrial Technology Development Organization (NEDO) estimates the Kuroshio Current could potentially generate as much as 200 gigawatts — about 60% of Japan’s present generating capacity.
Like other nations, the lion’s share of investment in renewables has gone into wind and solar, especially after the Fukushima nuclear disaster curbed that nation’s appetite for atomic energy.
Japan is already the world’s third largest generator of solar power and is investing heavily in offshore wind, but harnessing ocean currents could provide the reliable baseline power needed to reduce the need for energy storage or fossil fuels.
The advantage of ocean currents is their stability. They flow with little fluctuation in speed and direction, giving them a capacity factor — a measure of how often the system is generating — of 50-70%, compared with around 29% for onshore wind and 15% for solar.
In February, IHI completed a 3 ½ year-long demonstration study of the technology with NEDO. Its team tested the system in the waters around the Tokara Islands in southwestern Japan by hanging Kairyu from a vessel and sending power back to the ship. It first drove the ship to artificially generate a current, and then suspended the turbines in the Kuroshio.
The tests proved the prototype could generate the expected 100 kilowatts of stable power and the company now plans to scale up to a full 2 megawatt system that could be in commercial operation in the 2030s or later.
Like other advanced maritime nations, Japan is exploring various ways of harnessing energy from the sea, including tidal and wave power and ocean thermal energy conversion (OTEC), which exploits the difference in temperature between the surface and the deep ocean.
Mitsui OSK Lines Ltd. has invested in UK-based Bombora Wave Power to explore the potential for the technology in Japan and Europe. The company is also promoting OTEC and began operating a 100 kW demonstration facility in Okinawa in April, according to Yasuo Suzuki, general manager of the corporate marketing division.
Kyushu Electric’s renewable unit Kyuden Mirai Energy begins a 650 million yen ($5.1 million) feasibility test this year to produce 1 MW of tidal power around the Goto Islands in the East China Sea. The government this month also proposed changes to offshore wind auctions that could speed up development.
Among marine-energy technologies, the one advancing fastest towards cost-effectiveness is tidal stream, where “the technology has advanced quite a long way and it definitely works,” said Angus McCrone, a former BloombergNEF chief editor and marine energy analyst.
Scotland-based Orbital Marine Power is one of several companies constructing tidal systems around Orkney, location of the European Marine Energy Centre.
Others include SIMEC Atlantis Energy’s MeyGen array and California-based Aquantis, founded by US wind pioneer James Dehlsen, which reportedly plans to start testing a tidal system there next year.
While tidal flows don’t run 24 hours, they tend to be stronger than deep ocean currents. The Kuroshio current flows at 1 to 1.5 meters per second, compared with 3 meters per second for some tidal systems.
“The biggest issue for ocean current turbines is whether they could produce a device that would generate power economically out of currents that are not particularly strong,” said McCrone.
Ocean Energy Systems, an intergovernmental collaboration established by the International Energy Agency, sees the potential to deploy more than 300 gigawatts of ocean energy globally by 2050.
But the potential for ocean energy is location dependent, taking into account the strength of currents, access to grids or markets, maintenance costs, shipping, marine life and other factors.
In Japan, wave energy is moderate and unstable through the year, while areas with strong tidal currents tend to have heavy shipping traffic, Takagi said. And OTEC is better suited to tropical regions where the temperature gradient is bigger. One of the advantages of the deep ocean current is it doesn’t restrict navigation of ships, IHI said.
Still, the Japanese company has a long way to go. Compared with onshore facilities, it’s much more complicated to install a system underwater. “Unlike Europe, which has a long history of the North Sea Oil exploration, Japan has had little experience with offshore construction,” said Takagi.
There are major engineering challenges to build a system robust enough to withstand the hostile conditions of a deep ocean current and to reduce maintenance costs.
“Japan isn’t blessed with a lot of alternative energy sources,” he said. “People may say that this is just a dream, but we need to try everything to achieve zero carbon.”
With the cost of wind and solar power and battery storage declining, IHI will also need to demonstrate that overall project costs for ocean current power are competitive. IHI aims to generate power at 20 yen per kilowatt-hour from large-scale deployment.
That compares with about 17 yen for solar in the country and about 12-16 yen for offshore wind. IHI also said it conducted an environmental assessment before it launched the project and will use the test results to examine any impact on the marine environment and fishing industry.
If successful at scale, deep ocean currents could add a vital part in providing green baseline power in the global effort to phase out fossil fuels. IHI’s work could help Japan’s engineering take a leading role with government support, said McCrone.
IHI has to make a convincing argument that “Japan could benefit from being a technology leader in this area,” he said.
Miracle Fuel Hydrogen Can Actually Make Climate Change Worse
If it escapes into the air, this green fuel can contribute to global warming — which is why scientists say we need to limit leaks.
A world desperate for a climate-friendly fuel is pinning its hopes on hydrogen, seeing it as a way to power factories, buildings, ships and planes without pumping carbon dioxide into the sky.
But now scientists are warning that hydrogen leaked into the atmosphere can contribute to climate change much like carbon. Depending on how it’s made, distributed and used, it could even make warming worse over the next few decades, even if carbon poses the bigger long-term threat.
Any future hydrogen-based economy, they say, must be designed from the start to keep leaks of the gas to a minimum, or it risks adding to the very problem it’s supposed to solve. Some ideas now being tested, like shipping hydrogen in pipelines built to hold natural gas or burning it in individual homes, could cause an unacceptable level of leaks.
“The potency is a lot stronger than people realize,” said Ilissa Ocko, a climate scientist with the Environmental Defense Fund, a non-profit group. “We’re putting this on everyone’s radar now not to say ‘no’ to hydrogen but to think about how we deploy it.”
Hydrogen doesn’t trap heat directly, the way CO₂ does. Instead, when leaked it sets off a series of chemical reactions that warm the air, acting as an indirect greenhouse gas. And though it cycles out of the atmosphere far faster than carbon dioxide, which lingers for centuries, it can do more damage than CO₂ in the short term.
Over 20 years, it has 33 times the global warming potential of an equal amount of carbon dioxide, according to a recent UK government report. Over hundreds of years, carbon is more dangerous, due to its longevity.
Hydrogen’s warming potential was never a problem before, as its use was largely limited to oil refineries and chemical or fertilizer plants. But now governments worldwide are investing billions to build a hydrogen economy, seeing the gas as one of the only options for decarbonizing many industries that can’t easily run on electricity.
President Joe Biden has set aside $8 billion to build at least four “hydrogen hubs” where the fuel will be produced and used, and states are gearing up to compete. US utility companies that now deliver natural gas see it as a savior, announcing more than two dozen hydrogen pilot projects in the last two years.
“Now is when decisions are being made, and money’s being spent,” Ocko said. “We can get ahead of this issue now, so it doesn’t become a problem.”
She and others sounding this alarm insist it’s no reason to give up on hydrogen. Rather, hydrogen’s heat-trapping power means any future system for producing, distributing and using the gas must be built to minimize leaks.
“There is great potential using hydrogen to save a lot of emissions of carbon dioxide, but it’s really important to keep the hydrogen leakage rates down,” said Nicola Warwick, lead author of the UK study and a National Centre for Atmospheric Science research scientist at the University of Cambridge.
The hydrogen industry acknowledges the problem, even if companies disagree on the potential scope. Dave Edwards, with industrial gas company Air Liquide, said the effects of hydrogen leaks on the atmosphere should be far less than the traditional fuels they displace.
Running cars and trucks on hydrogen fuel cells would have less atmospheric impact than running them on gasoline and diesel, even if the system for making and delivering that hydrogen leaks.
“It doesn’t mean it’s not still important, it doesn’t mean we don’t need to understand more about it, but our first impression is it’s much, much smaller,” said Edwards, a director with the company and its chief hydrogen advocate in the US. Hydrogen leaks, he said, “are manageable problems to address.”
Hydrogen has big advantages as a clean fuel. Burn hydrogen in a turbine, and it will generate power without carbon dioxide. Run it through a fuel cell, and it will produce electricity with water vapor as the only exhaust. Unlike solar and wind power, it can be stored in large amounts for when it’s needed.
While the vast majority of the hydrogen produced today is stripped from natural gas, in a process that releases carbon dioxide, it can also be separated from water using renewable power, with no emissions but oxygen.
But for all its benefits, hydrogen can also slip easily through equipment designed to contain larger molecules like the methane in natural gas.
Once it escapes, much of the leaked hydrogen will be absorbed by microbes in the soil. Some of what’s left in the air will react with a substance that helps remove methane from the atmosphere. That’s a problem, because methane is itself a powerful greenhouse gas, with more than 80 times the global warming potential of carbon dioxide over 20 years.
The reaction between hydrogen and that substance — known as the hydroxyl radical, or OH — leaves less of the OH available to react with methane. So methane entering the atmosphere will stick around longer and do more damage than it would have if the hydrogen hadn’t been there.
Leaked hydrogen has other warming effects as well. In the troposphere, the atmospheric layer closest to the ground, it triggers a chain of chemical reactions that produce more ozone, another greenhouse gas and a key component of smog.
Much higher up, in the stratosphere, the hydrogen leads to an increase in water vapor, which has the overall effect of trapping more thermal energy in the atmosphere.
These reactions happen over a short time span — a handful of years. Excess carbon dioxide, in contrast, builds up atmospheric heat over centuries. But with temperatures quickly rising worldwide, scientists say short-term drivers of climate change can’t be ignored.
“These decades matter,” said Steven Hamburg, EDF’s chief scientist. His group has been trying to raise the issue of hydrogen’s warming potential with anyone who’ll listen, briefing academics, businesses and the US Department of Energy.
His colleague, Ocko, estimates they’ve met with some 200 people to date. For EDF, it’s a logical extension of the group’s work trying to direct public attention to short-term climate pollutants like methane and black carbon, which often get overlooked in the focus on carbon dioxide.
Many utility companies are experimenting with blending hydrogen into their existing natural gas pipelines, sprawling networks that feed everything from power plants to household stoves.
To Hamburg, that’s a recipe for leaks. He also warns that mass-producing hydrogen from fossil fuels could even lead to a short-term increase in warming, if the systems for making and transporting the hydrogen leak enough hydrogen and methane.
There would still be a long-term benefit from cutting carbon dioxide emissions, but over the span of a decade or two, a leaky hydrogen system based on fossil fuels could cause more warming than business as usual.
“Over several decades, you could be worse off — it’s very plausible,” Hamburg said.
The issue hasn’t stopped gas utilities from exploring hydrogen blending projects. But it may become one of the things those projects study.
California utility PG&E Corp. in May announced plans to try different blends of hydrogen and natural gas in a dedicated pipeline system separate from the company’s usual gas transmission network, with the blends burned in a power plant south of Sacramento. PG&E spokeswoman Melissa Subbotin said the company’s “Hydrogen to Infinity” project will examine the potential for leaks.
“Extensive research needs to be done to understand the feasibility of hydrogen injection within a natural gas pipeline system,” she wrote in an email.
A hydrogen economy riddled with leaks would just undercut its own effectiveness, Hamburg said, delivering less of a blow against climate change than it could.
Clean-energy advocates point to how methane leaking from natural gas wells and pipelines — leaking that turned out to be far more widespread than once believed — undermined some of the benefits of shifting power plants from coal to gas. They don’t want that to happen with hydrogen.
“We’re at risk of proceeding with the build-out of new infrastructure that’s essentially going to repeat all those past harms,” said Julie McNamara, deputy policy director for climate and energy with the Union of Concerned Scientists. “We don’t have the time or luxury to get it wrong.”
Plug Power Bets On Green-Hydrogen Production
Fuel-cell maker will invest roughly $315 million in a plant in Belgium as it steps up production of fuel made using renewable energy.
Hydrogen fuel-cell company Plug Power Inc. has struggled to turn a profit. It is betting that growing appetite for fuel made using wind and solar power will change that.
Plug Power got its start as a manufacturer of hydrogen fuel cells that power vehicles and provide electricity for other applications. The company has pivoted in the past year, announcing a string of green-hydrogen projects as it sets its sights on becoming a fuel maker.
The Latham, N.Y.-based company said Wednesday it is building its first project in Europe at the Port of Antwerp-Bruges in Belgium. Plug Power plans to invest around $315 million in the facility, which it expects to come fully online in 2025.
The company said the 100-megawatt plant will have the capacity to churn out 12,500 tons a year of fuel known as green hydrogen, powered by a nearby wind farm and other renewable-energy agreements.
Green hydrogen is manufactured by using renewable electricity to power an electrolyzer that splits water into hydrogen and oxygen. It contrasts with blue hydrogen, which is produced using natural gas and has a higher carbon footprint.
In the U.S., Plug Power said it is on track to produce 500 tons of green hydrogen a year by 2025. It has plants in New York and Georgia starting up this year, with two more on the way in Texas in 2023 and California in 2025.
Listed on the Nasdaq Stock Market in 1999, Plug Power’s shares have oscillated in recent years as investors speculated on hydrogen’s role in the transition away from fossil fuels. The company, with a market capitalization above $10.7 billion according to FactSet, has yet to turn a full-year profit.
A key challenge has been the high cost of buying hydrogen made from gas, which the company supplies to fuel-cell customers, according to Plug Power Chief Executive Andrew Marsh. He said the company’s push into hydrogen manufacturing promises to bring down costs and take the company to profitability.
Hydrogen has had false starts in the past, but Mr. Marsh said the time is now ripe due to government and corporate promises to cut greenhouse-gas emissions alongside advancements in electrolyzer, fuel-cell and renewable-energy technologies.
“We’ve been in the wilderness for a long time, but we are coming out now,” he said.
Hydrogen can power hard-to-decarbonize industrial activities such as fertilizer manufacturing, steelmaking and oil refining, but companies in logistics are currently Plug Power’s biggest customers, Mr. Marsh said.
In April, Plug Power struck a green-hydrogen supply agreement with Walmart Inc. to provide fuel to power the retailer’s forklifts. Plug Power has also established a joint venture with French car maker Renault in which the companies will use hydrogen from the planned plant in Belgium to power the auto maker’s Hyvia delivery vans.
Fossil fuels power most manufacturing of hydrogen today, which in turn is often used in oil-and-gas production and refining.
Around 95% of the world’s hydrogen came from fossil fuels in 2019, according to the International Renewable Energy Agency. But if hydrogen comes from renewable energy, it produces zero greenhouse-gas emissions.
Whether green hydrogen can play a significant role in weaning society off fossil fuels depends in part on driving down costs, Mr. Marsh said. “The industrial gas companies treat hydrogen like a specialty gas,” he said. “We treat it like a fuel and something that needs to be ubiquitous.”
In 2021, Plug Power posted a gross loss of $171.3 million on sales of $502.3 million, narrowing from a gross loss of $469.4 million in the previous year as revenues rose. Some analysts say they expect Plug Power’s profit margins to improve this year as it expands green-hydrogen production.
Green hydrogen is key to Plug Power’s future, said Alex Kania, a director at equities research firm Wolfe Research, who follows the company.
“Green hydrogen is looking more and more likely to be a significant piece of the global decarbonization story, particularly for hard-to-electrify sectors, and policy is shaping up to include green hydrogen, especially in the U.S. and especially Europe.”
Green-hydrogen suppliers hope to benefit from government support for the sector. Mr. Marsh said he is pursuing aid from Belgium and the European Union, which aims to produce and import 20 million tons of renewable hydrogen by 2030 as part of its plan to stop relying on Russia for energy.
In the U.S., Senate Majority Leader Chuck Schumer, a Democrat from New York, has applauded Plug Power.
Mr. Marsh said he and executives from other companies are lobbying for a U.S. tax credit of $3 per kilogram of green hydrogen that would need to get congressional approval by September under a process known as budget reconciliation.
Plug Power’s fortunes still depend in part, though, on the price of fossil fuels because it continues to buy hydrogen made from gas, even as its green-hydrogen business grows.
Stephen Byrd, Morgan Stanley’s head of North American research for the power and utilities and clean energy industries, said he expects Plug Power to break even at the end of this year but that could slip into 2023 if natural-gas prices stay high.
“The potential delay in the break-even point could have a negative impact on the stock in the near term as investors continue to apply a ‘wait-and-see’ narrative to this business,” Mr. Byrd said.
BP’s $36 Billion Project Highlights Massive Green Hydrogen Hubs
Major clean-fuel operations are planned in locations including Australia, Texas, the North Sea, Kazakhstan and Oman.
BP’s acquisition of a stake and lead role in a $36 billion green hydrogen development in Western Australia is casting a spotlight on a slew of ambitious projects around the world that are promising to deliver massive amounts of the clean fuel.
Green hydrogen, produced using water and renewable electricity, is widely predicted to play a crucial role in the decarbonization of heavy industry, such as steelmaking, and is forecast to grow rapidly this decade.
Global output could jump as much as 18-fold to about 11.6 million tons a year by 2030 with strong policy support, according to BloombergNEF.
In addition to the Asian Renewable Hub, in which BP will take a 40.5% share, massive developments are being mooted everywhere from Texas to Kazakhstan and Oman, drawn by the allure of cheap and abundant clean energy. Wood Mackenzie Ltd. forecasts that demand for low-carbon hydrogen could surge to as high as 600 million tons a year by 2050 from less than 1 million tons now.
The hubs that succeed will be the ones that are able to find buyers for their hydrogen, while governments also have a big role to play in offering policy incentives that encourage the switch from fossil fuels, said Martin Tengler, an analyst at BloombergNEF.
“Hubs with one or more large, guaranteed offtakers, are much more likely to come to fruition.”
Here are some of the projects being proposed. The capacity figures for the two Australian and the Oman hubs are from the International Renewable Energy Agency, while the others are from the company’s themselves.
Asian Renewable Energy Hub
Location: Western Australia
Planned hydrogen capacity: 14 GW
The AREH, which would use electricity from wind and solar plants stretched across thousands of miles of West Australian desert, aims to produce about 1.6 million tons of green hydrogen, or 9 million tons of green ammonia, for domestic use and export. In addition to BP, investors include InterContinental Energy Corp., CWP Global and Macquarie Group. Intercontinental said the partners are targeting a final investment decision by 2025.
Texas Hydrogen City
Location: Corpus Christi
Planned hydrogen capacity: 60 GW
Green Hydrogen International Corp., run by by renewable energy entrepreneur Brian Maxwell, announced the world’s largest planned hub for the fuel in March. The project will be able to produce more than 3 million tons of green hydrogen a year. The fuel will be generated from wind and solar and be stored in caverns at the Piedras Pintas Salt Dome, and then delivered by pipeline to ports at Corpus Christi and Brownsville. The first phase of the hub is expected to start operations in 2026.
Svevind Kazakhstan Project
Planned hydrogen capacity: 30 GW
Svevind AB, the closely held company behind Europe’s largest wind farm in Sweden, signed agreements last year with Kazakhstan’s government and national investment arm to build up to 30 gigawatts of electrolyzers backed by 45 gigawatts of renewable energy capacity to produce about 2 million tons a year of green hydrogen. Statements from the company and government officials in the central Asian nation didn’t describe potential uses or export avenues for the fuel.
Western Green Energy Hub
Location: Western Australia
Planned hydrogen capacity: 28 GW
Announced in July 2021, the proposed hub, could cost as much as A$100 billion ($69 billion). It would use wind and solar to generate power and would cover an area half the size of Belgium. Also backed by Intercontinental Energy, the project would produce as much as 3.5 million tons of green hydrogen or 20 million tons of green ammonia each year for domestic use and export.
Green Energy Oman
Planned total capacity: 14 GW
An international consortium including Oman’s government-owned petroleum investment company OQ and the ubiquitous InterContinental Energy plan to build massive wind and solar arrays in the Middle Eastern desert and “produce millions of tons” of green hydrogen annually. The group said the site’s strategic location between Europe and Asia would position it to offer a reliable supply of green fuels globally at a competitive price.
Location: Offshore Germany
Planned hydrogen capacity: 10 GW
In the icy blue waters around the island of Heligoland off Germany’s North Sea coast, the AquaVentus initiative plans to use power from offshore wind farms to operate electrolyzers also installed at sea. The goal is to have a total capacity of 10 gigawatts by 2035, enough to produce 1 million tons of green hydrogen a year. Partners in the venture include RWE AG, Shell Plc, the Island of Heligoland and Siemens AG.
Big Oil Bets That Green Hydrogen Is The Future Of Energy
The fuel is well suited to the majors’ strengths in project management and their deep pockets.
After years of dabbling, major oil companies are finally planning the kind of large-scale investments that would make green hydrogen a serious business.
They’re chasing a very particular vision of a low-carbon future — multibillion dollar developments that generate vast concentrations of renewable electricity and convert it into chemicals or clean fuels that can be shipped around the world to power trucks, ships or even airplanes.
“The oil majors have been building multibillion-dollar projects since forever,” said Julien Rolland, head of power and renewables at commodities trader Trafigura Group Pte Ltd. “This green hydrogen, green ammonia stuff will be the new energy industry.”
The plan is well suited to the companies’ natural strengths in project management and their financial heft, but even with those advantages they’re still making a big bet on an unproven technology that could fall short of its potential.
“I don’t think any company out there has developed anything to these kinds of scales,” said Gero Farruggio, head of Australia and global renewables at consultant Rystad A/S.
This month has seen a flurry of big news about hydrogen.
BP Plc is taking the lead in the $36 billion Asian Renewable Energy Hub, a project that aims to install 26 gigawatts of solar and wind farms over a vast 6,500-square-kilometer (2,500 square-mile) stretch of Western Australia’s Pilbara region, and use the electricity generated to split water molecules into hydrogen and oxygen.
Once fully developed, each year it would produce about 1.6 million tons of green hydrogen or 9 million tons of ammonia, which can be used to make fertilizer.
TotalEnergies SE has joined Indian billionaire Gautam Adani’s conglomerate in a venture that has the ambition to invest as much as $50 billion over the next 10 years in green hydrogen.
An initial investment of $5 billion will develop 4 gigawatts of wind and solar capacity, about half of which will feed electrolyzers producing hydrogen used to manufacture of ammonia. The venture could expand to 1 million tons of annual green hydrogen production by 2030, driven by 30 gigawatts of clean power.
It’s only a matter of time before Shell Plc follows with a megaproject of its own, said Paul Bogers, vice president for hydrogen at the company. Shell is looking for a place where there are sufficient wind and solar resources for a large-scale project that would play to its strengths, he said in an interview on the sidelines of the Financial Times Hydrogen Summit in London.
“The size of these projects isn’t something done by a small startup,” Bogers said. “It requires deep pockets.”
US giant Chevron Corp. is ready to spend billions on a mixture of green and blue hydrogen, which uses a chemical reaction to split natural gas and capture and store the carbon dioxide.
Smaller players in the oil market are also getting involved, with Trafigura looking at a number of mid-size green hydrogen projects, such as a 440-megawatt development near Adelaide, Australia.
While the trading house doesn’t have the balance sheet of an oil major, it’s looking to develop large-scale projects of multiple-gigawatt capacity, including one n South America, and then bring on a larger partner to actually build it, Rolland said.
Lifeline To The Future
The global supermajors still spend the bulk of their money on oil and gas, but are devoting a growing proportion to low-carbon energy. That has included major investments in areas well outside their core business — offshore wind farms, solar plants, battery technology and electric-car chargers.
“Electrons don’t need the type of infrastructure” that the oil majors specialize in, said Meredith Annex, an analyst at BloombergNEF. But hydrogen is a molecule and “these are companies that understand molecules and infrastructure design around molecules.”
Until recently, the majors’ hydrogen plans have been modest. BP is developing an electrolyzer at its Lingen refinery in Germany and its Castellon plant in Spain, making green hydrogen for use in those facilities. Shell started up a 10 megawatt plant producing hydrogen for its Rheinland refinery in Germany last year and already has plans to expand its capacity.
The nature of hydrogen, with its complex processing plants, pressurized pipelines and storage facilities, and the specialized tankers required for distribution, makes it “a lifeline into the future” for Big Oil, said Annex.
There’s another natural synergy for companies that have a long history of seeking the largest concentrations of energy and the biggest markets in the world and finding low-cost ways to connect them.
For green hydrogen “one of the key attributes is having very competitive renewable energy resources,” said Tom Ellacott, a senior vice president at consultant Wood Mackenzie Ltd. BP has gone to Australia because “you’ve got a lot of sun,” while TotalEnergies is in India because “low-cost ammonia is potentially a very big market.”
While giant projects may be the future of green hydrogen, there’s a long way to go before they’re proved to be commercially viable, said Pierre-Etienne Franc, chief executive officer of Hy24, a joint venture between asset managers Ardian SAS and FiveT Hydrogen.
“You can’t move from 10 megawatt size to gigawatt size just like that,” Franc said. First it will be necessary to build facilities at the scale of hundreds of megawatts — 10 times the size of pilot projects currently operating in Europe. Those will enhance the operational knowledge and the electrolyzer manufacturing capacity necessary to scale up to the next level, he said.
Rystad estimates that the average size of a green hydrogen electrolyzer is 3 to 4 megawatts. That should increase by 20 times by 2025, leaving a lot of groundwork still to be done for gigawatt-scale developments.
“There’s a long way to go before one of these projects actually starts seeing significant capital investment,” said Farruggio. “It will possibly be a stretch to see this coming in prior to 2030.”
That fits with the announced timetables for full expansion of the BP and TotalEnergies’ green hydrogen ventures, and is well within the 2050 deadline for the companies to achieve net-zero carbon emissions.
Large-scale hydrogen, unproven though it may be, could represent the best chance for the current generation of oil majors to remain as key players in a mid-21st century, climate-compatible energy industry.
“At some point, oil and gas will have to start declining to get on that Paris-aligned trajectory,” said Ellacott. Green hydrogen is the best fit for a new low-carbon profit center because it’s “such a big long-term growth market, it’s really in the majors’ sweet spot in terms of synergies with their existing businesses.”
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