There has been an influx of interest for everything hydrogen. From hydrogen production, development, transport, and end use, key stakeholders are having to collaborate to make hydrogen a viable market solution. What role do policy makers, vehicle manufacturers, energy developers, fleets, and utilities have in building out the supporting framework? Keep reading below.
Q: Why is hydrogen such an attractive alternative energy source and a topic on every industry event agenda?
A: I have participated in a handful of energy and transportation events in the last few months in Washington, DC, Phoenix, California, Wisconsin, Pittsburgh, and Long Beach. What I’ve found is that hydrogen is at the forefront of many energy conversations because it has some unique characteristics that make it attractive to different parts of the supply chain. Proponents and detractors come from many angles based on the requirements they have for the future.
Q: What is driving global and national policy to reduce the cost of hydrogen and unlock new markets?
A: Globally, two United Nations Sustainable Development Goals (SDGs) – the goal of Climate Action requires a sense of urgency to combat climate change and its impacts motivates us to look closely at zero emission hydrogen solutions. The goal of Affordable and Clean Energy shows the benefits of hydrogen as a cleaner fuel but also the challenges of making it affordable. In the U.S. the federal infrastructure bill is also set to open up a myriad of funding opportunities including $8 billion for regional hydrogen hubs that will need to will need to secure offtakers, ensure infrastructure is in place, and train a considerable new workforce.
Q: Who is interested in hydrogen production and why?
A: Oil and Natural Gas Producers, large and small, primarily only want to be oil producers, so they appreciate any market path for natural gas. They also know they must choose where and how to compete as the world transitions to a low-carbon future. Their petroleum products are targets for displacement, but they know they have recent “cleaner” energy success stories to build on as natural gas has made significant impacts replacing coal. Because burning natural gas yields fewer carbon dioxide emissions than burning coal (one-half) or petroleum (one-third less), the transition to natural gas has accounted for much of the decrease in greenhouse gas emissions from the U.S. electric sector in recent years. With high oil prices, these companies are well-positioned to boost hydrogen interests.
Natural Gas Producers (that produce minimal amounts of oil) are different because their market has gone through major transformations since the shale evolution with impactful growth associated to the development of the global export market for U.S. liquefied natural gas (LNG). If natural gas is the feedstock for hydrogen with a zero-emissions story, that strengthens their position as a contributor to better air quality. With soaring natural gas prices and a strategic focus on responsible production of gas, these producers see hydrogen production as an opportunity to be the lowest cost producer of hydrogen. Hydrogen emits only water when burned but creating it can be carbon intensive so carbon capture will be required. To address accusations of greenwashing, they must introduce a new focus on carbon accounting that takes responsibility for how much carbon dioxide equivalents an organization emits.
Renewable Energy Producers – While acknowledging that most hydrogen is produced with natural gas, many energy leaders want to address this with a growing variety of production paths from renewable resources. Interest in “green” hydrogen is skyrocketing based on the ability to use energy from solar, geothermal, wind, renewable natural gas, or other sources for electrolysis. These energy producers have a clear vision for a cleaner value chain to produce hydrogen. They are aiming to further expand renewable power capacity to produce competitive prices for this hydrogen. States from Texas to Arizona are claiming to be on the verge of building the largest green hydrogen facilities in the world.
Q: What does market development look like for hydrogen?
A: I have been impressed with the emphasis on our country’s ability to produce hydrogen. However, as we ramp up production, in parallel we must provide end-user incentives and address the investment risks of first-movers. The most popular question I hear as companies prove their ability to produce hydrogen is “who is going to purchase the offtake?” We need a combination of near-term and long-term plans with realistic growth goals to progress and build stakeholder confidence. Changing operations goes far beyond proving the technology works, plays out well on a spreadsheet or is desired by a large part of the population. A favorable policy environment must extend to the end users.
Q: What markets will be the most likely to use hydrogen and what needs to happen for them to be successful?
1. Transportation (29% of Emissions) – I have focused on the potential for alternative fuels in the transportation market for more than 10 years. Hydrogen has the potential to significantly reduce greenhouse gas emissions from trucks, buses, planes, and ships. With an “all of the above” approach, I see the role hydrogen can play for fuel cell electric vehicles as a transportation fuel in the mix with battery electric vehicles, hybrid electric vehicles, renewable diesel, biodiesel and renewable natural gas. The light-duty hydrogen vehicle market in the United States has been seeded in California by Toyota, Hyundai, and Honda but battery electric vehicles (BEV) seem to be a better fit for passenger vehicles. The heavy-duty market is getting a boost with fuel cell electric vehicle (FCEV) trucks fueled by hydrogen from Nikola, Hyzon, and Toyota on the roads proving their viability, but they still cost at least 3X the price of a diesel truck. Notably combustion engine manufacturers are not ceding the market to electric vehicles as they prove that hydrogen can also work efficiently in a hydrogen internal combustion engine (HICEV). Following affordability for the vehicles and the fuel, infrastructure is the most critical need for transportation. My current company U.S. Gain and others, are collaborating with fleets, auto manufacturers, and other motivated parties to ensure that the infrastructure is in place to dispense hydrogen fuel as needed.
2. Industrial (23% of Emissions) – Many industrial processes already use hydrogen including oil refining, ammonia production, methanol production, and steel production. Favorable policy environments and/or more stringent environmental regulations could increase the amount of industrial hydrogen applications. The scope of industrial use is much larger and will require larger investments in business process reengineering, fuel transport, infrastructure, and a trained workforce to transition.
3. Heating and Power Generation (25% of Emissions) – Interest in using hydrogen as a power plant fuel is growing. Several power plants in the U.S. have announced plans to operate on a natural gas-hydrogen fuel mixture in combustion gas turbines. At the Appalachian Hydrogen Conference in April, leaders of the Long Ridge Energy Generation Project facility in Ohio shared results of their recent project featuring a gas-fired combustion turbine that will run on a 95% natural gas/5% hydrogen fuel blend with a plan to eventually use 100% green hydrogen produced from renewable resources. On a much smaller scale, there is also a growing interest in hydrogen-fueled microgrids to produce electricity off the grid including distributed charging systems or to act as a backup power source. Hydrogen for heating and power generation on a larger scale will require significant investments in the supply chain, transport, and revised operations similar to industrial applications.
Q: When will we see a framework and foundation for hydrogen deployment in place?
A: The future of hydrogen may help the world with climate action goals as well as provide cleaner and affordable energy. The rate of success will be based on increased cleaner production, affordable fuel costs and transportation, and most importantly increased demand from a growing market of end users. The hydrogen market requires an ecosystem consisting of technology innovation, established supply chains, and favorable policy environment to accelerate market growth.