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Starting gun sounds for global 'race to the top' in hydrogen economy: IE Week panel


Hydrogen economy could reach up to 600 mil mt by 2050

But questions over the cost and scale of the transition

Gas assets to be stranded in net-zero world: Liebreich

  • Author
  • James Burgess
  • Editor
  • Alisdair Bowles
  • Commodity
  • Coal Energy Transition Natural Gas Metals Shipping

The hydrogen economy is poised to take off in 2023, with a "race to the top" between China and the US, and Europe scrambling to make up lost ground, according to panelists at International Energy Week, but questions over the cost and scale of the transition were hotly contested.

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An increasing focus on capital flowing to developing countries, along with the UN Climate Change Conference in the UAE later in the year, and national industrial strategies that favor green energy projects should all help drive momentum, Marco Alvera, CEO of Tree Energy Solutions, said at an IE Week panel discussion in London on March 1.

"I think 2023, this is going to be the year when it starts happening, when big projects are being built," Alvera said.

"The COP in the UAE is very timely. And the race is on. It's a race to the top between China, the US with the Inflation Reduction Act, the Middle East following and Europe has probably lost its leadership on this and has to regain ground. But it's a very positive competition."

In what was at times a fractious debate on the merits or otherwise of green hydrogen, Bloomberg New Energy Finance founder Michael Liebreich – CEO of Liebreich Associates – poured cold water on much of the bullishness of the green hydrogen advocates.

But the real differences in stance were more limited, Alvera and fellow panelist Graham Cooley (ex-CEO of ITM Power) said.

Huge market

The panel highlighted the roughly 500 TWh of renewable power needed to displace current fossil fuel-derived hydrogen demand in Europe of 10 million mt/year, which is around the total 2020 renewables output from the continent.

The Platts Hydrogen Price Wall shows grid-based electrolysis in Europe is amongst the most expensive hydrogen production pathways globally. Platts is part of S&P Global Commodity Insights.

Liebreich questioned the size of the projected future hydrogen market, which has been placed at as high as 600 million mt/year globally by 2050, in a net-zero scenario, suggesting the figure could be closer to 200 million to 300 million mt/year, up from 90 million mt/year of conventional hydrogen demand at present.

But, Alvera noted, even 300 million mt/year would still be "a huge market."

"All you're doing is saying the energy transition is big, expensive, and tough to do," Cooley said. "And I think we all agree with you."

Steel decarbonization solution

Panelists agreed that the best applications of renewable and low-carbon hydrogen were in replacing incumbent fossil fuel-derived hydrogen consumption in industry, as well as in hard-to-electrify sectors such as the steel industry.

Analysis from S&P Global Commodity Insights shows that hydrogen use in the steel industry has by far the greatest CO2 emissions reduction impact.

Martin Lambert, head of hydrogen research at the Oxford Institute of Energy Studies, said that decarbonizing existing hydrogen use in refining and ammonia production was "the obvious place to start," and would keep the hydrogen industry busy for a long time.

But "hydrogen won't do all of the things that some people claim it could do," he warned. "If you can electrify something, then that's what you should do."

Large-scale electrification raised the prospect of stranded assets in the gas sector, Liebreich said.

"The distribution gas network is a stranded asset. It will be gone," he said.

Liebreich also noted several other solutions in the steel sector, such as using biochar or coking coal from biological sources, utilizing carbon capture and storage or using offset credits.

Cooley pointed out that none of the solutions to decarbonization were easy.

"None of the other solutions are developed, and we have to have a solution," Cooley said. "Picking the right solution is an important thing to do. Actually, a pretty direct solution is doing hydrogen."

Hydrogen economy?

Disputing even the concept of a green hydrogen value chain, Liebreich said: "It's not a hydrogen economy. It's called importing fertilizer," referring to widespread plans to produce ammonia derived from renewable hydrogen as a carrier for the molecule.

Alvera disputed the characterization. "Sure, we will import fertilizers, sure we will import green steel. That's all part of the green hydrogen economy," he said.

Liebreich also disputed the business model behind Alvera's TES, which is planning to synthesize methane from captured CO2 emissions and renewable hydrogen, deliver it to demand centers in Europe and elsewhere before capturing the CO2 from the methane again for reuse in what it says is a closed loop.

Liebreich pointed to both efficiency losses through the various conversion processes, as well as the scope for CO2 and methane leakage along the way, challenging the cost and climate effectiveness of the approach, given the delivery costs of Eur100-120/MWh to Europe that Alvera stated.

Those prices would not be competitive in Europe, Liebreich said.

Platts assessed month-ahead Dutch TTF gas prices at Eur47.68/MWh on March 1, though prices were above Eur100/MWh for much of 2022 amid the energy crisis sparked by Russia's invasion of Ukraine.

"We need to have a serious grown-up conversation about deindustrialization" in Europe, he said. "Economics doesn't give a damn about what Europe wants."

Alvera said the technology was there, and the value chain was nowhere near as complex as working in upstream oil and gas.