The 2020s will be "crucial" for expanding the global low-carbon hydrogen market, with advances needed in supply, demand, transport and storage as well as regulatory frameworks, PwC commodity risk management head Folker Trepte said Jan. 19 at the Chile 2022 Green Hydrogen Summit.
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Trepte said trade in low-carbon and renewable hydrogen would develop in stages over the coming years, from hydrogen "islands" in the short term, where production and consumption are localized, to a series of expanding regional hubs in the medium term before global trade develops over the longer term.
A network of storage facilities and surplus hydrogen production would be prerequisites for the development of global trade, he said.
"When this happens between 2030 and 2050 really depends on how we invest in the infrastructure and the production," Trepte said.
Retrofitting natural gas facilities for hydrogen would help build cost-effective infrastructure for the energy carrier, he said, adding that global hydrogen trade could develop along similar lines to LNG.
He also stressed the need for the transport of hydrogen and hydrogen carriers such as ammonia to also be green, with tankers powered by renewable fuels.
Trepte identified four pillars needed to develop a global low-carbon hydrogen market: building cost-effective demand for the gas; increasing supply and closing the price gap with fossil fuels by using cheaper renewable electricity; transport and storage; and a clear regulatory framework.
He pointed to the need for governments to develop strategies with defined goals and fiscal incentives, as well as an international hydrogen certification scheme to bring transparency to the carbon intensity of production pathways.
Green ammonia trade
RWE Supply and Trade LNG Origination Manager Julian Flaemig expected global trade in green ammonia to develop as a separate product to conventional ammonia, which is largely used in the fertilizer industry.
"While there is a traded market for ammonia, green ammonia is almost an entirely different product which will have different trade flows, different customers, and also from a value perspective it is very different," Flaemig said. "A liquid internationally traded global market will only emerge once enough volume is there."
"It's very important to establish these first value chains as soon as possible to build volume and to create a platform for future growth," he added.
He welcomed the German H2Global hydrogen and ammonia import initiative with Eur900 million ($1 billion) for projects abroad, saying it brought certainty for partners throughout the value chain.
"Even though it is very early, it isn't too early to get the framework right, to get the regulatory framework in place to foster a liquid market in the future," Flaemig said.
Germany's head of bilateral energy cooperation at the economy and climate ministry, Christine Falken-Grosser, said the country's target of 10 GW of renewable hydrogen capacity by 2030 would not be enough to meet projected demand of 90-110 TWh by that date.
Germany has signed bilateral alliances on hydrogen production with Australia, Canada, Chile, Morocco, Namibia, Saudi Arabia and Ukraine.
However, Flaemig warned that overly onerous or strict rules in one region that were not applied elsewhere could hamper the development of the market, pointing to the example of the EU's delegated act on renewable hydrogen rules, currently under discussion.
Chile stands to become a significant producer and exporter of renewable hydrogen and ammonia, hosting the conference as it develops plans to create a green hydrogen export corridor to Europe.
The country's H2 Mission event held over Jan. 17-22 is focused on infrastructure projects needed to build a green hydrogen supply chain and exports, with the country hosting leading energy companies from Europe.
A delegation led by the Port of Rotterdam is visiting major pilot projects in the South American country.
"Chile possesses the natural conditions needed to produce over 1,800 GW of renewable energy, equivalent to 75 times the country's national energy needs," government agency ProChile said in a statement Jan. 13.
The country launched a national green hydrogen strategy in 2020, targeting renewable hydrogen production at below $1.5/kg by 2030.
This compares with calculated costs of alkaline electrolysis hydrogen production assessed by S&P Global Platts at $2.41/kg on the US Gulf Coast Jan. 18, and Eur11.54/kg ($13.09/kg) in the Netherlands, where soaring gas and power prices have pushed up spot input costs in recent months.
The Port of Rotterdam has launched a series of partnerships in recent months with countries including Portugal, Morocco, Oman, Australia, Chile, Brazil and Canada, with a particular focus on hydrogen.
Chile has also signed a memorandum of understanding with the Belgian ports of Antwerp and Zeebrugge to develop hydrogen shipments.
The country is developing several renewable hydrogen projects. The HNH Energy project in southern Chile, being developed by AustriaEnergy and Oekowind, aims to produce 1 million mt/year of green ammonia from renewable hydrogen, fed by 2 GW of wind power.
The Haru Oni project aims to produce 350 mt/year of methanol and 130,000 liters/year of synthetic gasoline from green hydrogen from 2022 for export to Europe.