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Market growth, trade flows eyed as hydrogen reaches inflection point


Scaling up production crucial to bring costs down

International hydrogen trade needs to start soon

Clear policies, regulation needed to draw investment

  • Author
  • Sambit Mohanty
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  • Debiprasad Nayak
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  • Energy Transition Environment and Sustainability Hydrogen: Beyond the Hype

Hydrogen is at its inflection point as governments and the industry step up efforts to embrace the fuel, but expanding use beyond refining and chemicals as well as developing a trading model would be crucial for cargo flows and consumption to take off, industry leaders told the Gastech Virtual Summit.

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While hydrogen's versatility is attracting interest from governments and companies, there are many challenges -- such as high costs, transportation as well as scaling up production -- that have to be addressed through clear policies, projects and incentives, they added.

"For hydrogen to make a significant contribution to clean energy transitions, expanding clean hydrogen production is not enough. Hydrogen use needs to be greatly expanded in both, existing sectors like refining and chemicals, and also in new sectors like building, transport, and power generation," said Keisuke Sadamori, director for energy markets and security at the International Energy Agency.

"Lessons from the successful growth of the global LNG market can be leveraged. International hydrogen trade needs to start soon if it is to make an impact on the global energy system. What we do between now and 2030 is critical -- the challenge is to turn the momentum into investment decisions," he added.

Sadamori added that a lot of work was being undertaken globally in the green hydrogen sector. Global electrolyzer capacity additions in 2019 were twice as high compared with 2015 levels. The total installed capacity reached a new record of 170 MW last year, and additional projects of 2.8 GW have been announced recently.

"Green hydrogen from the low-carbon electricity is currently more expensive. The scale-up is needed to bring costs down," Sadamori added.

Hydrogen properties


De La Rey Venter, executive vice president for integrated gas ventures at Shell, told the summit that despite the clean fuel initiatives, the hard-to-decarbonize segment could still be 50% of the total global energy system in the longer term.

"This is where hydrogen uniquely can provide a way to fully decarbonize shipping, heavy industry, heavy-duty transport, chemicals, and more -- in segments, where today, we do not have any other credible full decarbonization methods," Venter added.

He said the role of government, multilateral agencies and regulatory bodies in accelerating the expansion of the hydrogen sector were extremely crucial.

"On the supply side, we believe in the integration value of hydrogen with offshore wind and with solar, and creating green hubs around the supply nodes. We are, for example, among other things involved with two very large projects in the Netherlands to produce hydrogen from offshore wind," he added.

Niek den Hollander, executive board member at Uniper SE, told the summit that the company had recently launched a new strategy with a huge focus on decarbonization.

"That clearly puts hydrogen on the top of our agenda. We're aiming to invest several billions of dollars until 2022, and a significant proportion of that will be invested in primarily green growth projects," he said, adding that the company had pledged to make their power generation business in Europe carbon-neutral by 2035.

The challenge to tackle climate changes is huge, and a mix of hydrogen production technology is consequently needed to successfully address it "Having said that, I think it's definitely clear to us that the endgame in hydrogen will have to be green," he added.


Thorbjoern Fors, chief executive officer for oil and gas at Siemens Energy said that the company had several partnerships around many demonstration projects, and their technologies in areas -- such as power generation and gas turbines -- would be able to operate at 100% hydrogen by 2030.

"Today, many of them can do that, but would require water. What we are looking for is no need of water, but actually a combustion system that in a dry low-emission system can operate at 100% hydrogen. Today, we're at about 60% and we claim to be a leader in that area," he added.

Sanjiv Lamba, executive vice president for Asia-Pacific at Linde, said that the global hydrogen economy was at its inflection point and the company was actively investing in the development of clean hydrogen infrastructure and ecosystems, while continuing to working on developing technology that's going to produce, distribute, and dispense cost-effective green hydrogen.

"We firmly believe scaling up locally is critical to sustain long-term economics," he added.

EU's hydrogen demand is anticipated to increase sharply to about 17 million mt a year by 2030, nearly 75% of which will need to be imported from outside the block, speakers said quoting various industry associations forecasts.

Commenting on Asia, they said that in some north Asian countries, government policy dictates that all hydrogen imports must be carbon-free by 2030.