CERAWEEK: Strategically-placed hydrogen hubs necessary to kickstart industry

A well-placed hydrogen hub that utilizes existing infrastructure from high CO2-emitting facilities is the key to unlocking the potential of the commodity, industry representatives from multiple regions said March 21.

With green hydrogen a relatively new sector, governments and policymakers are required to step in and support their development, said Nikolas Meitanis, strategy director at Abu Dhabi Future Energy Co., at a CERAWeek by S&P Global panel focused on global hydrogen hub development.

"[Hubs] vary based on size based on the scope," Meitanis said. "Typically the objectives are defined by a national industrial policy strategy, and I say national because we all know this is a new sector."

Hydrogen hub investment opportunities can be identified by levels of CO2 emissions, Felipe Arbelaez, vice-president of hydrogen and carbon capture at BP, said. For example, he pointed out the US Gulf Coast's industrial cluster has about 300 million-400 million mtCO2e/year. One of the Biden administration's announced regional clean hydrogen hubs is the HyVelocity Hub off of the Gulf Coast.

The industrial cluster on the Gulf Coast provides an opportunity to capture benefits of scale and existing infrastructure, Arbelaez said.

"In many of these jobs, energy plays an absolutely key role," he said. "Therefore, hydrogen and the substitution of either green hydrogen or other sorts of energy with low carbon hydrogen, it makes a lot of sense."

Some of the challenges presented by hydrogen hub development mentioned by speakers include acquiring land for projects, especially land that has competitive advantage; willingness to pay high prices; and securing grid connections for renewables and the resulting electricity demand bottlenecks.

Hubs that are co-located with renewable energy sources and industrial emitters allows necessary technologies to be deployed easier and quicker, said Emmanouil Kakaras, vice-president of the NEXT Energy Business at Mitsubishi Heavy Industries in Europe, the Middle East and Africa.

Additionally, sharing infrastructure could also lower the final cost of delivery to customers, Arbelaez said.

"Our approach would be to try to repurpose as much of the infrastructure that exists as possible to reduce ultimately the cost of delivering the molecule," he said. "It reduces the upfront capital needed to be able to achieve a certain scale."

NIMBY-ism

Co-locating hubs with market participants and potential offtakes, like industrial facilities seeking to decarbonize, fertilizer manufacturing assets and chemical facilities, not only shortens the supply chain but also makes large-scale development faster, speakers said.

"We all know how long it takes to put large scale infrastructure projects in the ground," Meitanis said. "And it's not just securing the land. The security permits, environmental, social, getting the various concerns of local communities, NIMBY-ism becomes an issue."

The hydrogen industry is likely to emerge first in these areas with existing energy infrastructure, Arbelaez said, while Kakaras called existing facilities "low-hanging fruits" for hub options, also recommending areas with ports. Demand will arise to decarbonize ports and import ammonia, he added.

One specific country with potential for a hydrogen hub is the UAE, Meitanis said. The land could be made available when dunes are flattened, he said. The area also has high solar capacity and the Abu Dhabi Future Energy Company is finding low-wind speed wind resources, he said.

"So putting these advantages together, I would absolutely agree where there is already some infrastructure in place as the places we should be looking at," Meitanis said.

Uncertainty in the US caused by the proposed 45v hydrogen production tax credit is going to cause a "big slowdown" for hydrogen development, Arbelaez said. Projections for hydrogen as a large-scale decarbonization solution in Europe are delayed to the mid-2030's rather than the end of this decade, Kakaras said.

There is "not so much [hydrogen] optimism as the year before," he said.

Uncertainty and slowed development is a natural part of the discovery process, Meitanis said. He said there is "plenty of reason for optimism."

"We know today we cannot build a hydrogen economy, not right away, it will take some time," Meitanis said. "But we can build many hydrogen economies within a certain location, and eventually scale them up, add complexity."