President George W. Bush in his 2003 State of the Union address predicted that hydrogen would power a large number of American vehicles by 2020. However, the costly nature of the technology and the amount of emissions tied to hydrogen production meant much of that focus has since shifted to electric vehicles.
Yet, today, concerns regarding climate change are driving a resurgence of interest in hydrogen, particularly pairing hydrogen production with carbon capture and sequestration, or CCS. A number of fossil fuel and industrial companies, governments in Europe, Japan and Australia, and the state of California are in the early throes of exploring so-called "blue" hydrogen technologies that capture carbon emitted from the hydrogen production process and store it in deep underground caverns.
In theory, the low-carbon hydrogen would then be used for indoor heating, as a transportation fuel, for industrial processes, or potentially even to provide electricity to balance out intermittent renewable generation. Some companies are also exploring the idea of "green hydrogen" where renewables, such as offshore wind turbines, power an electrolysis process to create zero-carbon hydrogen.
Unlike renewable generation, which is location-dependent and only works when the sun is shining or wind is blowing, hydrogen, particularly when paired with ammonia, can be shipped, transported and stored until it is needed relatively easily. But a number of cost-related, regulatory and logistical hurdles must be addressed before the technology can become economically viable.
Climate change as a catalyst
Scientists have warned that to limit global warming to 1.5 degrees Celsius relative to pre-industrial levels, the world will need to make significant strides in curbing emissions by 2030 and achieve net-zero emissions by 2050. Based on those scientific projections, a number of investors, countries and companies have begun to analyze the actions needed to achieve the net-zero target.
Some oil and gas companies had to look at what they need to do to remain viable as the world transitions to a low-carbon economy, Equinor ASA Senior Vice President of Wind and Low-carbon Development Stephen Bull said in an interview. Equinor is developing half a dozen projects that would pair clean hydrogen and CCS and are aimed at being brought online between 2023 and 2027.
One such project is Northern Lights, a joint effort of Equinor, Royal Dutch Shell PLC and Total SA to build lines to gather and pipe captured carbon to ships that transport it to be stored under the ocean floor of the North Sea.
Seven industrial companies recently signaled their interest in connecting to the Northern Lights project by signing a memorandum of understanding with the developers. Equinor, Shell and Total are also part of the Hydrogen Council that was formed in 2017 and now includes more than 30 companies in the energy, transportation and industrial sectors.
Why oil and gas companies care
The ultimate goal is for Equinor to be able to create blue hydrogen out of its natural gas supplies and store the carbon using the infrastructure the company would initially build for industrial customers, Bull said.
"If we can build infrastructure around CCS so we eventually [have] major self-storage, we can also use our natural gas in our portfolio and decarbonize that, and that's what we're looking for when we're trying to find new markets for hydrogen as well," Bull said.
READ MORE: Experts say carbon capture, sequestration is not just for power plants anymore
Hydrogen is used mostly in oil refining and for fertilizer production, and the carbon dioxide emissions from that production account for about 2% of global carbon emissions, the International Energy Agency said in a June report on the future of hydrogen. In addition to the relatively low-hanging fruit of capturing and storing emissions from existing hydrogen production processes, the IEA suggested the technology could be used to provide much broader benefits.
For hydrogen "to make a significant contribution to clean energy transitions, it also needs to be adopted in sectors where it is almost completely absent at the moment, such as transport, buildings and power generation," the IEA said. Experts have also suggested that hydrogen and CCS can be used to help the industrial sector reduce emissions that would otherwise be difficult to curb.
Environmental experts and an official from the U.S. Department of Energy at an Oct. 3 event in Washington hosted by the Global CCS Institute explained that while the technologies behind creating hydrogen have been around for decades and are relatively low cost, adding carbon capture and other needed infrastructure would greatly increase the total cost of hydrogen.
Moreover, producing hydrogen from renewable generation is even more expensive than deriving it from fossil fuels. But the IEA estimated that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 due to declining costs of renewables and as hydrogen production is scaled up.
While a number of countries have set low-carbon targets and/or established a price on carbon, the price would need to be much higher for hydrogen paired with CCS to be economically viable, Bull said.
"Barring a proper price on carbon, [hydrogen paired with CCS] will be reliant on public-private partnerships," Bull said.
Equinor has estimated that it would need a price of about €50 per tonne for hydrogen paired with CCS to be economic, Bull said. For comparison, EU carbon emissions allowances as of Oct. 2 were priced at about €24, according to Markets Insider.
Oil and gas companies, including those that are part of the Oil and Gas Climate Initiative, in recent years have begun to lobby for a federal price on carbon in the U.S. and globally. And the initiative members recently pledged to grow carbon capture investments, including through a $1 billion fund already dedicated to 15 projects.
For the companies, scaling up projects could also help bring costs down. The Rocky Mountain Institute estimated that the hydrogen market could grow by 83%, or to about 650 million tonnes, by 2050, said Patrick Molloy of the Rocky Mountain Institute. Moreover, about 1 GW of hydrogen electrolyzers will be installed around the world by 2020, Molloy said.
"It's a scale game," Bull said. "We'll need a heck of a lot of CCS around the world. It's just getting this moving and turning it into a business model that can be replicated. That's the important thing for us."