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Hydrogen storage tanks in Spain in May 2022. Hydrogen has a variety of applications and can be deployed in a wide range of industries.
Angel Garcia | bloomberg | Getty Images
The hype around hydrogen has grown increasingly loud in the past few years – many see it as an important tool in reducing the environmental footprint of heavy industry and helping economies achieve net zero goals.
The green hydrogen sector, centered on its production using renewable energy sources such as wind and solar, has attracted particular interest and boasts some high-profile backers.
Among them is German Chancellor Olaf Scholz, who described it in 2022 as “one of the most important technologies for a climate-neutral world” and “the key to decarbonising our economies.”
In the world of business and multinational companies of Iberdrola to Siemens Energy They are also looking forward to doing missions in green hydrogen.
But while there is a huge amount of excitement about hydrogen’s potential – the International Energy Agency describes it as a “versatile energy carrier” – there are also undeniable challenges.
For a start, the vast majority of hydrogen production It still relies on fossil fuels, not renewables – a fact that clearly runs counter to net zero goals.
And when it comes to green hydrogen specifically, production costs are a big problem, and will need to be cut in the coming years.
Transporting hydrogen from production sites to users is another factor that is just as important as the others.
“Hydrogen is very expensive to transport,” Murray Douglas, head of hydrogen research at Wood Mackenzie, told CNBC during an interview.
He added, “Transportation is more difficult than natural gas… technically and engineering… it is more difficult.”
Douglas is not alone in highlighting some of the hurdles in hydrogen delivery.
The US Department of Energy, for example, Notes the main challenges “Includes cost reduction, increased energy efficiency, preservation of hydrogen purity, and reduction of hydrogen leakage.”
The DOE adds that more research is needed “to analyze trade-offs between hydrogen production options and hydrogen delivery options when viewed together as a system.”
Location matters
In terms of the logistics surrounding green hydrogen in particular, one area Which will need attention is the location of the production facilities.
Often, they are reserved for regions where renewables are abundant – such as Australia, North Africa and the Middle East – but many miles away from where the hydrogen will actually be used.
Wood Mackenzie’s Douglas pointed to relocation options when considering the investment horizon for the next 10 years.
“Obviously you can pipe it in, but you’d probably need a dedicated pipeline,” he said, noting that this would likely need to be built new and close to end users.
He said that the only other realistic option in this investment horizon is related to the export of hydrogen in the form of ammonia.
“You produce hydrogen, green hydrogen, and then you make it into ammonia with nitrogen,” he said.
Douglas noted that ammonia shipping was “a well-established technology and industry — there’s already a range of receiving outlets in place.”
This ammonia can then be sold directly to end users, such as fertilizer producers.
An alternative option would be to “crack the ammonia back into hydrogen”, although this would not be without its own problems.
“Once you start ‘cracking’ again into hydrogen, you start to incur some … pretty significant energy losses,” said Douglas.
An efficient delivery system is required
In a statement sent to CNBC, Jorgo Chatzimarkakis, CEO of industry association Hydrogen Europe, was optimistic about the prospects for green hydrogen.
It will become a “global commodity”, he said, before emphasizing the importance of an “effective delivery system”.
Chatzimarkakis also highlighted the need for a certification program, because “green hydrogen needs to prove that it comes from renewable energy.”
Despite some obvious significant hurdles, partnerships and programs related to the supply and distribution of green hydrogen are beginning to take shape.
Earlier this year, for example, Greenergy and Octopus Hydrogen — the latter part of Octopus Energy Group — announce They have started the Green Hydrogen Delivery Partnership.
Elsewhere, German company Enertrag He says It has been “operating tankers and trailers to transport large quantities of green hydrogen to customers” since 2021.
And in 2022, Madrid-based energy company Cepsa said it will work with the Port of Rotterdam to develop “the first green hydrogen corridor between southern and northern Europe.”
Point of disagreement
Despite the existence of the technology and knowledge of hydrogen production and delivery, one sticking point remains.
“The industry knows how to transport hydrogen,” said Douglas of Wood Mackenzie, adding that the energy and chemical sectors have been transporting it “for a long time — it’s not new, it’s just expensive.”
Expanding on his point, Douglas said lowering production costs is key. The lower their number, the more manageable transportation costs.
“I’m not sure if there is any kind of magic… cost-cutting technology that will come into play on the transportation side of the equation,” he added.
“We’re not going to suddenly find … a better material to charge the hydrogen through,” he said.
He continued, “If you’re monetizing it, you have to get very cold, and that’s very expensive.” “If you’re converting it to ammonia, there’s a cost there, and then there’s a bunch of challenges around toxicity.”
“They know how to do all these things,” he concluded. “It’s still about cost.”
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