The modern world is built from large complex networks that bring us everything from food and water to electricity to smartphones. Nearly everything that we humans rely upon every day are the result of raw materials being sourced, processed and manufactured into different components across multiple countries. These are then transported on trucks, trains and ships over roads, railways and ports for our consumption.
The industrial processes and freight transportation behind the creation of the modern world consumes an enormous amount of energy, which consequently results in a significant amount of Greenhouse Gas (GHG) emissions. The Intergovernmental Panel on Climate Change (IPCC) estimated that industry contributes approximately 32% of the total GHG emissions (21% direct and 11% indirect) (Intergovernmental Panel on Climate Change, 2014).
One potential mitigation to these GHG emissions is hydrogen. Hydrogen is an energy carrier that can be used as an industrial feedstock, burned for heat or used to create electricity for either stationary or moving applications. Hydrogen has an energy density of between 120 – 142 MJ/kg, which is approximately 240 times more than current lithium ion batteries and nearly 3 times more than gasoline, making it a great resource if used effectively.
Although most people think of hydrogen as some future fuel source for electric vehicles, it is worth mentioning that a large market already exists for hydrogen. Globally, 55 Mt of hydrogen is produced annually and mostly consumed in the petrochemical industry and in ammonia production (Hydrogen Council, 2017). Most of this hydrogen is produced in a process known as steam methane reforming (“SMR”). In this process methane (natural gas) reacts with high pressure stream in the presence of a catalyst to produce hydrogen, carbon monoxide and carbon dioxide. Consequently, hydrogen produced via SMR has a carbon intensity of 96.82 g CO2e/MJ, which is approximately equivalent to that of diesel (Government of British Columbia, 2017).
Fortunately, with recent technological advances there is a growing trend towards producing hydrogen via electrolysis, which is becoming more efficient and cost effective. In this process electricity is used to split water into hydrogen and oxygen inside what is referred to as an electrolyser. The carbon intensity of this process is dependent on where the electricity is produced. If renewable electricity is used, the hydrogen has a relatively low environmental impact (referred to as “Green Hydrogen”).
However, one of the biggest drivers that will influence changes to operational models is cost. Green Hydrogen must be economically competitive in any potential market for it to gain mass market acceptance and create a lasting change. One of the major hurdles Green Hydrogen has to overcome for it to be economically competitive is scale. A large facility can produce hydrogen at a much lower cost than a small facility, due to the economies of scale it can enjoy. This is the crux of the problem – no one is going to invest significant capital into a large facility unless there is a ready market available.
The trick to scale is to find an existing market (i.e. as a feedstock for industry) where Green Hydrogen can be competitive by considering multiple variables. This will enable a supply contract to be put in place that will provide the right foundation for investment.
By approaching the development by looking at existing hydrogen markets, it will drive the price of Green Hydrogen down to a level that will make it competitive in other potential growth markets, as shown in Figure 2 and described below. It will also help reduce the estimated 600-700 Mt of GHG emitted each year from the existing SMR hydrogen market.
Power for remote sites and communities
Remote sites and communities that rely on fossil fuel powered generators could be a market for hydrogen. Hydrogen fuel cells have a higher energy efficiency than generators. They also produce water as a by-product, which could be used in other applications. Instead of transporting fossil fuel over long distances to these remote areas, Green Hydrogen will be transported from a large production facility. One option for transportation would be in specialized containers that can then utilize existing supply chain options (i.e. road, rail, water).
Heavy duty vehicles and machines
There is a growing trend towards electrification of vehicles and there is good reason for this. The driving efficiency of a battery electric vehicle (BEV) is around 90% compared with around 25-35% for an internal combustion engine vehicle. This can result in a significant reduction in the fuel costs for the vehicle. It is also a factor in why BEVs are more common than hydrogen fuel cell electric vehicles (FCEV) that have a driving efficiency of around 50%. However, battery electric vehicles have a few downsides. These include battery pack weights, range limitations and low utilization due to charging time requirements.
For these reasons, heavy duty vehicles and machines that require a high utilization or large driving range, and/or have weight restrictions due to pavement load capacities are prime markets for hydrogen (i.e. freight trucks, container handling machines, front-end loaders, mining trucks, etc.).
Hydrogen could be used to replace fossil fuel for industrial heating (i.e. for ethylene production). Existing furnaces can be modified for hydrogen with limited alterations (McKinsey&Company, 2018). This limits initial capital outlay, which could result in hydrogen being more competitive on a whole of life cost analysis for existing operations (compared with fossil fuels or changing to new more efficient electric heating).
Industrial marine vessels
Like land vehicles, electric drive systems for marine vessels are more efficient than internal combustion engine drive systems. The question is then what “fuel” should be used to power these electric drive trains (battery vs. hydrogen fuel cells). Industrial marine vessels generally require a much higher sustained load than land vehicles, which can lead to early battery degradation if batteries are used. Hydrogen, therefore, is a good option to power these vessels (i.e. tug boats, freight vessels, cruise ships, etc.).
Green Hydrogen is an important element in the decarbonization of the world that will increase efficiencies and reduce costs in certain markets. The existing hydrogen market is a vehicle that could enable a large Green Hydrogen production facility to be built. A large facility will lower the cost of hydrogen to a level that will enable other markets to open. These include power generation at remote sites and communities; heavy duty vehicles and machines; industrial heating; and industrial marine vessels.
Government of British Columbia. (2017). British Columbia Low Carbon Fuels Compliance Pathway Assessment.
Hydrogen Council. (2017). Hydrogen – scaling up: A sustainable pathway for the global energy transition.
Intergovernmental Panel on Climate Change. (2014). AR5 Climate Change 2014: Mitigation of Climate Change.
McKinsey&Company. (2018). Decarbonization of industrial sectors: the next frontier.