Hydrogen for Decarbonisation: three critical factors
Using hydrogen as a lever in the decarbonisation of heavy industry requires interplay between new business models, industrial ecosystems and technology says Crispin Keanie, Managing Partner Industrial, Chemicals and Energy.
With net zero targets on the horizon, hydrogen is considered an important part of the industrial decarbonisation equation. However, more work is needed to ensure it can play a meaningful and effective role. An important aspect of this is accelerating the transition from grey to blue to green hydrogen.
The progression to blue and green hydrogen
From a commercial perspective, grey hydrogen’s low price point can make it difficult to justify a move towards lower carbon alternatives. However, this is likely to change, with some countries expected to set a much higher minimum price within the next decade. Combined with the environmental, social and governance (ESG) commitments being made by many businesses, we expect the balance to tip in favour of blue hydrogen by 2030. It’s widely believed that blue hydrogen will act as a stepping-stone to the widespread use of net zero green hydrogen by 2050.
Right now, the processes involved in green hydrogen production – electrolysis driven by renewable energy sources – are very expensive. While it offers an attractive zero-carbon prospect, it’s a long way from being the dependable and commercially viable solution that industry is looking for.
In the meantime, there’s a need to quicken progress towards increased use of blue hydrogen to ensure it delivers the significant improvement upon grey hydrogen. Given that its production is dependent on natural gas and CO2 is a by-product, this is far from straightforward and has resulted in debate within the industry. To ensure it delivers the improvement on grey hydrogen, it requires industry to step-up to the challenges of reducing transportation leaks, achieving high levels of CO2 capture and scaling up the CO2 storage/ utilisation mechanisms blue hydrogen relies upon. Innovation in this space needs to be considered in parallel to that for green hydrogen which we expect to be the long-term production method.
So, what will it take to drive a systematic and effective transition to blue, then green, hydrogen for industry? Clearly technology has an important role to play, but ensuring new approaches are commercially viable as well as technically feasible is vital. If hydrogen is to realise its potential and aid the decarbonisation of industry, technology needs to be considered alongside ecosystems and new business models. It’s the interplay between these three factors that will ultimately drive success.
- Blue and green hydrogen technologies
The core process in green hydrogen production – separation of water into hydrogen and oxygen – can be achieved using several different technologies. These approaches to hydrogen electrolysis offer varying levels of efficiency, maturity and cost-effectiveness.
Alkaline electrolysis is the most established technology overall, but polymer electrolyte membrane (PEM) electrolysis is the current technology of choice for green hydrogen plants. Both technologies bring challenges and there are some interesting advancements in other fields of electrolysis which may offer better prospects for efficiency and commercialisation in the future.
Emerging technologies include AEM, which combines the benefits of alkaline and PEM systems, although the technology is still in the very early stages of development.
A more realistic prospect in the near to mid-term could be solid oxide electrolysers. They’re not yet at the level of maturity seen in alkaline and PEM technology, but the GrInHy project is an active proof of concept that we are monitoring with interest.
Looking further ahead, advancements in offshore electrolysers that convert seawater into hydrogen using renewable energy offer much potential. Neptune Energy’s PosHYdon pilot project on its Q13-a gas platform in the Dutch North Sea aims to gain insights into the production of hydrogen from seawater using offshore wind power.
In terms of blue hydrogen solutions, the most commercialised pathway for CO2 utilisation at present is enhanced oil recovery (EOR) where the gas is injected to oil reservoirs to facilitate extraction. From an environmental perspective, it would be preferable to increase the adoption of CO2 storage and alternative pathways such as:
- Chemical conversion (into fuels including methane, methanol and syngas)
- Mineralisation (which permanently sequesters CO2 while inhibiting it from leaching into the environment)
- Direct utilisation (in heating, cooling and power applications as well as the generation of succinic acid used in the food and cleaning sectors).
Each of these pathways offers effective ways to capture and use CO2, and they have already been commercialised to an extent. However, there is also great potential in new technologies which move into the biological conversion of CO2. Advancements here could see residues absorbed and fixed by algae and other cropsor used in the growth of microbial proteins.
Uptake of blue and green hydrogen will have the greatest impact in industries that currently use grey hydrogen as well as those requiring extremely high temperatures or where electrification poses a challenge. Steel and cement production are considered prime areas of interest as are oil refineries and chemical plants.
With such varied target environments, a range of solutions will be required. This adds to the complexity of technical innovation, underlining the need for applications to be properly considered at the front end of the process. Successful production and adoption of blue and green hydrogen will require new ecosystems and partnerships that transcend traditional industry boundaries.
To date, blue hydrogen pilots have focused on largescale applications. These include H2H Saltend in the UK’s Humber region where blue hydrogen will be produced from natural gas and delivered to a cluster of chemical plants, replacing their direct use of natural gas. The CO2 by-product will be captured and stored offshore in the North Sea. Air Liquide, a pioneer in blue hydrogen, is exploring large individual applications such as oil refineries.
However, while largescale applications will dominate at first, there is a real need for solutions geared towards smaller industry ecosystems as well. Various hydrogen production technologies are emerging that could cater to this end of the industry spectrum. Small-scale reformers and water electrolysis solutions that can be built in a modular way are already commercially available and hold much potential. As these are further developed to improve efficiency and bring costs down, they could play a significant role driving more extensive blue carbon uptake. Close collaboration between suppliers and end-users will be key to make this a reality.
Achieving industrial decarbonisation will require new business models to ensure blue and green hydrogen solutions are viable across a broad spectrum of end markets. We expect to see interesting approaches explored and implemented in the coming years.
Early examples include the transition of oil and gas companies into broader energy service companies that operate across the value chain. These include offerings for CO2 capture and storage as well as solutions for green hydrogen production.
For instance, Norway’s Aker Solutions has launched an ‘as a service’ model for CO2 carbon capture and storage. Aker Carbon Capture operates a carbon capture plant, then handles the transportation and storage value chain. This is something that could be replicated in other parts of the world, with initiatives such as the 45Q tax in the US potentially driving interest and uptake.
Another interesting model is Saipem’s development of SUISO, a turnkey technology for offshore production of green hydrogen to support the energy transition of its clients. A news announcement from the company in July said: “SUISO combines various renewable energy sources such as floating wind, floating solar and marine energy in a single system. The aim is to power, together or individually, electrolyzes installed on existing offshore platforms for the production of green hydrogen.”
These examples illustrate how traditional energy companies are turning their attention to industrial decarbonisation and thinking creatively about alternative business models that might be adopted to commercialise this.
Leveraging hydrogen for industrial decarbonisation
Blue and green hydrogen could act as important levers in the decarbonisation of heavy industry. However, action is needed to ensure technologies are feasible, commercially viable and tailored to the needs of end users. Working strategically and collaboratively to achieve an effective interplay between technology, ecosystems and business models will be crucial.
As technologies mature and cost curves come down there will be multiple opportunities to harness the commercial potential of blue and green hydrogen. Here at Sagentia Innovation, we’re hugely excited about supporting established vendors and emerging start-ups as they bring new technologies and solutions to market. We are at a critical point in the journey towards 2050’s net zero targets; decisions taken now will lay the foundations for the future.
This insight piece is based on a presentation Crispin made at Shaping the Future of Hydrogen.