Environmental challenges

Clean hydrogen, is key to the climate transition

Published on 10 July 2024

Hydrogéne

Christian Lopez
Sustainable Investment Business Intelligence, CPRAM

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What are the main objectives of producing clean hydrogen?

Climate change has been driven by our greenhouse gas emissions for several years. In 2023, more than 40 gigatonnes of greenhouse gases came from the use of fossil fuels1. To limit the repercussions of climate change, those emissions must be eliminated as quickly as possible. Renewable and nuclear energies help to do so by generating low-carbon-emission electricity. However, this electricity cannot be the answer to all the challenges, particularly for certain industrial activities with high emissions. Clean hydrogen, obtained by a low-emitting production process, then acts as a complementary means of electricity to decarbonize some of these activities and the current hydrogen production itself.

What are the main ways to produce hydrogen, now? What are its current main uses, now?

Natural hydrogen is not yet used on an industrial scale. Hydrogen is now being produced mostly from the methane found in natural gas or organic waste and only marginally from water. Worldwide, we produce about 100 million tonnes of hydrogen annually, mainly to synthesise ammonia for use in nitrogen fertilisers, as well as petroleum refining. Unfortunately, conventional hydrogen production processes are heavy emitters – about 10 kg of CO2 per kg of hydrogen produced in methane steam reforming processes2. So there is already scope for decarbonising current hydrogen production by about 1 gigatonne. Keep in mind that Europe has reduced its imports of Russian methane but still depends on heavy imports of Russian nitrogen fertilisers.

What are the main processes for decarbonising hydrogen production and, hence, producing clean hydrogen?

An initial solution consists in supplementing methane steam-reforming processes with carbon-capture, transport and geological storage technologies. This is what Exxon is doing for its Bayton, Texas project, which is awaiting a final investment decision (FID). A second solution consists of producing hydrogen through water electrolysis using electricity produced with renewable energies. This is the case of the world’s largest facility, operated by Sinopec in Kuqa, Xinjiang.

What are the main heavily-emitting activities that could also switch over to clean hydrogen?

Steelmaking is a heavy-emissions activity, due mainly to its use of coal for reducing iron ore. That coal can indeed be replaced by hydrogen. However, the switchover requires heavy investments in new infrastructures. German steelmakers have decided to make these investments, using about 7 billion euros in aid from the federal government, approved by the European Commission following initial testing in Sweden. Posco in Korea and Nippon Steel in Japan have also launched pilot projects in this area, and Australia is thinking of reducing iron ore with clean hydrogen domestically and then exporting it.

Production of nitrogen fertiliser, which is essential to feeding the planet, depends on heavy-emissions ammonia-synthesising processes. Producing clean hydrogen makes it possible to produce clean ammonia and, hence, clean nitrogen fertiliser. This is what the Yara group has done. Moreover, ammonia is an economical and efficient way to transport hydrogen, as we have long known how to synthetise ammonia from hydrogen3 ), as well as how to crack open the ammonia molecule to extract hydrogen. Exxon’s Bayton project will also produce clean ammonia and export it to Europe and Asia. This is also the case of the NEOM project in Saudi Arabia, which is under construction.

225 methanol-powered ships are currently under construction, particularly in China and Korea. Upon delivery by 2028, they will be powered by clean methanol made from clean hydrogen. Production projects have been launched in Scandinavia and China to supply 14 million tonnes of clean methanol and, hence, at least 1.75 million tonnes of clean hydrogen. Many clean ammonia-powered ship plans have also been launched in Japan and Korea.

And, lastly, the liquid hydrogen produced for buses and trucks in China and Korea, for example, can also be in the form of clean hydrogen. The world’s largest liquid hydrogen production plant4 has just been opened in Korea to supply local buses and trucks. There are similar projects in the US, the leading country in the use of hydrogen for forklifts, particularly at Amazon, assisted by Plug Power. Aviation is another target, as it is under an obligation to use sustainable jet fuel made from clean hydrogen using the Fischer-Tropsch process5.
 

    What are the main obstacles to developing clean hydrogen?

      This transition requires huge investments that companies cannot bear alone. Governments have therefore stepped in with subsidies under certain climate-eligibility conditions. China currently leads in clean hydrogen produced via water electrolysis using renewable energies. In the US, in contrast, regulations are still not up to speed, two years after the announcement of tax credits for clean hydrogen production under the Inflation Reduction Act (IRA). Europe has had regulations in place covering renewable hydrogen for one year now, but not yet for low-carbon hydrogen produced from methane.

        France is behind schedule on revising its hydrogen strategy and on its tender of 4 billion CfDs and has not officially recognised the need to import clean hydrogen, as other industrialised countries have done; failing to do so has created media wariness of the industry. Germany, in contrast, has taken a very clear stance on decarbonising its steelmaking industry, on imports, and on building pipelines, but seems to be backtracking on hydrogen mobility following protests from within the sector. These regulatory delays have caused many postponements or cancellations of final investment decisions (FIDs) on projects in Europe and the US6.

          Moreover, European renewable hydrogen is far more expensive than hydrogen obtained by steam reforming, and current subsidies are unable to make up the difference, which amounts to about 5 euros per kg of hydrogen. Clean hydrogen application scopes have accordingly been lowered. In contrast, Korea and Japan are moving forth very fast in mobility, heavy industry and transport, but at times controversially, for example in using ammonia in coal-fired power plants to reduce CO2 emissions.

          Keep in mind also that the geopolitical context has caused Western countries to want to be less dependent on supplies from China.

            What are the main takeaways?

              We are still awaiting finalisation of US regulations, which are tied up with two major technical challenges: 1/ including methane leaks in the aggregate lifecycle GHG emissions related to clean hydrogen produced at a hydrogen production facility (“well to gate emissions”), as satellite observations have brought to light very poor practices by the oil & gas sector; and 2/ taking on board grid constraints for the production of clean hydrogen from water, as US electricity generation is not yet clean and its grid is already overburdened. Regarding the former point, the White House has set up a methane task force and has just released new methane emission reporting requirements for the fossil fuel sector with penalties for breaches (900 dollars per tonne for this year’s reports).

                As to the latter point, the Energy Department provides subsidies to make electrolysis technologies more competitive, and the IRA promotes financing of renewable and nuclear power generation. It is also important to monitor project FIDs, project application scopes, and long-term delivery contracts. Not to be overlooked is the fact that sector companies are also encountering greater-than-expected technical challenges in scaling up projects, particularly in the area of safety. Despite all these challenges, we are confident that clean hydrogen remains essential to the climate transition, in decarbonating many heavy-emissions activities.

                  Source :

                  1. https://www.ft.com/content/f0e1f4fa-bc5a-45e9-9257-871dae461e5d
                  2. https://fr.wikipedia.org/wiki/Vaporeformage
                  3. Source : procédé Haber-Bosch, https://fr.wikipedia.org/wiki/Proc%C3%A9d%C3%A9_Haber
                  4. https://fr.wikipedia.org/wiki/Hydrog%C3%A8ne_liquide
                  5. https://fr.wikipedia.org/wiki/Proc%C3%A9d%C3%A9_Fischer-Tropsch
                  6. https://www.ft.com/content/14a60649-172a-45c1-99a9-039f481430e7

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