How likely is the divorce from gas, as the emerging love affair with hydrogen stakes its claim?

The raging global energy crisis has turned the previously set agendas on their head, as countries scramble to strengthen their energy security. The green shift lobby, with hydrogen as a centrepiece in its energy gospel, is getting the wind at its back on the solution to the energy crisis, advocating the pivot to renewables as a way to avoid high gas prices and bolster the security of supply.

However, gas shows no signs of being easily toppled, thus, it is not likely to throw in the towel in favour of hydrogen. While the voices calling for an end to fossil fuels and a paradigm shift to renewables are gaining ground, those advocating the use of oil and gas to propel the energy transition are not easy to overthrow. Despite this, many global governments have thrown their support behind the hydrogen hype in a bid to bring down their greenhouse gas (GHG) emissions and achieve the goals of the Paris Agreement along with net-zero targets.

Offshore Energy previously wrote about the recent developments within the energy industry, which showed the inroads hydrogen was making. This highlights the potential the trend has to sideline gas as the key piece on the energy decarbonisation chessboard. At the time, it was underscored that Europe was at the helm of the proposed solutions to substitute natural gas with green hydrogen to remove emissions from hard-to-abate sectors. 

This was illustrated even more clearly in the second half of December 2022 by the H2Med subsea pipeline between Barcelona and Marseille and seven hydrogen projects in the Netherlands, which received a subsidy of almost €800 million (over $853.3 million) from the second wave of Hydrogen Important Projects of Common European Interest (IPCEIs).

Hydrogen’s growth was also further hammered home by the H2Sines.RDAM project, aiming to produce green hydrogen on a unit in Sines, convert it to liquefied hydrogen and export it to Rotterdam via a dedicated liquid hydrogen carrier; and the progress made on the Northwestern Europe’s first import, storage and handling terminal designed exclusively for hydrogen carriers, renewable energy products and low-carbon fuels.

In the wake of many countries and companies seeing hydrogen as the fuel of the future, believing that it can help decarbonise hard-to-abate sectors and replace natural gas, Offshore Energy set up a poll on social media at the start of January 2023, asking: How likely is hydrogen to replace gas? The participants were offered four different choices:

• It will replace it by 2030.
• It will replace it by 2050.
• Only in some sectors
• It cannot replace gas.

While the poll was open, 11 per cent of the participants voted for 2030 as the year when hydrogen will oust gas; 23 per cent cast their votes in favour of 2050 as the year when gas will be driven out by hydrogen; 25 per cent of voters said that gas cannot replace hydrogen; while the majority of votes or 41 per cent went to the option which said that hydrogen can only substitute gas in some sectors.

The final results of this poll are in accordance with some of the recent studies on hydrogen. These results also support views on hydrogen replacing gas like the ones expressed by Paul Martin, Chemical Engineer, which outline that fossil fuels should be burned a little longer until the right solutions are in place.

Despite the potential that green hydrogen and hydrogen, in general, have to assist in reaching net-zero targets, there are also some blind spots due to the lack of data on leaks and the potential harm that could arise as a result, among other things. Several studies on the risk of leaks undermining hydrogen’s climate benefits, published by Columbia University, the Environmental Defense Fund, the universities of Cambridge and Reading, and the Frazer-Nash Consultancy, showed that hydrogen loses its environmental edge after it seeps into the atmosphere.

Dr Ilissa Ocko, Senior Climate Scientist at EDF, warned: “Hydrogen itself poses a greater warming risk than decision-makers realize. For ‘clean’ hydrogen to provide the hoped-for climate benefits, leakage has to be kept extremely low. This is not a place to rush blindly. The process needs to be carefully designed and managed effectively from end to end.”

The EDF’s report emphasises that many scientists believe a 10 per cent hydrogen leak rate is plausible, thus, at this rate, blue hydrogen with carbon capture and 3 per cent methane leakage has the potential to increase the 20-year warming impact by 25 per cent. On the other hand, while green hydrogen would reduce the 20-year warming effects by two-thirds relative to fossil fuels, this is still significantly less than the climate-neutral promise that many supporters use to toot green hydrogen’s horn.

Dr Nicola Warwick, NCAS climate scientist based at the University of Cambridge, underlined: “Using low carbon hydrogen, instead of fuels like natural gas, will prevent emissions of carbon dioxide, and bring significant benefits for the global climate. But leakage of hydrogen during production, storage, and distribution could offset some of these benefits, and that’s a cause for concern.”

Many scientists agree that while methane is hard to manage, hydrogen will be harder still, as the existing equipment will likely not be up to the task. However, they still claim that hydrogen would be appropriate where other low-carbon options are lacking, such as steel and cement production, or as feedstock for low-carbon fuels for ships and planes. As transporting hydrogen will increase the risk of leaks, it is believed that it should be produced close to where it is put to use.

Dr Steven Hamburg, EDF Chief Scientist, underlined this point: “If the goal is to rapidly reduce greenhouse gas emissions cheaply, it makes no sense to divert clean electricity from the grid to make hydrogen for use in cars, homes or commercial buildings, where in almost all cases clean electricity can serve these energy needs directly.

“It’s vitally important that both industry and policy-makers understand these realities before building tens of billions of dollars’ worth of infrastructure that won’t deliver the climate benefits we’re counting on.”   

With a data gap due to insufficient technology advancements for monitoring hydrogen leaks, scientists agree that more research is required to calculate its net impact on global warming prior to taking final investment decisions (FIDs) on hydrogen-related projects.

Frazer-Nash’s Stephen Livermore, remarked: “Hydrogen is likely to play a significant role in the decarbonisation of the UK’s future energy system. By understanding where and how much hydrogen may be emitted government can explore technologies to reduce these emissions and consider their potential implications in relation to Net Zero 2050 decarbonisation goals.”

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Some countries and governments, like the United Kingdom, have recently questioned the role of hydrogen in achieving net-zero. As a reminder, a key component of the UK government’s Ten Point Plan for a Green Industrial Revolution hinges on driving the growth of low-carbon hydrogen.

In line with this, the plan outlined a range of measures to support the development and adoption of hydrogen, including a £240 million (about $289.3 million) net-zero hydrogen fund. With this at the forefront, the House of Commons Science and Technology Committee launched a new inquiry into the role of hydrogen in reaching the UK’s net-zero target.  

In a report published in December 2022, the House of Commons Committee outlined its recommendations to the government, which has two months to respond. This report warns that hydrogen is not “a panacea for reaching the net-zero emissions reductions by 2050” but can grow to become “a big niche” fuel in particular sectors and applications.

The Commons Science and Technology Committee argues that hydrogen will likely have “a specific but limited” role in decarbonising sectors, for example where electrification is not possible and as a means of storing energy. As hydrogen is a gas of high calorific value and when burned does not produce carbon dioxide, which is a harmful greenhouse gas, in principle, it could play a role in decarbonising the UK economy and help reach net-zero emissions by 2050.

Previously, the UK set up targets in the medium term, which encompass reducing upstream emissions by 50 per cent, bringing 50 GW of offshore wind and 10 GW of hydrogen online, and capturing 20-30 mt CO₂ per year by 2030. In relation to the 2030 emission reduction target, the UK’s regulator North Sea Transition Authority (NSTA) confirmed in September 2022 that the oil and gas industry was making progress, albeit, more action would be required to halve emissions by 2030 as agreed in the North Sea Transition Deal (NSTD).

Meanwhile, the Committee states that it is not convinced that hydrogen will be able to play a widespread role in heating homes by 2026 – when the UK government mentioned it could start mandating hydrogen-ready boilers in domestic homes – though it could be feasible to blend some hydrogen with natural gas.

More to the point, the policy for hydrogen metering in homes has been “overlooked,” according to this report, as the energy regulator Ofgem is unable to say whether current smart meters would be suitable for hydrogen or the cost implications for the consumer if this is not the case.

Furthermore, using hydrogen to replace fossil fuels within the UK’s energy system would entail “significant investment” in the networks and infrastructure needed to distribute it around the country, based on the report’s findings.

In light of this, replacing petrol and diesel with hydrogen in passenger cars and heavy goods vehicles would require an extensive and new network of hydrogen refuelling stations across the UK while completely or substantially replacing gas in domestic heating systems with hydrogen would likely be “a massive and costly programme” of replacing boilers, meters and network infrastructure, highlights the report.

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The report further emphasises that the future use of hydrogen is likely to be “limited rather than universal,” best suited to applications or places which are hard to electrify, such as some parts of the rail network; uses that do not require the creation of an extensive refuelling network, such as local bus services operating out of a fixed number of depots; and users who are adjacent to, or accessible to, places where hydrogen is produced, such as industrial clusters.

Additionally, hydrogen is expected to have important potential uses as a means of energy storage; and a source of power for energy-intensive industries like steel, glass and mineral production. At this point in time, hydrogen is mainly produced from fossil-fuel-intensive processes while the production of low-carbon green hydrogen relies on renewable electricity and so-called blue hydrogen requires carbon capture and storage (CCS), which is not deployed at the large scale required to make a material contribution to emissions reductions, underlines the report.

Moreover, the report specifies that to make a large contribution to reducing greenhouse gas emissions in the UK, the production of hydrogen requires “significant advances” in the economic deployment of CCUS and/or the development of a renewable-to-hydrogen capacity. As the timing of these is uncertain, the Committee points out that it would be “unwise to assume that hydrogen can make a very large contribution to reducing UK greenhouse gas emissions in the short- to medium-term.”

On the other hand, to maximise the future possibilities of using hydrogen to decarbonise the economy, clear commitments will be needed by the UK government in the short- and medium-term to the development and deployment of carbon capture, usage and storage and renewable energy.

As this limited, rather than universal, use of hydrogen should inform the UK government’s decisions, the Committee disagrees with the Climate Change Committee’s recommendation that the government should mandate new domestic boilers to be hydrogen-ready from 2025.

This view is justified by multiple changes that will be needed to the way the UK obtains, uses and stores energy if it plans to reach net-zero emissions by 2050. While hydrogen will have its place in this portfolio, the Committee does not believe that it will be the solution to the UK’s problems that might sometimes be inferred from the hopes placed on it.

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Although, hydrogen is likely to be “a big niche” where it will play a major role in certain sectors of the economy, and be “a huge growth story” over the next 30 years, “it will not be everything,” concludes the Committee. As essential questions remain to be answered as to how future large quantities of hydrogen can be produced, distributed, and used in ways that are compatible with net-zero and cost efficiency, to help hydrogen achieve its potential requires the UK government to have a clear view of its practical deployment and to turn the high-level hydrogen strategy into a set of operational decisions.

To this end, the Committee has asked the UK government to outline a series of decision points between now and 2050 in the next two months that will set out in practical terms the role of hydrogen in the UK’s future energy system. This should cover the scientific and technological progress that needs to be made at each stage, such as requirements for the deployment of CCS to make blue hydrogen economic and the level of renewable generation that would lead to surplus power, which could be used to produce green hydrogen.

Commenting on this, Greg Clark, MP, Committee Chair, remarked: “Hydrogen can play an important role in decarbonising the UK’s economy, but it is not a panacea. There are significant infrastructure challenges associated with converting our energy networks to use hydrogen and uncertainty about when low-carbon hydrogen can be produced at scale at an economical cost. But there are important applications for hydrogen in particular industries so it can be, in the words of one witness to our inquiry, ‘a big niche.’

“We welcome the government’s high-level strategy and support of hydrogen trials, but future decisions on the role of hydrogen must increasingly be practical, taking into account what is technically and economically achievable. We call on the government to set out a series of decision points, which would give industry the clarity that it needs.”

The findings of this report indicate that hydrogen is not likely to dethrone gas on the UK’s energy stage. The U.S. is also not likely to cut off gas or oil investments in the foreseeable future, which was confirmed by Jamie Dimon, JPMorgan Chase CEO, during a recent congressional hearing when he was asked whether there is a policy against funding new oil and gas products. Dimon responded to this question by saying: “Absolutely not and that would be the road to hell for America.”

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Based on the current situation in Europe, it was recently accentuated by Frans Timmermans, the European Commission Executive Vice-President, that gas would “remain a transition fuel in many sectors and regions.” Whether this will change in the future, remains to be seen.

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