Is gas paving the way for the hydrogen revolution?

In the aftermath of the energy crisis sweeping across the globe, gas has entrenched its position as the energy king. However, in the energy transition blueprint for the sustainable future, hydrogen has carved a niche for itself and is gaining more ground, as the climate crisis and weaponisation of gas, following the Ukraine crisis, push the future of energy supply into the arms of hydrogen and other low-carbon and clean energy sources.

In February 2023, ministers responsible for energy from around 40 countries took part in an IEA Ministerial meeting on gas markets and supply security. According to the International Energy Agency (IEA), they concurred with the need to coordinate plans to mitigate the risks associated with the unpredictability of Russia’s use of energy as “a weapon of political coercion” resulting in unprecedented price rises and volatility, after considering the IEA’s analysis of natural gas supply and demand dynamics.

These risks need to be assessed in the context of the short-term limited global liquefied natural gas (LNG) supply capacity additions and uncertainty related to the rebound of China’s economy and its potential impacts on global gas demand. Bearing this in mind, the ministers concluded that the gas crisis had made it clear that clean energy transition and increasing stability in the global LNG market, specifically security of supply and price stability, was a common task for all gas-producing and consuming countries in the world.

Dr Fatih Birol, IEA Executive Director, remarked: “While natural gas markets have suffered some bruises, they are today in a better shape than many expected one year ago. But the reality is that winter 2023-2024 is likely to be the real test. The concrete steps we agreed on today, as well as the solidarity we demonstrated, gives me growing confidence that we will be ready to face the next wave of the crisis. There will be difficult days ahead, but the dividends in terms of energy security, affordability and climate neutrality will be long-lasting.”

In addition, it was decided to expand the dialogue with the broader global community, including through existing multilateral mechanisms such as G7, G20, and PTECC, recognising the need to ensure that short-term actions are taken to address the immediate global energy crisis, while still meeting the Paris agreement targets, including pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels by accelerating clean and sustainable energy transitions in order to achieve global energy security and climate goals.

The importance of galvanising efforts to tackle the climate crisis was hammered home further during the Major Economies Forum on Energy and Climate, convened last week by the U.S. President, Joe Biden, highlighting the critical areas where immediate action is needed to bring down emissions this decade quickly enough to keep the goal of limiting global warming to 1.5 °C within reach. At this event, leaders from across the globe emphasised the rapid progress of clean energy technologies and the need for stronger policy action.

Following President Biden’s opening speech, the International Energy Agency’s Executive Director pointed out that the clean energy economy was emerging faster than expected as a result of the rapid progress in technologies such as solar, electric cars and heat pumps, however, stronger actions would still need to be undertaken to avoid the worst effects of climate change.

“What happens this decade is crucial. The good news is that we have the technologies needed to bring about a decisive peak in emissions this decade, as the record deployment of clean energy in 2022 shows. Today, 1.5 °C is still within reach, but the world must put emissions into decline before 2025 and then continue on a trajectory to rapidly bring them to net-zero by mid-century,” explained Birol.

This comes after G7 ministers in Sapporo under Japan’s 2023 Presidency of the G7 recently gave strong recognition to many areas of the IEA’s work on clean energy transitions and energy security, including critical minerals, energy efficiency, renewables, natural gas, hydrogen, emissions from road transport and coal, and the decarbonisation of heavy industries.

The IEA’s analysis and activities – covering efforts to improve energy efficiency, accelerate the deployment of renewables such as wind and solar, scale up low-emissions hydrogen, and bring down emissions from road transport and heavy industry – were showcased in G7’s communiqué, which set out aims to strengthen energy security and accelerate progress on clean energy transitions.

Furthermore, G7 welcomed the IEA’s reports on the emissions intensity of hydrogen production, on measuring the emissions of the steel industry, and on managing seasonal variability of renewables, as well as the agency’s work on regulatory frameworks for energy efficiency and on natural gas security while citing the IEA’s work on net-zero pathways, innovation and emissions from coal and road transport.

Birol underscored the importance of making supply chains for clean energy technologies more secure, diverse and sustainable to maintain momentum on a clean and sustainable energy transition to keep the 1.5°C limit within reach. Against this backdrop of ensuring a low-carbon and green energy future, hydrogen is one of the clean energy puzzle pieces, which is emerging from its cocoon like a butterfly to spread its wings within the energy mix.

As the world dons its energy diversification armour to fuel its energy arsenal and oil the wheels of the transition to net-zero, will the hydrogen revolution be the solution or will the hype’s lifespan be short-lived? In a bid to shed some light on the future of hydrogen, Offshore Energy obtain insights from Rajiv Sabharwal, Vice President of Business Development, Energy at Bureau Veritas, who claims that the mass production of carbon-neutral hydrogen development is “an emerging area.”

Hydrogen can be produced from a variety of resources, including natural gas, nuclear power, biomass, and renewable power like solar and wind, which make it an attractive fuel option for transportation and electricity generation applications. The most common methods of hydrogen fuel production are natural gas reforming (a thermal process), and electrolysis.

On the other hand, solar-driven and biological processes can also be used to produce hydrogen fuel. Despite the opportunity presented by scaling up hydrogen production, Sabharwal notes there are also challenges thrown into the mix, including technology, supply chain, regulation, transportation infrastructure, and trained workforce.

“The industry is taking these opportunities and challenges very seriously. Recently, new innovations have been unveiled and implications have been discussed at length at conferences and events including Hydrogen Forum, Hydrogen Council, and the IPF International Offshore Wind Forum. Bureau Veritas has been an active participant and contributor to many of them,” underlined Sabharwal.

Even though hydrogen is perceived to be a clean fuel with adoption rising over the years, as countries develop their own strategy for the production, storage, transportation, and use of hydrogen as an energy source, Sabharwal sees Europe at the forefront of development, followed by the Middle East and APAC while North America is picking up the pace.

As more than a thousand large-scale hydrogen projects were announced globally with an anticipated required investment of $300 billion by the end of 2030, Sabharwal believes that government incentives will play “a major role” to help mitigate the high cost of hydrogen production and infrastructure development, bringing hydrogen to par with the other energy source in the next decade. For Sabharwal, there are four pillars of hydrogen growth, encompassing regulatory framework and safety standards, infrastructure development, technology upgrades, and accelerating demand.

When it comes to the regulations for hydrogen production, distribution, and use, Sabharwal underscores that these vary greatly from country to country and industry to industry, but a major priority will be the development and consolidation of a uniform regulatory framework for hydrogen projects across the value chain, which will enable a worldwide approved approach to technical and safety challenges for hydrogen production, distribution, transportation, and use.

“As the sector grows over the coming decades, regulatory conformity will become imperative at local, national, and international levels. Guidance from a trusted source will be essential for companies looking to avoid sanctions for breach of compliance, gain stakeholder trust, and secure financing for forward-thinking projects,” elaborated Sabharwal.

To drive growth in the sector, Sabharwal highlights the necessity of incentivising investment in the supply chain development to facilitate low-cost mass production and investing in the midstream infrastructure for the transportation of hydrogen. In line with this, an investment of $100 billion is estimated to be required to develop the pipeline network in the U.S. while streamlining the permitting process should accelerate investment decisions.

Moreover, Bureau Veritas’ Vice President of Business Development points to a need to develop “high-capacity, high efficient electrolysers” to support the mass production of hydrogen through electrolysers. While various governments are facilitating this through incentives and tax breaks aimed at reducing the cost of hydrogen production, the investment in carbon-capturing technology is also identified as “a main area that will help the production of blue hydrogen using hydrocarbons and bring clean hydrogen costs down,” says Sabharwal.

While the heavy haul mobility sector is “swiftly” adopting the use of hydrogen, there is more growth potential in other transportation sectors, as powering ships, trains, and use in aviation are seen by Sabharwal as “promising areas for decarbonising and greatly reducing environmental impact.” Further growth in the hydrogen sector is also expected to be supported by recently announced government incentives for application development and deployment of hydrogen in energy-intensity applications, such as cement and steel manufacturing.

“Overall, the hydrogen industry is poised for significant growth in the coming years. As a trusted partner in the hydrogen industry, Bureau Veritas (BV) is well-positioned to play a critical role in supporting this transition. By providing technical services and certification, BV can help ensure that the industry operates safely and sustainably while facilitating the growth of the hydrogen economy. As the industry continues to evolve, BV will remain at the forefront of this exciting and important sector,” concluded Sabharwal.

Despite the inroads hydrogen is making with Europe at the heart of the proposed solutions to substitute natural gas with green hydrogen to remove emissions from hard-to-abate sectors, a report from the House of Commons Committee, recently warned that hydrogen was not “a panacea for reaching the net-zero emissions reductions by 2050” although it could grow to become “a big niche” fuel in particular sectors and applications.

With hydrogen’s potential to sideline gas as the key player in the decarbonisation game being limited, gas could assist in ramping up hydrogen’s deployment, but “gas will remain a transition fuel in many sectors and regions,” as accentuated by Frans Timmermans, the European Commission Executive Vice-President.

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