Hydrogen may take off for industrial use
Attention is moving away from transportation and energy storage towards decarbonising hard-to-abate heavy industry processes
Decarbonisation of the US electricity sector is roaring ahead. Combined wind and solar will crest over 10pc of system generation this year, and electric vehicle (EV) adoption has helped put road fuel consumption on a plateau since 2017.
But decarbonising the industrial sector remains a stubbornly hard problem, and that may create an opening for hydrogen. Given enough policy support and a willingness by industry to invest in lower emissions, hydrogen has the potential to play a junior role in the US climate push.
“Hydrogen creates a pathway for industries where there was previously no pathway. It creates an alternative, whereas before you only had carbon capture as an option,” says Thomas Koch Blank, senior principal of industry and heavy transport at sustainability research organisation the Rocky Mountain Institute (RMI) in Colorado.
“Hydrogen creates a [decarbonisation] pathway for industries where there was previously no pathway” Blank, RMI
Hydrogen will have its greatest decarbonisation impact in the steel sector, according to a 2020 RMI report co-written by Blank. This is because of hydrogen’s ability to perform double-duty in steel manufacturing: providing both the required heat and the catalyst normally supplied by coking coal. Now global thermal coal use has peaked, Blank points out that hydrogen producers have their sights aimed squarely at metallurgical coal—the remaining growth area for the industry.
The backstory to hydrogen’s more speculative development in the US very much centres on vehicle fuel cells and the potential for grid storage. But those efforts turned out to be minor, at best. Lithium-ion batteries, which continue to fall in price, now dominate at both the individual vehicle level and on a grander scale for the grid.
Hydrogen production itself still faces a physics hurdle in such areas; at least 20pc of energy used to produce it is lost in electrolysis, a process that is also expensive and demanding of materials.
Unsurprisingly, scientists continue to battle to overcome these hurdles. Researchers at the US Department of Energy’s SLAC National Accelerator Laboratory at Stanford University reported late last year that cobalt has the potential to replace precious metal catalysts. Cobalt is much less costly, but uncertainties remain about its durability over long periods of time. In short, hydrogen production continues to face a scaling problem.
The lack of progress in making the technological breakthroughs required to utilise hydrogen at scale had led to interest fading from the sector. For now, it is policy rather than cost-competitiveness that is beginning to create opportunities. In the Pacific Northwest, for example, recent legislation in the states of Washington and Oregon created a backdoor for hydrogen through climate policies promoting the use of renewable natural gas (RNG) in the utility industry.
The logic is easy to understand. If procurement guidelines target RNG made from large-scale organic waste, why not include hydrogen made from renewable electricity?
20pc – Minimum energy loss from electrolysis
“This is the market we are chasing now. Not transport, and not [grid] storage. Indeed, it is possible that renewable hydrogen is on the path to start competing with natural gas,” says an industry source with a large national energy consulting firm who asked not to be named. The source adds that transport increasingly looks like a dim prospect for hydrogen.
It is a common belief that producing hydrogen at scale becomes both economic and green if solar or wind is used to create it. But even utilising excess solar and wind power—which would otherwise be wasted—does not yet make hydrogen cost-competitive without policy mandates that step-up hydrogen into a higher cost environment.
The best way to understand hydrogen’s potential, therefore, is to see it as a subsidy-dependent energy source entering industries at the margins, where agreements have already been made to invest greater sums in decarbonisation.
Optimists argue this is not unlike the early days of wind and solar. If that is true, then there is a prospect of a learning rate, and therefore the potential for costs to decline. “With hydrogen, you are at least creating a decoupling. You break from your original cost structure, associated with coal, and connect to a cost structure of renewables,” notes RMI’s Koch Blank.