Oil Companies Know Hydrogen Is A Dead End, But It’s A Handy Way To Hold Back Electrification

Originally posted on EVANNEX.
by Charles Morris

Reasonable minds may differ on the question of whether hydrogen fuel cells have a place in the clean-energy future. However, it’s a fact that the fossil fuel giants have been heavily hyping hydrogen, and it’s not hard to see why, as the vast majority of hydrogen is currently produced from natural gas.

Oil companies (which now want to be known as “energy companies”) are keen to be seen as green these days. Shell, BP, and Total are investing large sums in EV infrastructure, at all levels of the charging value chain. They also present their hydrogen business as a tool to reduce carbon emissions. However, recent comments by an oil industry lobbyist concerning the industry’s efforts to undermine climate regulations indicate that Big Oil’s double-dealing strategy — butterflies and grandchildren for the press, lobbyists and campaign cash for policymakers — hasn’t changed.

Michael Liebreich, the founder of BloombergNEF (originally named New Energy Financing before it was purchases by Bloomberg), presents some new thoughts about the issue in a recent interview published in Recharge.

Liebreich (who is no tree-hugging liberal, but a pro-business supporter of the UK Conservative Party, and an advisor to Norwegian oil giant Equinor) isn’t against hydrogen per se, but he believes (as do many in the clean energy field) that it makes sense only in certain use cases.

“In an attempt to guide governments and industry players away from the [oil industry-sponsored] spin, Liebreich has created what he calls his Hydrogen Ladder, a simple chart showing which use cases for H₂ are uncompetitive, which are unavoidable for decarbonization, and which sit somewhere in the middle,” writes Recharge’s Leigh Collins.

At the top of Liebreich’s ladder lie applications such as ammonia-based fertilizer and oil refining, which currently use highly polluting grey hydrogen produced from fossil fuels, and are responsible for 3–4% of all global carbon emissions. In the middle are use cases in which hydrogen might make sense, such as seasonal power storage, steel, chemicals, shipping and long-haul aviation. At the bottom “uncompetitive” end of the ladder are light-duty vehicles and domestic heating, applications in which hydrogen fuel cells clearly make no sense (battery-electric vehicles and heat pumps are far more efficient, and already well established in the market).

In Liebreich’s view, the logical course would be to replace polluting grey hydrogen with green hydrogen produced by electrolysis in the applications at the hydrogen-friendly top of the ladder, and to cease futile attempts to make hydrogen work for cars and other applications at the bottom of the ladder.

However, that’s not the approach that the oil companies are taking. They’re pouring money and lobbying efforts into convincing politicians to direct public investment to building a “hydrogen economy,” with considerable success, notable in Canada, Germany, and the UK.

This is not because oil company execs are ignorant of the science — you can bet they’re as well informed as you and I, if not more so. Liebreich believes that leaders of fossil fuel firms know that hydrogen is a poor choice for cars and home heating, but are pushing it as a solution in order to slow the pace of electrification.

“If you’re an oil and gas company, in a way, talking about hydrogen is kind of a two-way bet because if it works, then you’re embedded in the hydrogen industry — but if it doesn’t work, you’ve delayed the transition to the thing you don’t make, which is electricity,” he tells Recharge. “So why wouldn’t you promote hydrogen for inappropriate use? For the things that are not at the top of the ladder, that are fairly down — local trains, local buses, cars, delivery vehicles — why not promote it? Because at worst it creates confusion, which is great [for them]. And these companies have an interest in this [electric] stuff not moving too fast, I’m afraid — for all their good words.”