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Hydrogen Demand Projection

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Hydrogen Demand: There Is Only One Growth Hotspot Through 2100 (Part 2 Of 3)

Hydrogen demand today is two-thirds for petroleum refining and fertilizer manufacturing. Both of those uses are going to drop precipitously in the coming decades, and the one area of demand growth won’t replace the loss.

In part 1 of my 3-part article on hydrogen demand projection through 2100, I explored the two biggest demand areas today and why they will almost disappear. In this second part, I explore some areas where there is little opportunity for significant change, and the one major demand increase area for hydrogen I see at this point.

Mixed Other — 30 Million Tons Staying Flat

About a third of hydrogen today appears in mixtures with other gases during industrial processes. There’s little reason to believe that this will substantially grow or shrink over the coming decades, so I’ve projected it remaining at that level.

Methanol 9 Million Tons Staying Flat

Methanol has a pretty stable global market as a solvent, pesticide, and alternative fuel source. It ebbs and flows a bit, but as a synthetic substance, it has uses today which are not going away. It makes a poor synthetic fuel in most circumstances as it’s expensive and has a lower energy density than alternatives, but as an alcohol it burns cleanly. Methanex, a Vancouver-based firm whose head offices I was in a few years ago for technology transformation consulting purposes, is the 800-pound gorilla globally. Its business model is building smaller methanol plants to supply regional markets with lower shipping costs, a model which will make even more sense with higher priced shipping in the future. The price of methanol will rise regardless as cheap black hydrogen is replaced with more expensive green hydrogen.

I project that that demand will stay roughly flat for methanol through the century at 9 million tons per year.

Hydrogenation – 8 Million Tons Down To 5 Million

Hydrogen is used to make a lot of liquid oils into more solid variants which are better for prepared foods and cooking. Margarine is just hydrogenated vegetable oil, as an obvious example. They have health impacts, but the utility of them suggests that they are going to be around for a long time. Never underestimate consumer tastes and convenience over health. However, I think more and more the health concerns will dominate and other solutions will be found to achieve the benefits. I project a slow reduction in demand from 8 million tons per year to 5 million tons per year by the end of the century. This is a very weak projection given my knowledge of the area, but it’s also in a small demand area that has been stable in my understanding, so I’m comfortable with it in the larger scheme.

Steel — 4 Million Tons Rising To 40 Million

This is the sole growth area I can see for hydrogen, and it’s also where my crystal ball and finger in the wind are getting their biggest workout. Increase yes, but my projected increase has very large error bars, probably mostly upward.

Direct reduction of iron ore into steel is already occurring today. Much of it is delivered in the form of syngas, not as gaseous hydrogen. This is relevant as the majority of new steel comes from iron ore which is reduced using metallurgical coal, with high CO2e emissions.

This is the only hydrogen demand area I see growing substantially through this century, however, I don’t expect it will be nearly as large a demand areas as others assume. The reason for this is simple: electric arc mills already turn scrap steel into steel ingots, typically with the addition of a bit of new steel to get the chemical composition right. A couple of decades ago, the US had achieved 70% of steel demand from electric minimills. These electric minimills are a proven technology that work just fine from electricity delivered through the grid from renewables, just as aluminum smelters work just fine on hydro-generated electricity in most of the world today.

One of the largest consumers of steel and largest existing steel infrastructure are going to see radical declines in demand and scrapping as a result in the coming decades. That would be the global fossil fuel infrastructure. Refineries are going to shut down and scrapped. Pipelines are going to be shut down and scrapped. Oil freighters are going to be shut down and scrapped. Drill rigs and oil pumps on sites are going to be shut down and scrapped. The massive trucks used in the oil sands are going to be shut down and scrapped. The train tanker cars delivering oil and diesel on every continent are going to be shut down and scrapped. We aren’t going to be building replacements for this infrastructure, it’s just going to go away.

To a lesser extent, another major consumer of steel (and cement) is transforming. Canada and Scandinavia are leading on the use of engineered hardwood timbers, basically plywood beams, for construction of buildings up to 12 or 16 stories, or even — something I saw just now — 20 stories. That displaces the rebar in the reinforced concrete that would normally be used for structural support, as well as a lot of cement.

The combination of vast amounts of available scrap steel, the very low carbon emissions around electric steel minimills, and the reduction of key types of demand mean that we’ll need a lot less new steel than many projections expect.

To be clear, I have not done a global market calculation on the current mix of new steel vs scrapped steel, the percentage of new steel made with syngas today, or the megatons of scrap steel which will become available from the fossil fuel infrastructure, so the 10x demand growth is the most poorly supported of the major changes in demand in this projection. If readers are aware of literature in this space I should read, I would appreciate seeing them.

As a result, we’ll need a lot less hydrogen for direct reduction of iron than many expect too. However, I do expect it to be a growth market. We will still need new steel.

I project it rising from 4 million tons today to 40 million tons by 2100. That’s a lot of green hydrogen, but not nearly as much as the reductions in fertilizer and refinery use.


And so, there are the flat demand segments and the single bright spot for hydrogen demand I see in the coming decade. Given 30 years of hydrogen hype that have only resulted in refinery use growing, I don’t consider my projections so far to be surprising or controversial. But the third piece should raise the hackles of many people and organizations devoted to a hydrogen economy I don’t consider to be forthcoming.

 
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Written By

is Board Observer and Strategist for Agora Energy Technologies a CO2-based redox flow startup, a member of the Advisory Board of ELECTRON Aviation an electric aviation startup, Chief Strategist at TFIE Strategy and co-founder of distnc technologies. He spends his time projecting scenarios for decarbonization 40-80 years into the future, and assisting executives, Boards and investors to pick wisely today. Whether it's refueling aviation, grid storage, vehicle-to-grid, or hydrogen demand, his work is based on fundamentals of physics, economics and human nature, and informed by the decarbonization requirements and innovations of multiple domains. His leadership positions in North America, Asia and Latin America enhanced his global point of view. He publishes regularly in multiple outlets on innovation, business, technology and policy. He is available for Board, strategy advisor and speaking engagements.

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