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Another Hydrogen For Energy Play Predictably Fails, This Time In Marine Fueling

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Every week there are breathless announcements about some new hydrogen for energy play. It might be about a 121 km hydrogen passenger train route. It might be about a memorandum of understanding to maybe, at some point in the future, build a lot of renewables to make hydrogen in Namibia. It might be about a plane flying for ten minutes with one propeller turned by hydrogen.

Less breathlessly announced and hyped are the quiet abandonment of scheme after scheme after scheme as they don’t pan out.

The one that brought this to mind this morning was the announcement that Equinor, Air Liquide, and Eviny were completely abandoning their Norwegian green hydrogen shipping fuel project. They had a site picked out next to an Equinor refinery where they were going to build an electrolysis plant and manufacture six tons of liquified hydrogen a day.

At about 50 MWh per ton of hydrogen for electrolysis, that’s about 300 MWh per day. And at about a third of the energy in the hydrogen to liquify it, that’s another 67 MWh or so. Add in energy for everything else in the facility and let’s call it around 380 MWh per day. That would have been about 140 GWh per year, assuming fairly constant production. The electrolyzer itself would have been in the 12.5-20 MW range depending on utilization.

They’d have been paying industrial prices for major users, about $58 USD per MWh at average rates over the past 15 years. That covers multiple generation sources, transmission, firming, and regulatory prices. That would have been about $8 million annually, just for electricity. That’s about $3,700 per ton of liquid H2, or about $3.70 per kg. This cost of electricity isn’t going to go down. It’s already among the lowest rates for electricity that exist or even can exist until late stage grid decarbonization with massive amounts of renewables, HVDC, and storage having mostly been amortized. That’s 2100 or so, and can safely be ignored.

That’s just operational costs, by the way. Assuming an 80% utilization factor, the electrolyzer would be in the 16 MW range. As the IEA dryly notes, “CAPEX requirements are currently in the range of USD 500-1 400/kWe for alkaline electrolysers and USD 1 100-1 800/kWe for PEM electrolysers, while estimates for solid oxide electrolyser cell (SOEC) electrolysers range across USD 2 800-5 600/kWe.” Assuming the lower end of this range, let’s take $1,200 per kWe, suggesting an electrolyzer only CAPEX of about $19 million. Amortizing that over a few years adds perhaps $4 million per year, making the cost of the hydrogen about 50% higher, in the range of $5,600 per ton. It’s quite probable that electrolyzers will get cheaper, but they won’t be coming in every box of Cracker Jacks.

Of course, then there’s the CAPEX of the rest of the plant including the 27-odd industrial components required around the electrolyzer, and then the multi-stage liquification process. That will probably add up to maybe triple the cost of the expensive electrolyzer components, or another $60 million, which turns into another $8 million per year in amortized costs. By itself that doubles the OPEX cost, turning the base $3,700 into about $9,300 per ton of liquid H2, or about $9.30 per kg undelivered. This last isn’t going to get cheaper. These are commoditized industrial products already. They are already about as cheap as they can get.

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This is all simple math that was available in 2021 when the project was announced with much fanfare. Not that anyone whipped out a napkin and a Bic pen to do this. Where’s the fun in that?

The project was immediately short listed for Europe’s big hydrogen innovation fund, the $5.7 billion IPCEI Hy2Tech initiative. Yes, Europeans really know how to name projects so that they roll off the tongue, if the tongue belongs to someone who can tie knots in cherry stems with it.

Of course, it was a bait and switch project, at least on Equinor’s part. The documents make it clear that the actual intent was to make blue hydrogen by steam reformation of SMR. That’s the entire reason the oil and gas biggies are pushing hydrogen so hard. While they don’t expose or probably even do the napkin math for projects like Aurora, they do know that there’s no way to make hydrogen an energy carrier and make that hydrogen with renewables and electrolysis in the most remote timeline imaginable.

Hydrogen demand through 2100 by Michael Barnard, Chief Strategist, TFIE Strategy Inc
Hydrogen demand through 2100 by Michael Barnard, Chief Strategist, TFIE Strategy Inc

Let’s do a bit of math, shall we? Right now we manufacture about 120 million tons of hydrogen per year. My projection for hydrogen demand remaining after we get rid of the biggest user, oil refineries at 38 million tons, reduce the next biggest user, ammonia-based fertilizer at 31 million tons, and add in steel-making suggests we’ll need 95 million tons of hydrogen a year in 2100.

At 50 MWh per ton, that’s 4,800 TWh just for hydrogen for industrial uses in the end game. Want to clean up all 120 million tons? That’s 6,000 TWh. How much renewable electricity was generated from all sources including wind, solar, hydro, biomass, and the like in 2021? About 8,000 TWh. Just cleaning up existing uses of hydrogen requires us to build 60% to 75% more renewables.

Let’s do some more math. How many barrels of oil are consumed daily? About 94 million. About 25% of that goes into more societally beneficial uses making durable products and industrial feedstocks rather than being burnt to create air pollution and climate change. That leaves about 70 million barrels a day of fuel to replace.

How much hydrogen would be required to replace that? Well, a barrel of oil has about 6,120 MJ, and a kg of hydrogen has about 120 MJ, so you need about 51 kg of hydrogen. Let’s give this the benefit of the doubt and assume the higher energy efficiency of fuel cells over internal combustion engines, and that brings us down to about 31 kg of hydrogen to replace the fuels in a barrel of oil. That means we need about 2.2 million tons of hydrogen, which sounds reasonable until you remember that that is every single day. That means every year we would need about 800 million more tons of hydrogen, about seven times our total global production today.

That would, of course, require over five times as much as all the renewable electricity we’ve built in the entire history of human society and leave nothing left over for little things like lights, refrigeration, air conditioning, or the data centers that serve us cat videos.

Right now 99% of all of our hydrogen comes from fossil fuels, mostly natural gas, but coal is in there as well, with even worse carbon emissions. It’s a climate change problem in the scale of all of aviation globally. Just fixing that requires us to almost double renewable generation. Making hydrogen a source of energy would requires multiples of it.

Humanity can’t actually do this. There is no sensible economic pathway where green hydrogen replaces fossil fuels. But if the fossil fuel industry can convince people that they keep needing to burn something for energy and that hydrogen is that thing, then they can bolt on energy-draining carbon capture technologies to their steam reformation and coal gasification plants, fix a tiny fraction of the upstream emissions, spend a lot of lobbying money and get governments to buy into the illusion that blue hydrogen is a climate solution.

And voila, instead of their fossil fuel reserves being worth perhaps 2 cents on the dollar, all of a sudden they are worth more, because they would pass the extra cost of making blue hydrogen on to the world. Aurora’s proximity to Equinor’s refinery starts to make more sense, doesn’t it?

But Equinor, Eviny, and Air Liquide ran into a snag. They started trying to sell liquid hydrogen to the Norwegian shipping industry. And the shipping industry looked at the energy density by volume of hydrogen (very low) and the cost of hydrogen compared to current fuels (very high) and the challenges of bunkering liquid hydrogen (a long, long list) and said absolutt ikke.

After a lot of knocking on doors, they had no orders for their very expensive, very hard to bunker, very hard to carry on ships liquid hydrogen. And presumably they weren’t getting enough of the $5.7 billion in European hydrogen funding. So they closed up shop entirely last week, after putting a pause on the project in late 2022.

This doesn’t mean that the shipping industry has learned their lesson about hydrogen, by the way. Maersk is betting on green methanol, has bought a bunch of dual-fuel ships and committed to a few sources of green methanol. That fuel is problematic for a variety of reasons, but the biggest one is obvious from this analysis of the Aurora facility, the need to electrolyze water at great expense to make the hydrogen. Take away the liquification, add in getting CO2 from somewhere and the manufacturing process for methanol, and the costs are about the same, which is to say really expensive. And methanol has 45% the energy density of diesel, so bunkering would have to be expanded by 2.2 times, reducing port area, and fuel tanks on ships would have to be expanded by 2.2 times, and you couldn’t just reuse existing bunkering because we’ll still need current bunker fuel until the transition is complete. Green methanol remains off of my list of marine energy replacements for these reasons.

Oh, and Methanex’ bait-and-switch 95% natural gas/5% biomethane methanol is not even remotely a viable alternative. That’s just egregious greenwashing by a corporation and industry that wants methanol volumes to grow by a factor of three and have dollar signs where their eyes used to be.

Another option others are considering is green ammonia. Guess what. More green hydrogen. Same cost challenges. Even less energy density than methanol. And it’s an absolutely horrific health hazard that’s much worse when exposed to water. As a public health official in the Netherlands, one responsible for three ports and a bunch of cities said recently, bunkering ammonia at ports would lead to the risk of tens of thousands of people dying in the event of a spill, and he couldn’t understand why it was even being considered.

It took me, personally, a long time to work through the thickets of marine decarbonization and arrive at an opinion. It will end up as batteries for all inland and two-thirds of short sea shipping, and biofuels for the rest, in my considered opinion. Green hydrogen is going to supplement some biofuels processes, but that’s about it. And the economics of green hydrogen suggest that biofuels pathways that don’t require hydrogen at all will be cheaper.

Green hydrogen for energy schemes are all running into the same problems: no one wants to buy the stuff and governments haven’t been ponying up the trillions required to subsidize them. Whenever spreadsheet jockeys get involved, green hydrogen falls of the table as a viable energy option. We will be replacing the vast majority of the oil we burn with electricity, but we’ll do it a lot more directly and efficiently via grid-ties and batteries so we don’t have to build absurd amounts of renewables. Expect a lot more announcements about shutting down hydrogen for energy projects like the recent one from Equinor, Air Liquide, and Eviny. And expect them not to get nearly as much press as new hydrogen for energy announcements.

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Michael Barnard

is a climate futurist, strategist and author. He spends his time projecting scenarios for decarbonization 40-80 years into the future. He assists multi-billion dollar investment funds and firms, executives, Boards and startups to pick wisely today. He is founder and Chief Strategist of TFIE Strategy Inc and a member of the Advisory Board of electric aviation startup FLIMAX. He hosts the Redefining Energy - Tech podcast (https://shorturl.at/tuEF5) , a part of the award-winning Redefining Energy team.

Michael Barnard has 707 posts and counting. See all posts by Michael Barnard