Recently, someone reached out to me with this question. They got an engineering degree and an MBA from good schools, have worked at one of the world’s top consultancies, have done CEO-level strategy work, and currently have decarbonization accountability for a $4 billion annual revenue transportation company. They have the STEM and fiscal chops that make it obvious hydrogen for energy is a dead end, as well as skin in the game.
Because they actually know the science, run the numbers on decarbonization solutions, and deal with otherwise bright, informed, competent people who have many of those attributes, they were deeply perplexed why they were getting hydrogen for energy questions and proposals twice a day. In their words, “What drives this madness on hydrogen?” They hoped I could shed some light on the subject to help them deal with the matter more effectively and efficiently.
I’m withholding the name for a couple of reasons. One, the person in question has an important and already conflict-laden role of transformation, and wouldn’t be helped by becoming a lightning rod within their firm, client, and supplier group. I’ll ground that charge for them. Second, I get this question all the time from different people I engage with globally. When I deal with investment groups, frequently they are wondering the same thing even if they don’t have the STEM chops to follow Paul Martin’s explanations in the space. They respect my complete disregard for people’s feelings in my ruthless adherence to running the numbers in multiple domains, respect the outcomes in areas they understand, yet see the disconnect between the current hydrogen hype and my positions and analysis of hydrogen for energy. We are all bullish on hydrogen electrolysers and building lots of green energy to power them, but are realistic about what off-takers actually exist for projects.
The most recent person to ask the question had the same context I do with my projection of hydrogen demand through 2100, the same as BNEF founder Michael Liebreich with his excellent hydrogen ladder, and the same as chemical engineer and co-founder of the Hydrogen Science Coalition Paul Martin with his many explainers on the science and reality of hydrogen. They know we use about 120 million tons of it annually in industry — 90 million tons of pure hydrogen and 30 million tons of hydrogen in synthetic gases. They know it’s an essential industrial feedstock and that it’s a major climate change problem. They know that we have to manufacture low-carbon hydrogen for those purposes. They know we have to make ammonia-based fertilizers a lot greener by replacing black and gray hydrogen with green hydrogen.
But as a transportation and decarbonization expert with STEM and business degrees, my most recent correspondent on this topic knows that it’s just nonsense as a store of energy for the vast majority of applications. (Michael Liebreich is bullish on hydrogen for very long-duration storage in salt caverns, while I think we should just fill the caverns with as much of the biomethane we can’t avoid producing as possible and build even more HVDC. I suspect that might be a topic of conversation at dinner with him and green investment banker Laurent Segalen next week in London.)
They had at least a rough idea of why oil and gas majors were motivated to push hydrogen for energy, if only to delay the inevitable transition. But they were very perplexed (and undoubtedly frequently annoyed in their day jobs) about the rest of the hydrogen lobby pushing hydrogen into non-viable small pockets such as their segment of transportation to justify their investments. They were wondering how it helped them. As they asked, “Surely they must have run the numbers even though they don’t dare show them. Right?”
Here’s my response, lightly edited:
There are multiple groups I separate this into.
Obviously, there are the oil and gas firms. They have two motivations. Delaying the transition is one of them, of course. But if they can’t convince everyone that hydrogen is required for energy, they won’t be able to turn their hydrocarbon reservoirs into money via blue hydrogen, and they will be worthless. As firms like Shell and bp have 4–10 billion barrels of proven reserves, those assets will become almost worthless. And these firms treat these reserves as a fiscal tool for debt financing. Worthless reserves = financial institutions calling in their debts, the collapse of their stock prices, and the bankruptcy of those firms.
Financial institutions with big positions in oil and gas firms have a vested interest in those firms continuing to be healthy, they are filled with people with business degrees, but usually empty of people with STEM degrees. I’ve been in sessions with 25 investment managers for multi-billion-dollar infrastructure investment funds, and when I got to hydrogen I asked how many people had chemistry, physics, or other STEM degrees. No one did. This doesn’t make them bad people, but the lack of STEM chops means that they are dependent on advisors and focused on due diligence on the business side, not the technical side. The oil and gas industry tells them hydrogen is the answer, fills their eyes with dollar signs, and then basic human nature turns them into boosters.
Something similar happens in the corridors of governmental power. 6.1% of Norway’s GDP is from its fossil fuels. 25% of Saudi Arabia’s is. There is no future where hydrogen isn’t a source of energy where those percentages don’t just disappear. There are secondary and tertiary GDP impacts as well, so the actual economic losses are bigger, likely double. And due to the outsized economic significance in fossil-fuel-heavy countries like those, Canada, Venezuela, and Australia, governmental politicians and bureaucrats have a revolving door into and out of industry, and their doors are always open to lobbyists. Politicians and bureaucrats may be excellent people, but it’s pretty rare to find hard engineering backgrounds among them. And so, the oil and gas industry tells them hydrogen is the answer, and they believe them because otherwise they don’t have a good answer, governmental revenues plummet, and they don’t have their cushy jobs or board positions after they exit public service.
The next are people with a technology that makes hydrogen or uses it, like Ballard or Plug Power. They got invested in it at some point in the past, often prior to 2000 when batteries and renewables sucked, and then confirmation bias and their paychecks just keep them from accepting reality, cutting their losses, and pivoting to something useful. I always like to look at stock price history with firms like that. Both of those firms had peak stock price in March of 2000, which obviously means it was peak hype on the market, and are now at 3% and 0.6% of that stock peak respectively, which really should tell the fiscal people something.
Then there are the companies who are dead, but still moving around. Cummins is a case in point. They build big engines, almost entirely for ground transportation (although, they have a marine division). All of their intellectual capital is about burning stuff inside big internal combustion engines. Virtually their entire market is going away if hydrogen isn’t the answer. Since I had to look up if they had a marine engine division, I can guarantee that they are unlikely to be the leader in supplying the relatively few marine engines left after all inland and two-thirds of short sea shipping electrifies (my projection). Wärtsilä, Hyundai Heavy, and STX Heavy are more likely to persist. Cummins folks have crossed my screen ranting about my hatred of hydrogen and that I’m wrong because if I (and many others like me) are right, they have no future.
Then there are the credulous fans, almost entirely devoid of STEM skills. (Although there are also deluded people with good STEM backgrounds in there that have other cognitive biases.) The credulous fans have a well-thumbed copy of Rifkin’s book on their bedside table, they click on every clickbait article on hydrogen that crosses their screen, and they watch hydrogen videos. They are the useful idiots, spoonfed hydrogen crack by the ones with fiscal oars in the water. Many are readers of CleanTechnica, and fill the comments section with statements about how I’m the biased one who doesn’t understand the science.
So, yes, the hydrogen lobby is a many-headed hydra. It’s a self-reinforcing circle of people whose livelihood depends on hydrogen for energy replacing fossil fuels. There’s some tribalism going on. There are a bunch of obvious cognitive biases that are keeping them from accepting reality, with the prospect theory being key among them. That theory was the one that won psychologist Daniel Kahneman a Nobel Prize in economics in 2002 and is a cornerstone of behavioral economics.
At its simplest, all prospect theory says is that human beings fear potential loss more than they value potential gain, and will make decisions accordingly and only somewhat rationally. Confirmation bias (the tendency to ignore information that contradicts something you believe and consider authoritative what does support your beliefs), availability bias (thinking that what your brain quickly provides as examples is statistically valid for the world), and familiarity bias (whatever you’ve heard or seen a few times being considered better and more reliable than anything novel) all play a part too.
As Liebreich says, it will take until 2030 for the hype to die down, because that’s how long it takes to deprogram a cult.
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