Un-sustainable: ‘blue’ hydrogen proves more damaging than burning coal or natural gas

0
27

Not all forms of hydrogen are climate-friendly – and researchers have found that one of them is not as emissions-free as was previously advertised.


Adding to the grim mood produced by the UN climate change report this week, research at Cornell and Stanford Universities has found that ‘blue’ hydrogen causes more pollution than burning coal, according to a new study published in the Energy Science & Engineering journal.


Blue hydrogen is made by splitting natural gas into hydrogen and carbon dioxide, but with the CO2 emissions supposedly prevented from entering the atmosphere using ‘carbon capture’ processes.


This form of hydrogen has received fervent backing from many oil & gas companies and chemicals companies such as Johnson Matthey PLC (LSE:JMAT) (which touted it as “critical in the transition to net zero” and with an addressable market for the company potentially of up to GBP2bn per year by 2030).


However, the scientists found the process does not prevent methane from entering the atmosphere as well as using large amounts of energy to separate and store the CO2.


Furthermore, the research found that the carbon capture process is far from perfect with some of the CO2 escaping.


Blue hydrogen creates 20% more greenhouse gases than coal when being burned for heat and 60% more than burning diesel, according to the research.


“There really is no role for blue hydrogen in a carbon-free future,” the authors of the report said.


“We suggest that blue hydrogen is best viewed as a distraction, something that may delay needed action to truly decarbonize the global energy economy.”


Blue versus green (and grey)


There remains a clean form of hydrogen – known as ‘green’ hydrogen – which is electrolyses using renewable energy.


It is the only version of the fuel that is free of CO2 at the point of use and at the point of production.


Currently most hydrogen that is produced is ‘grey’, meaning it is produced using fossil fuels such as from coal gasification or steam methane reforming, and so cannot be judged a clean energy source.


Global production today is around 70mln tonnes per year from direct manufacturing processes, with 98% of that being produced from fossil fuels, mostly natural gas, according to analysis by broker Liberum, with around 2% from blue or green processes.


Mixed week for BP’s hydrogen ambitions


Among others, the research is bad news for oil and gas giant BP PLC (LSE:BP.), which back in March announced plans to build the largest hydrogen plant in the UK, in Teeside, County Durham.


Producing up to 1Gw of ‘blue hydrogen’, the plans were for H2 Teeside to capture and store up to 2mln tonnes of Co2 per year.


However, this week, BP announced the results of a study that indicated that the large-scale production of green hydrogen and green ammonia using renewable ?energy is feasible in Australia.


BP said Western Australia would be “an ideal place” to develop huge renewable energy production facilities to produce green hydrogen and/or green ammonia for domestic and export markets, with green ammonia generated through the combination of green hydrogen and nitrogen from the air, with ammonia used as a “hydrogen carrier”.


Frederic Baudry, BP Australia’s president, said Western Australia was “?particularly promising” as the state has “existing infrastructure, access to land and ?abundant renewable energy resources such as wind and solar”.


BP aims to become a net-zero company by the year 2050 or before.


Green continent


Another potentially crucial source of green hydrogen for BP and others could be Latin America, according to JPMorgan research published overnight, as the continent has the near-unique qualities to develop the lowest-cost green hydrogen production in the world.


The investment bank published a deep dive into the long-term hydrogen, aka H2, looking at investment opportunities in Latin America and how the region could develop related industries.


“The hydrogen revolution has been gaining momentum recently, and we believe this time is for real,” the JPMorgan analysts said in a note to clients on Thursday.


Although Chile is the exception, regional strategies are not as advanced as in the EU or Developed Asia due to differences in energy profiles, but the JPM team said the continent has the potential to “play a pivotal role in a future global H2 economy” as countries in the Andes mountain range have a combination of low cost and high load factor wind and solar power potential that could potentially allow them to achieve the lowest cost green H2 production globally at around $1.6 per kg by 2030.


“This could help the local adoption of green H2 as a low carbon energy source and help the region align with its Paris Agreement goals,” said JPM’s mining, steel and hydrogen team, led by analyst Patrick Jones.


If this happens, some Andean countries could even shift from being energy importers to major exporters of green hydrogen, though to make export viable it will require carbon prices to be higher in importing jurisdictions.


Chile is “by far” the Latin American country with the greatest ambition and most developed strategy, with the government aiming to commission 25 gigawatts (GW) of electrolysis capacity by 2030, predominantly for export to Asia.


Widening interest in hydrogen from developed and emerging markets is supportive of JPMorgan’s view that the hydrogen transition is “gathering momentum” and “will be critical” for supplying hydrogen to regions that are likely remain energy importers – and thus offer major demand for H2 such as Korea and Japan.


With the electrolyser industry expected to remain highly competitive, the analysts recommend investors “look for relative winners in the space” and stated a continued preference for ITM Power PLC (AIM:ITM) over Nel ASA and Green Hydrogen Systems.

LEAVE A REPLY

Please enter your comment!
Please enter your name here