There’s a lot of buzz going around about green hydrogen. It’s virtually emissions-free, it burns hot enough to replace combustible fossil fuels, and when it combusts it leaves behind nothing but water vapor -- a seeming silver bullet for the clean energy industry. Not only can it be used to replace things like coking coal, which wind and solar can’t replace because of the ultra-high temperatures needed, green hydrogen could also be a key component to scaling up other clean energies by providing a green method of storing energy that doesn’t require things like lithium-ion batteries, which in turn rely on finite rare Earth metals and minerals. There are already plenty of industries that rely on burning hydrogen and have done so for years, but that doesn’t make them clean, because hydrogen is only as green as the energy that is used to make it. The vast majority of hydrogen users are burning gray hydrogen, which is produced using fossil fuels and which therefore has a worryingly large carbon footprint. Hydrogen made using the less emissions-intensive natural gas is sometimes distinguished from this grouping and referred to as blue hydrogen. And green hydrogen, the holy grail of hydrogens, is produced using clean and renewable energies.
So why isn’t it being used on a massive scale? Quite simply, green hydrogen is still far too expensive to produce for the clean fuel stock to enter the market in any meaningful way. “Meeting the ambitious plans being made for [green hydrogen] means building a giant industry almost from scratch,” Bloomberg Green explained last month in a report cheekily titled “Why Hydrogen Is the Hottest Thing in Green Energy.”
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Since green hydrogen is still in its nascency as an industry, production costs are far too high for scalability. To become competitive with the other, more mainstream and more polluting forms of hydrogen -- blue hydrogen and gray hydrogen -- green hydrogen would need to bring down production costs to less than one dollar per kilogram. As it stands, green hydrogen costs several times that generally falling between $2.50 and $4.50 a kilogram to produce. A BloombergNEF analysis projects that green hydrogen may be able to cut its costs down to a competitive level by 2030, but only in a scenario in which both electricity production and electrolyzer capacity are also scaled “at a time when the world’s generators and grids already will be straining to keep up with demand from newly electrified vehicles.” This could be a real hurdle, as the United States already desperately needs to modernize its power grid.
The good news is that there are already some major players with even more majorly deep pockets leading the charge. The most recent, and perhaps the most significant of these, comes from a surprising source: the world’s wealthiest oil company. Saudi Aramco has doubled down on green hydrogen in recent weeks as investors turn away from Big Oil. “Hydrogen is real,” Aramco Chief Technology Officer Ahmad Al Khowaiter told CNBC in a recent interview. The statement came on the heels of an entire day of presentations by Aramco executives and partners extolling the virtues and lofty goals of the oil giant’s foray into hydrogen. “Today we’re showing that the technologies for the use of hydrogen are mature and commercially available… and we see this kind of as an inflection point in the market for hydrogen,” Al Khowaiter was quoted by CNBC.
The plans that they outlined, however, weren’t really plans per se. The presentations, for all they offered in the way of lofty ideals and waxing poetic on hydrogen’s role in a decarbonizing future, were extremely light on details, logistics, and any kind of deliverables. Despite this general mushiness and ambiguity, Aramco’s willingness to align itself with hydrogen in any sense is big and exciting news for the budding industry. When a company as big and rich as Saudi Aramco says they see a major market opportunity forming, the world listens.
By Haley Zaremba for Oilprice.com
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