Sunday, September 19

The promise of hydrogen comes in fine print | Business

Hydrogen bus developed by Toyota.
Hydrogen bus developed by Toyota.TOYOTA / Europa Press

“From now on, we will produce unlimited amounts of clean, renewable energy, everywhere, for all purposes, for all eternity.” Who wouldn’t want embrace the dream that Nel proposes, a Norwegian company that installed its first electrolyzer in 1927 and has recently teamed up with Iberdrola to produce green (low-emission) hydrogen. The climate emergency is accelerating, as is the search for radical solutions for the entire planet, and there is hydrogen, the most abundant chemical element in the universe. Like the tale of Peter and the Wolf, that same promise resonated after the oil crisis of 1970 and 1990, but nothing magical happened. Can this time be different?

95% of the hydrogen that is produced and used in the world right now, according to a report by Candriam, is extracted from fossil fuels by high temperature cracking and has annual emissions of 830 million tons of CO2, about the same as Indonesia and the United Kingdom together. The other 5% is obtained by electrolysis, using an electric current to divide the bonds between the hydrogen and oxygen atoms in the water, something that is “cleaner, but not as cheap”, explains Javier Brey, President of the Spanish Hydrogen Association. Cleaner when the current applied comes from renewable sources.

The coronavirus has promoted hydrogen as the key vector for Europe to meet its goals of decarbonizing the economy by 2050. But production costs, as was the case for wind or solar power 15 years ago, do not outweigh the supposed benefits. “Ambitious, specific and short-term actions are needed to further overcome barriers and reduce costs,” they say in the International Energy Association.

On September 25, the British company ZeroAvia completed the world’s first hydrogen fuel cell powered flight of a commercial grade aircraft. There is also talk that it will be able to propel trucks, buses or boats that will only give off water vapor as a residue. It is studied as a complement to city gas to heat homes, since a proportion of 5% and up to 20% of this element can travel through the same infrastructure. And it can help store energy (wind or solar) by transforming it into storable hydrogen when there is an excess supply.

The sheer push from governments has led to hikes in a range of hydrogen-based assets, and the prices of some stocks have tripled in the last twelve months. “For investors, this fact represents an opportunity to diversify between projects with different time scales or between different types of business (electrolysis, hydrogen producers, fuel cell producers)”, they point out in Candriam. ANDl Hydrogen Coucil, an association based in Brussels, believes that in 2030 the cost of technological solutions will fall by half, “which will make hydrogen competitive with other low-carbon alternatives and, in some cases, even conventional options.”

But, as a recent article in The EconomistIt must be remembered that it is not a primary fuel (it is created from something) and although it is better than batteries, it stores less energy in a given volume compared to fossil fuels. In addition, replacing an entire infrastructure system designed by and for fossil fuels will not be easy, fast or cheap.

That said, the experts consulted believe that it will be essential if the continent wants to achieve its roadmap of being emissions neutral by 2050. The path traced is as follows– From now until 2024, the EU has set out to support the production of up to one million tonnes of renewable hydrogen and in 2030, at least 40 Gw of renewable hydrogen electrolyzers and 10 million tonnes. That’s more than the 8 million tonnes the IEA estimates for the entire world on that date. So companies rush to present projects in their countries to be the first and take advantage of the river of funds. “Europe is going to decarbonise four sectors: energy, industry, residential and transport. There is no going back ”believes Brey.

In parallel, Spain has presented its own roadmap within the Integrated Energy and Climate Plan (PNIEC) 2021-2030 that foresees 1,500 million to activate the wheel of the industry. “In ten years we will be able to produce green hydrogen at prices competitive with gray [el procedente de combustibles fósiles, que se cotiza a 1,5 dólares el kilo]”, Assures Brey. Other experts see it as one more lever in the energy pie, not as something absolutely disruptive. “The great opportunity to reconvert the transport and distribution networks from natural gas to hydrogen will depend on the development of large-scale electrolyzers that may have a cost advantage over smaller electrolyzers and close to the final point of consumption”, Alberto believes Martín, Partner responsible for Energy at KPMG in Spain.

For now, the truth is that, according to Bloomberg, Europe plans to spend 470,000 million dollars to get green hydrogen, whose price is between 3.5 and 6.5 euros per kilo, falls below the euro. “With recovery funds this can be done faster. The massive investment in technology is going to accelerate the learning curve ”, believes the engineer of a large Spanish company dedicated to projects of this type. Because, he explains, hydrogen is in a similar position to wind or photovoltaic energy in 2006, when it needed large public subsidies to get to compete in price with oil, as is the case today.

Europe does not want to miss this opportunity to develop an entire industry and not, as in other clean energies, being a mere buyer of the components and batteries that are manufactured in China. But the risk is enormous: beyond the fact that other countries are in the same race, the continent could end up having a lot of dilapidated factories and without having achieved its goal of decarbonization.

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