Green hydrogen future needs to overcome high production and transportation costs
2023/7/19
Oil-derived gray or blue hydrogen production is considered relatively low-cost, and many companies already rely on the fuel. Gray hydrogen is produced from natural gas, which undergoes a steam methane reforming (SMR) process that uses high-pressure steam to break down methane to produce separated hydrogen, carbon monoxide and carbon dioxide molecules. This process produces a large amount of carbon dioxide, about 9 to 10 tons of carbon dioxide per ton of hydrogen produced. But it is also highly cost-effective as long as gas prices remain stable. Gray hydrogen costs around $2 per kilogram until July 2022.
Green hydrogen production, by contrast, is more expensive to prepare. Green hydrogen uses renewable energy to drive an electrolysis process that separates hydrogen from water and produces only steam as an emission -- it's carbon neutral, which makes it very attractive for companies looking to reduce carbon. However, until July 2022, the cost of producing green hydrogen is about $4 to $5 per kilogram, or even higher. Some industry experts don't think the high cost of green hydrogen production will come down anytime soon.
Green hydrogen is considered by many international agencies, such as the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA), as a carbon emission reduction solution for areas that are difficult to reduce. As governments and private companies around the world invest more money into the green hydrogen business, there are high hopes that the cost of producing green hydrogen will drop dramatically – possibly as low as $0.50 per kilogram, but others see it as It is difficult to reduce the cost below $3 per kilogram.
IRENA released two research reports in November 2020 and December 2020 aimed at boosting global green hydrogen production: "Green Hydrogen: A Guide for Policy Development" and "Green Hydrogen Cost Reduction: Scaling Up Electrolyzers for a 1.5°C Climate Target". These studies are designed to encourage governments and private companies to scale up production to reduce costs. However, so far, the production price of green hydrogen is still relatively high, and when the price of natural gas stabilizes, its cost is about 2 to 3 times that of gray hydrogen production.
However, electrolyser prices have fallen by around 60% since 2010 as more money has been invested in research and development; IRENA says this cost could fall by another 40% in the short term and 80% in the long term. This cost reduction forecast relies on more innovations in electrolysis technologies that improve their performance, and can expand manufacturing capacity, implement standardization, and increase economies of scale.
Another challenge to consider is shipping costs. "Hydrogen is quite expensive to transport, it's more difficult to transport than natural gas, and it's more complex from a technical and engineering standpoint," said Murray Douglas, director of hydrogen research at Wood Mackenzie. Not just him. The U.S. Department of Energy (DoE) cited a number of challenges in its report on green hydrogen, including "reducing costs, improving energy efficiency, maintaining hydrogen purity and minimizing hydrogen leakage." The DoE believes that more research is needed to "combine the trade-offs when considering hydrogen production options and hydrogen delivery options."
Companies around the world are now considering the best locations for green hydrogen production facilities. While Australia, North Africa and the Middle East have great potential to develop such projects, these regions can be quite far from their main markets. Douglas emphasized, "If you send green hydrogen by pipeline, you need to build dedicated pipelines to connect producers and end users. Or green hydrogen can be transported in the form of ammonia, which can be mixed with nitrogen and can be transported and sold to, for example, fertilizer producers. The consumer end of the class. Otherwise, the user would have to crack the ammonia back into nitrogen, which would increase costs and result in energy losses.”
For green hydrogen to be as successful as one hopes, major investments will be needed to overcome these challenges. Jorgo Chatzimarkakis, chief executive of industry association Hydrogen Europe, has suggested a certification system to ensure any green hydrogen production is powered by renewable energy. In addition, a well-studied delivery strategy needs to be developed to ensure that production facilities are adequately connected to the green hydrogen market. This is already reflected in some projects, such as Cepsa's green hydrogen corridor between southern and northern Europe.
Although the transportation cost is high, large international companies have mastered the mature technology of transporting green hydrogen like natural gas, but some companies are discouraged by the cost. As a result, the industry has had to reduce production costs to relieve some of the pressure on shipping. Although the green hydrogen industry still faces some major challenges, delaying the large-scale deployment of clean fuels, greater investment in the field over the next few decades could resolve many issues and enable large-scale green hydrogen production globally.
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