15 June 2021
by Shardell Joseph

Event hones in on hydrogen for achieving net-zero

An IOM3 virtual event explored the potential opportunities and challenges of using hydrogen as an alternative energy source, looking at its viability as a realistic path to achieving net-zero.

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‘When [UK] Parliament legislated to amend the Climate Change Act from an 80% reduction in 2050 to a 100% reduction in greenhouse gas emissions…[it] meant that we had to deal with the really difficult emissions. In an 80% reduction scenario, there were a number of sectors that we didn’t have to completely decarbonise, and those sectors are particularly some areas of industrial processes,’ explained Baroness Brown of Cambridge, HonFIMMM, Deputy Chair of the UK Climate Change Committee (CCC). She suggests that hydrogen will need to be deployed in these difficult-to-decarbonise industries.

The Baroness was speaking at a virtual event held by IOM3 on the hydrogen economy in the lead up to the Glasgow Climate Summit (COP26) this year. The speakers explored the potential opportunities and challenges of using hydrogen as an alternative energy source, debating its viability as a realistic path to achieving net-zero.

Brown continued, ‘I think this is the time for all of those hydrogen investments. Now that may sound like hydrogen is a silver bullet, [but] remember, we can do the 80% without all this hydrogen. Hydrogen really is the key that helps us unlock that remaining 20% of emissions.’

The central scenario that CCC is pushing for, she noted, is the 6th Carbon Budget, whereby ‘electricity goes from 300TWh to over 700TWh. So more than doubling, and quite a chunk of that [will be] used for hydrogen production.

‘That gives us a need for storage. But it also means that, because offshore wind, for example, will be so cheap by 2050, we may well be curtailing something like 30% of its operation. That curtailment can be used to produce hydrogen effectively at electricity prices that are zero, or, in some cases, potentially even negative. So, given that we are making hydrogen by electrolysis, usually we think of the most expensive part being the cost of the electricity, [but] there will be this very cheap electricity available by 2050.’

Brown noted that CCC expects to see growth in carbon capture and storage, blue hydrogen and electrolysis for hydrogen production.’

With a manufacturing capacity of 1GW per annum, ITM Power, a British manufacturer of polymer electrolyte membrane electrolysers for hydrogen production, is said to have the world’s largest electrolyser factory.

‘An electrolyser…takes in water and electricity and it splits the water into hydrogen and oxygen – you vent the oxygen, and you use the hydrogen either for industry or decarbonising transport, or for decarbonising the gas grid,’ explained Dr Graham Cooley FIMMM, CEO at ITM Power. ‘And the energy gas that you get is the only known net-zero energy gas.

‘If you make hydrogen using electrolysis, and you power it with renewable power, there is no carbon in the entire supply chain. And the reason that this is so interesting now, is [that] there is long-term energy storage.’

Analysing the electrolyser’s business model, and citing a well-known financial blueprint, Cooley explained that efficiency trumped capital cost.

‘The thing that’s dominated by capital cost is market share…This is the McKinsey model, a very famous model for costing green hydrogen. If you have electricity at 4p/KWh or five cents, and the load factor of 50%, and the capital cost of half a million dollars to make more, you will make hydrogen at $3/kg...With renewable power costs, we can do that with green hydrogen today.’

Richard Oblath FIMMM, Chair of the IOM3 Energy Transition Group, discussed investing in the hydrogen economy. As Executive Chairman and General Partner at H2Transition Capital, he explained how the firm is currently working with potential investors.

‘Ahead of initial fundraising, we studied the hydrogen value chain in depth, which we believe could be as large as a $11trln industry by 2050. We identified locations which lend themselves as potential sites for investments and analysed over 450 companies involved in technology developments or commercialisation that could help lower the delivered cost of hydrogen or improve the efficiency and effectiveness of its use.’

Another part of the investigation, Oblath noted, was to consider government intervention to promote hydrogen.

‘This might include subsidies, private public partnerships, and carbon taxes or similar incentives to disadvantage fossil fuels. We, as a partnership, have taken the view that we should, and we can, build businesses in the value chain, resulting in suitable returns for investors without such interventions, although of course, if they occur, the speed of uptake may well be enhanced,’ Oblath added.

‘[Hydrogen] has the potential to help decarbonise hard-to-abate sectors, such as heavy transportation, aviation, steelmaking and cement production, and can be used for heating in industrial and residential settings...As such, I see the hydrogen value chain as an exciting and hopefully profitable segment of the energy transition.’

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Shardell Joseph

News Writer