There is little doubt that that coronavirus will be with us for some time to come, but the easing of lock-down measures will encourage economic activity again, and the demand for energy will rise in tandem. It will take time, but the world’s decision-makers will once again return to discussions on the global threat posed by climate change and the mitigating actions needed over the next three decades to meet the 2050 net-zero emissions target. Fundamental to this target will be the success, or otherwise, of the energy’s dream team: low-carbon electricity and hydrogen.
It is easy to understand why there is so much optimism for this team. Inspection of the world’s energy system over the last 150 years shows a gradual decarbonisation of the sector driven by technological and market developments: high carbon-intensive fossil fuels in biomass and coal giving way to the lower carbon intensive natural gas. Taken to its natural conclusion it is easy to imagine further decarbonisation with hydrogen as a major energy carrier alongside electricity produced by low-carbon technologies. The net-zero target for greenhouse gases in 2050 is an important driver for the dream team.
What can we say about the dream team? The emergence of wind and solar photovoltaic (PV) technologies over the last 20 years has been very encouraging. Today, low-carbon technologies make up about 35% of the world's electricity generated, with hydro contributing 16%, nuclear 10%, and wind and solar 5% and 2% respectively; in total the renewable technologies contributed over 9% of the electricity generated in 2018, recording a very healthy growth rate on the year before.
A long way to go
Impressive as these statistics are, it is important to note that fossil generation still amounts to over 64% of the total electricity generated, made up of 38% coal, 23% gas and 3% oil. The electricity industry, which will see a major increase in demand in the coming decades with the electrification of transport and heat, has a long way to go to decarbonise fully by 2050. Nonetheless, the low-carbon technologies are available, and it requires political will and the right incentives to encourage further deployment on the scale needed.
The evolution of wind and solar PV is following the classic ‘S-curve’ profile experienced by other technologies: a slow evolution as the technology is developed followed by period of rapid growth as it is deployed, reaching a plateau sometime over the next thirty years or so, the level depending on a number of factors. Perhaps the most important factor will be the emergence, or otherwise, of storage media capable of improving the utility of these intermittent renewables.
Storage media a potential solution but also a challenge
New storage media may also facilitate the greater deployment of nuclear power, a technology generating large volumes of low-carbon electricity in continuous mode; the latter characteristic means that excess electricity generated overnight when demand is low can be stored for use at peak demand during the day.
Hydrogen can be used as a storage medium, albeit an expensive one at this time; but it is much else besides. The world production of hydrogen has gone up steadily over the last 50 years or so rather than following the classic ‘s-curve’ more commonly associated with emerging energy technologies. This is perhaps not surprising since it has been largely used as a chemical feedstock in industry, primarily in oil refining and in ammonia and methanol production. In its liquid form, hydrogen has been used as a rocket fuel for the space programme; it is also used in fuel cells to provide power. Most recently hydrogen has been added to natural gas in pilot schemes for use in the domestic sector.
Hydrogen is mostly produced from natural gas which means carbon dioxide is produced as a side product – 10 tonnes of carbon dioxide for every tonne of hydrogen - and this must be used elsewhere or treated as a waste product. The cost varies in different regions primarily due to different prices for natural gas around the world. The development of Carbon Capture and Storage infrastructure would help the production of hydrogen, and many other carbon intensive activities, but would also add significant costs.
Hydrogen can also be produced via electrolysis of water, but it is an electricity intensive process, and this makes it much more expensive; in this case hydrogen can act as a storage medium. Unfortunately, costs using ‘grid’ electricity, even under optimum conditions, are several times that for hydrogen produced from natural gas; for this reason, the amount of hydrogen produced using electrolysis is very small and limited to those applications that require high quality gas, for example, in the electronics sector.
A need for commitment and investment
To realise the promise of the ‘hydrogen economy’ will require the convergence of developments in several areas: political, economics, technical and societal. For example, politicians need to develop and implement a strategy that encourages those that wish to develop hydrogen products and infrastructure, and to provide appropriate incentives, financial and otherwise to facilitate such development. Germany, for example, has such a strategy and has committed €9 billion to deliver it in the coming years.
From a technical and economic perspective, it is crucial that the cost of producing hydrogen is reduced, particularly via electrolysis, if it is to be considered alongside other green energy carriers. Experience suggests that rising demand encourages cost decline, so it is important that the physical infrastructure is developed to allow widespread access to this energy carrier. Societal acceptance is also an important consideration and it is incumbent on both regulators and industry stakeholders to ensure the safe and convenient provision of hydrogen in the transport and heat sectors. A new and vibrant energy sector driven by the deployment of the dream team will also yield much needed employment following the economic ravages of Covid-19.
The importance of converging developments is recognition that there needs to be progress across the spectrum of activities highlighted above to ensure the development of the hydrogen economy; a lack of progress in one area will impact the development of the sector. And there needs to be genuine progress in the current decade to establish the bedrock on which hydrogen technologies can make the contribution needed to help the world meet the net-zero emissions target by the middle of this century. The strength of Germany’s strategy is that it has taken such a holistic approach, and it is important that countries around the world follow this lead.
In conclusion
The coronavirus crisis will ease with time. Governments will once again turn their attention to meeting their climate change commitments and realising the full potential of the low carbon sector and fabled ‘hydrogen economy’. There remain many challenges for the energy sector dream team but there are also major opportunities going forward. Organisations that choose to engage will be rewarded.
At Opportuneo, we would be delighted to discuss the challenges and opportunities of energy’s dream team with you. Please contact us at info@opportuneo.org
Chris Anastasi - August 2020