Natural gas stakeholders are beginning to coalesce around the idea that demand for so-called “blue” hydrogen will keep the dollar bills flowing their way for years to come. Well, not so fast. A new report from BloombergNEF suggests that the blue hydrogen moniker is so much dust in the wind, now that green hydrogen technology is roaring bigly into the global marketplace.
What Is This Blue Hydrogen Of Which You Speak?
For those of you new to the topic, hydrogen is the most abundant element in the universe and it also lends itself to all sorts of applications in modern society, from rocket fuel and zero emission fuel cells to fertilizer, food processing, consumer products, and medicine.
However, hydrogen is sticky. It does not exist by itself in the natural order of things. It must be extracted from something else, and right now almost all of that something else is natural gas.
The power sector is inching away from natural gas as well as coal, so now natural gas stakeholders are seeking to grab a share of the hydrogen fuel cell pie to stay afloat. Fuel cell passenger cars have been slow to catch on, but there is plenty of room for growth in the areas of fuel cell trucks, boats, aircraft, and locomotives, as well as stationary fuel cells for zero emission power generation.
Of course, as the global economy decarbonizes, nobody wants to hitch their wagon to natural gas, and that’s where that thing about “blue” hydrogen comes in.
The blue in blue hydrogen is a marketing gimmick. Blue hydrogen is the same as plain old ordinary hydrogen sourced from natural gas (or coal, in some parts of the world), only with a carbon capture system attached.
Left unsaid is the part where natural gas extraction and transmission is responsible for significant greenhouse gas emissions as well as significant local impacts on air quality and water resources. Ditto for coal.
Green Hydrogen Will Steamroll Over Blue Hydrogen
As lame as the “blue” PR gimmick is, it’s just about the only thing that natural gas and coal stakeholders can cling to now that cost-competitive green hydrogen is in sight.
Green hydrogen refers to hydrogen from renewable resources. Biogas and biomass are in the running, but right now the big money is going into electrolysis, which refers to applying electricity to water. With an assist from a catalyst, out pops hydrogen gas. Add renewable energy as the source of electricity and Bob’s your uncle, sustainably speaking.
If you’re wondering why nobody ever thought of that before, that’s a good question. The idea of producing water-sourced hydrogen for the mass market made little sense back in the day, when wind and solar were relatively expensive.
Now renewable energy is cheap as sin, and the red-hot pace of R&D activity has brought the cost of electrolysis down. Aside from the transportation sector, steel manufacturing and other industries are seeking a green hydrogen pathway out of their fossil fuel rut.
Into this picture marches the energy research firm BloombergNEF. The new BNEF hydrogen market report foresees green hydrogen competing against conventional hydrogen over the long run, which is good news for green hydrogen fans, eventually. The short-term outlook, though, should give blue hydrogen fans a case of the heebie-jeebies.
Check out this insight from the executive summary:
“By 2030, it will make little economic sense to build ‘blue’ hydrogen production facilities in most countries, unless space constraints are an issue for renewables. Companies currently banking on producing hydrogen from fossil fuels with CCS will have at most ten years before they feel the pinch. Eventually those assets will be undercut, like what is happening with coal in the power sector today.”
Ouch!
Green Hydrogen Beats Plain Old Hydrogen, Eventually
BNEF dropped an email previewing the new report into the CleanTechnica mailbox earlier this week.
“We find that ‘green’ hydrogen from renewables should get cheaper than natural gas (on an energy-equivalent basis) by 2050 in 15 of the 28 markets we modeled, assuming scale-up continues. These countries accounted for one-third of global GDP in 2019,” the note read.
“The costs of producing ‘green’ hydrogen from renewable electricity should fall by up to 85% from today to 2050, leading to costs below $1/kg ($7.4/MMBtu) by 2050 in most modeled markets,” BNEF added.
In particular, BNEF nailed the falling cost of solar power as the main driver of the trend, writing that “we now think that PV electricity will be 40% cheaper in 2050 than what we had thought just two years ago, driven by more automatic manufacturing, less silicon and silver consumption, higher photovoltaic efficiency of solar cells, and greater yields using bifacial panels.”
Speeding Up The Green Hydrogen Timeline
The not-so-hidden message behind the BNEF report is that government policies could speed the timeline for green hydrogen to beat fossil-sourced hydrogen in the global market.
Martin Tengler, who is the lead hydrogen analyst at BNEF, teased the message out into the open.
“Such low renewable hydrogen costs could completely rewrite the energy map. It shows that in future, at least 33% of the world economy could be powered by clean energy for not a cent more than it pays for fossil fuels. But the technology will require continued government support to get there – we are at the high part of the cost curve now, and policy-supported investment is needed to get to the low part,” Tengler wrote.
Ya don’t say!
The EU, for one, is already gearing up for the green H2 economy of the sparkling green future. Here in the US, the Energy Department is all over green hydrogen like white on rice. Green hydrogen stakeholders are coming together around regional plans, with California, the Midwest, and even Texas emerging as green H2 hotspots.
The US Department of Energy could also factor bigly into that thing about the cost of solar power driving down the cost of green hydrogen. The Energy Department has been promoting low cost perovskite solar cell technology hand over fist ever since the Obama administration, and it is loaded for bear now that the climate-friendly Biden administration is up and running.
Meanwhile, things are humming along in the private sector. Everyone is buzzing about the launch of something called the FiveT Hydrogen Fund with the energy services firm Baker Hughes, the cyrogenics firm Chart Industries, and fuel cell specialist Plug Power behind it, but the press release only says “clean” hydrogen and Baker Hughes is known for its fossil energy services and the company recently doubled down on its carbon capture interests. Apparently additional details are forthcoming and that will hopefully clarify whether or not FiveT is a green hydrogen fund.
On the other hand, the Plug Power factor could mean that Baker Hughes is betting big on green, because Plug Power has been on a bit of a green hydrogen tear of late. In February the company announced plans to build a $290 million green H2 facility in Latham, New York, which they are billing as North America’s largest.
Plug Power also has a green H2 facility up and running in Tennessee and last month it paired up with Brookfield Renewable Partners to build one in Pennsylvania, which will run on electricity from a Brookfield hydropower plant.
Plug Power first crossed the CleanTechnica radar as a fuel cell forklift specialist somewhere back around 2010, when the Energy Department’s National Renewable Energy Laboratory was evaluating the cost of running hydrogen fuel cell forklifts.
Plug Power has had its ups and downs since then but just last fall the company articulated a vision of hitching its star to the green hydrogen trend covering all modes of transportation, so keep an eye out for more news this year.
Follow me on Twitter @TinaMCasey.
Image (screenshot): Courtesy of Plug Power.
