Investor News

CCS hydrogen could be half the price of using renewable energy

Could hydrogen, made from coal or gas with the carbon captured and stored, be half the price of using renewable energy?

It appears so.

Yesterday's article ($) in the Financial Review by David Byers and Peter Cook exposes the cost challenge facing renewable hydrogen production.

Byers and Cook are commenting in response to the release of the Morrison government's Technology Investment Roadmap discussion paper, and $300 million pledge to set Australia on the path to becoming a hydrogen superpower, noting that an integral part of the approach is clean (no emissions) hydrogen produced from fossil fuels, with carbon emissions captured and geologically stored.

This technology-neutral approach isn't popular with renewable advocates who demand wind and solar power be used to make hydrogen, instead of natural gas or coal.

Are they right?

Let's start with a little background.

Hydrogen is the most abundant chemical element in the universe, but it doesn't occur naturally by itself here on earth. It's either combined with oxygen, to form water (H2O) or combined with carbon, to form hydrocarbons such as those found in natural gas (CH4) and other fossil fuels.

As such, we need to produce it. And there are two paths:

  • Thermochemical - splitting hydrocarbons
  • Electrochemical - splitting water

Currently, around 95% of the world’s hydrogen is derived from thermochemical processes based on steam methane reforming (SMR)that use natural gas, oil or coal as the feedstock.

The other 4% is produced by splitting water using an electrochemical process powered by electricity.

If that electricity comes from the grid, and the grid includes fossil fuel power generation, then that hydrogen will have a corresponding CO2 footprint.

Emissions data from Australia's Clean Energy Regulator shows our grid CO2 intensity is about 0.75t CO2 per MWh (2017-18).

It takes about 50kWh to make 1kg of hydrogen, giving it a footprint of 37kg per kg of H2.

This is important to understand because the National Hydrogen Roadmap includes a 'guarantee of origin' scheme to verify and reward clean hydrogen production. The European CertifHy project is given as an example to adopt.

CertifHy categorises 'green' and 'low carbon' hydrogen as follows:

  • CertifHy 'Green' Hydrogen refers to hydrogen generated by renewable energy with carbon emissions 60% below the benchmark emissions intensity threshold.
  • CertifHy 'Low Carbon' Hydrogen is hydrogen created by non-renewable energy with emissions below the same threshold.

What does this mean in practice?

As mentioned, around 95% of the world's hydrogen is currently made via the steam methane reforming process. A great recent article over at Forbes crunches the numbers, providing a figure of around 9.3kg of CO2 per kg of hydrogen. This is just for production.

As we can see, hydrogen produced using electricity generated by the current grid is around 4 times higher than from natural gas using the current dominant SMR method.

To use grid electricity to produce green hydrogen, under the CertifHy definition, the CO2 intensity of the grid would need to decrease from 0.75t CO2/MWh to 0.074t CO2/MWh. A drop of 90% from the current level.

Not impossible. But there are two more targets that must also be achieved if hydrogen is to meet the cost target of $2/kg:

  1. The cost of electricity must drop from 6c/kWh to 3c/kWh or less
  2. The capital cost of an electrolyser must drop to $135/kW, from a current best case estimate of $968/kW

Again, not impossible. But nowhere can we find a well-founded articulation of how this may be achieved. Unknown breakthroughs are required if these targets are to be achieved.

So, while 'green' hydrogen can be made using electricity from wind and solar to split water into hydrogen and oxygen, there's currently no approach that can achieve this affordably.

Conversely, hydrogen can be made cleanly from coal and gas when coupled with carbon capture and storage technology.

Byers and Cook are CCS experts.

David Byers is chief executive of CO2CRC, Australia's leading carbon, capture and storage (CCS) research body.

Professor Peter Cook is a senior adviser in the Peter Cook Centre for CCS Research at the University of Melbourne.

Renewable hydrogen advocates tend to try to gloss over the cost and scale challenge they face, but are quick to claim CCS is just experimental and unproven.

Byers and Cook disagree:

Carbon capture and storage is far from experimental – it is a well-understood technology.

Analyses by the IEA and the Intergovernmental Panel on Climate Change have concluded that the lowest cost pathway to limit global warming to below 2 degrees should include capturing and storing carbon.

This begs the question; why are some opposed to CCS hydrogen if its more affordable than dedicated renewable hydrogen?

If a key part of the global hydrogen strategy is to provide a viable alternative energy solution to the direct, emissions-intensive use of coal, natural gas and oil, then why would renewable hydrogen advocates insist on limiting our options and making it expensive?

Could it be that they are simply trying to remove the competition?

Maybe they are opposed to CCS hydrogen because it will still require the extraction of coal, oil and gas from the earth.

But this can't be the reason.

You see, the amount of wind and solar infrastructure required to generate the electricity required to split the water to make the hydrogen required to replace fossil fuels would result in a tremendous increase in mineral extraction to supply the raw materials that make the wind and solar infrastructure possible. That extractive activity, refining and disposal are already taking a toll on the environment.

To put this into perspective, IRENA forecast hydrogen demand in 2050 of between 133.8 million and 158.3 million tonnes a year, requiring at least 6,690TWh of dedicated electricity every year.

To deliver this amount of electricity would require the equivalent of :

  • 1,775GW of offshore wind farms, or;
  • 2,243GW of onshore wind, or;
  • 4,240GW of solar PV, or;
  • 957GW of nuclear power

For context, at the end of 2018, the world had installed 23.4GW of offshore wind, 540.4GW of onshore wind, 480.4GW of solar PV and 397GW of operating nuclear reactors, according to IRENA and the World Nuclear Association. And virtually all of this capacity is being used to generate electricity, not green hydrogen.

Renewable hydrogen production, at large scale, may eventually become affordable and able to meet the $2/kg target to compete with fossil fuels in many applications. Until then we need to bridge the gap by producing CCS hydrogen.

Here at ECT, we see two direct opportunities in the context of the emerging hydrogen industry:

  1. Coldry, our low-temperature, lignite drying solution, which features zero-direct CO2 emissions, can be deployed as the front end feedstock preparation stage for standard coal gasification technology, which is the stage prior to the standard hydrogen production route known as steam reforming. It’s the gateway enabler for lignite-to-hydrogen production.
  2. COHgen, which stands for ‘catalytic organic hydrogen generation’, is our novel, low temperature, low emissions hydrogen generation technology currently under development that may provide a low-cost alternative to the steam reforming route to produce hydrogen from brown coal.

There is still a lot of work ahead to develop our COHgen process and confirm techno-economic viability at large scale, but we are engaged with various parties involved with the Victorian HESC project, both directly and as a member of the FEnEx CRC – Future Energy Exports Cooperative Research Centre –

We mentioned above that, even at $2/kg, hydrogen isn’t economically viable for certain applications. Iron and steel making is an example.

We have a solution for that too.

HydroMOR, which stands for ‘hydrogen metal oxide reduction’, is our lignite-based, hydrogen-driven, low-emission primary iron making process which enables the utilisation of alternative low grade and waste resources, improving the economic and environmental outcomes of primary iron production. HydroMOR utilises the Coldry process as its front-end drying and material agglomeration stage.

Importantly for steelmaking, HydroMOR is a way to directly harness hydrogen from lignite, without the need for a separate hydrogen plant, delivering lower-cost iron and steel compared to traditional coal-based routes.

The hydrogen is generated in-situ from the lignite, within the reactor, providing outstanding efficiencies and CO2 reductions of ~30% compared to blast furnace production.

Hydrogen is indeed a smart way to transition to lower emissions.

Byers and Cook state it well:

Australia has ready access to the latest carbon-capture and storage technologies and expertise. It has some of the world's best deep sedimentary basins in which to store carbon dioxide, and an internationally recognised resources industry.

Hydrogen has long been touted for its potential as a clean energy solution. But only a technology-neutral approach makes sense. Pursuing a renewables-only pathway risks condemning hydrogen to stay where it has been for the past 30 years – always the next big thing.


Hydrogen and CCS could be the energy road-map winners

1 June 2020 | Australian Financial Review | David Byers and Peter Cook

The Morrison government’s technology investment road map is a welcome embrace of science and technology as the pathway to accelerating low-emissions technologies.

At its core, the message is an optimistic one, backing a range of technologies that will support emissions reduction and jobs growth.

Source ($):