Market Trends Green Hydrogen is the Future
The global chemical process industries are aware of this trend and some of them are already undertaking mega projects to accelerate their energy transition.
Today, hydrogen is trending across industries and it’s all for the right reasons. Used for oil refining, ammonia production and methanol production, hydrogen is majorly produced from fossil fuels via steam reforming of natural gas, partial oxidation of methane, and coal gasification.
Natural gas is currently the primary source of hydrogen production, accounting for around three quarters of the annual global dedicated hydrogen production of around 70 million tons. This accounts for about 6 % of global natural gas use. Gas is followed by coal, due to its dominant role in China, and a small fraction is produced from the use of oil and electricity, states a recent report by the International Energy Agency (IEA). However, with growing concerns of climate change, the urgent need to reduce CO2 emissions, the dwindling costs of renewable electricity and electrolyzer technology, as well as various government supportive policies, the demand for green hydrogen is gaining steam.
According to the investment banking company Goldman Sachs, green hydrogen could supply up to 25 % of the world’s energy needs by 2050 and become a 10 trillion-dollar addressable market by 2050. Investment in green hydrogen production is set to exceed 1 billion dollars a year by 2023, according to American-British information provider IHS Markit. A clear increase in the number of green hydrogen projects as compared to blue hydrogen projects in 2021 is forecasted based on the growing number of hydrogen production projects announced last year, states a report by market research firm, Fitch Solutions (Refer to pie chart).
Production Costs expected to fall by 40 % until 2025
Any technology first has to be used on an industrial scale for it to become economically viable. The same applies to electrolyzer technologies. Currently, electrolyzer prices are down 50 % as compared to five years back, mentions a report by the business news channel CNBC. This is due to significant advancements in electrolyzer technology and manufacturing capacity.
“Investment in electrolysis is booming around the world. The pipeline through 2030 is for over 23 GW of capacity to be developed — more than 280 times current capacity,” said Catherine Robinson, Executive Director, Hydrogen and Renewable Gas at IHS Markit. This statement was made before the announcement of the Green Hydrogen Catapult (see Green Hydrogen Catapult box). Green hydrogen production costs have fallen by 40 % since 2015 and are expected to fall by a further 40 % through 2025, states a report by IHS Markit.
This is partly due to state-funded research and development, but also large investment projects. Countries that have already published national hydrogen strategies are e.g. Australia, Chile, Germany, Portugal, Spain but also Japan, South Korea or New Zealand. Germany for instance supports research and development with several billion euros. An important showcase project here is the “Westküste 100”. It models regional hydrogen economy on an industrial scale on Germany’s coast with a total budget of 105 million dollars. The approved funding from the German Federal Ministry of Economic Affairs and Energy is 35 million dollars. In view of these conditions, it is hardly surprising that more and more large-scale projects are shooting up like mushrooms.
Green Hydrogen Projects in Action
And this is happening all over the world, including in Canada. There, the energy company Hydro- Québec plans to build one of the world’s first and biggest production facilities for green hydrogen in Varennes, Quebec. The engineering contract for installing the 88 MW water electrolysis plant has already been awarded to thyssenkrupp Uhde Chlorine Engineers’ Green Hydrogen product division. Expected to produce more than 11,000 metric tons of green hydrogen annually, the facility will deliver the clean hydrogen to a biofuel plant to produce biofuels from residual waste for the transportation sector. Commissioning of the grand project is scheduled for 2023.
The U.S.-based firm Air Products has also collaborated with Saudi Arabia’s Acwa Power to create a world-scale green hydrogen and green ammonia plant. The 5-billion-dollar facility is expected to be built at the futuristic city of Neom in the Gulf nation and will produce 650 tons per day of hydrogen by electrolysis using thyssenkrupp’s technology which will then be converted into 1.2 million tons per year of green ammonia using Haldor Topsoe’s technology. Green ammonia will be exported to other international markets and the project is scheduled to be on-stream in 2025. The project will help to reduce over three million tons of CO2 emissions annually!
Back to Germany, where Oil Giant BP and Ørsted also collaborate to develop a 50 MW electrolyzer at BP’s Lingen Refinery or to New Jersey / USA, where local Natural Gas supplier selected McDermott International’s CB&I Storage Solutions business to carry out EPC works for its power-to-gas facility. It will produce green hydrogen from solar energy which will then be supplied into an existing natural gas distribution network for home and commercial use. The project is expected to be completed this year.
Gas producers are also among the winners of this development, either by participating directly in projects or by building the plants. For example Air Liquide acquires 40 % stake in H2V Normandy / France, to create large-scale electrolyzer complex of up to 200 MW for production of renewable and low-carbon hydrogen. In addition to this, Linde is building the world’s largest PEM (Proton Exchange Membrane) electrolyzer plant at the Leuna Chemical complex in Germany. The 24 MW facility will produce green hydrogen and deliver it to the firm’s industrial customers via its existing pipelines. The company will also distribute liquefied green hydrogen to refueling stations and other industrial customers in the region, which will save up to 40,000 tons of carbon dioxide tailpipe emissions per year. The electrolyzer will be built by ITM Linde Electrolysis, a joint venture between Linde and ITM Power.
Last, but not least: energy company Uniper and the Port of Rotterdam Authority have commenced a feasibility study regarding the construction of a green hydrogen plant at Maasvlakte / Rotterdam, the Netherlands. Once the study is complete, the partners are expected to develop a 100 MW plant which will later be expanded to 500 MW. All these examples show that the process industries are well aware that green hydrogen is the future and are leaving no stone unturned to accelerate their energy transitions. This transformation may vary depending on different geographical locations, but sooner or later everyone will get there!