Mr Noé van Hulst, a former Chair of the IEA Governing Board, addressed the future development of hydrogen in the maritime industry. He notes that the general idea is that hydrogen will play a crucial role in the world’s transition to a sustainable energy future. Thus, it is of a great importance, to help reduce carbon emissions from the shipping sector and in the meantime, provide a long-term energy storage at scale.
Specifically, as Mr van Hulst highlights
Hydrogen is a versatile energy carrier that can be produced from a wide range of sources and used in many ways across the entire energy sector. It could become a game-changer in its low-carbon form, but its widespread adoption faces challenges.
According to researchers, clean hydrogen remains expensive, that’s why it’s is still not fully deployed.
- Grey Hydrogen
At the moment, grey hydrogen is cheaper than the other two. Its price is estimated to be around €1.50 per kilo. The main driver is the price of natural gas, which varies around the world.
Many are those who support that the price of grey hydrogen will remain at this relatively low level for the foreseeable future. That ignores the IEA’s projection of a structural rise in natural gas prices due to market forces.
What’s more, grey hydrogen’s CO2 emissions carry a cost in an increasing number of jurisdictions around the world.
In the European Union’s emissions trading system, the price of CO2 is in the range of €20 to €25 per ton.
According to Mr van Hulst, a big number of European Union countries aspire to set a minimum CO2 price that will gradually increase to around €30 to €40 per ton over the next 10 years. That means the cost of CO2 could eventually add almost €0.50 to the price of a kilo of grey hydrogen in Europe, bringing the total price to around €2.
- Blue Hydrogen
It’s price is mainly influenced by natural gas prices. Yet, its second-most important driver is the cost of capturing and reusing or storing the carbon emissions.
Current estimates put the price of carbon capture, utilization and storage (CCUS) in the range of €50 to €70 per ton of CO2. The price is lower in specific cases like ammonia production .
Once the process of CCUS in blue hydrogen plants is scaled up and standardized, the cost is likely to come down.
- Green Hydrogen
In addition, green hydrogen’s price depends on renewables. It’s price is estimated to be between €3.50 and €5 per kilo at the moment.
The factor the price depends on are:
- The cost of electrolysis, the process through which hydrogen is produced from water using renewable energy. Total global electrolysis capacity is limited and costly at the moment. Most industry experts expect that a significant increase of electrolysis capacity will reduce costs by roughly 70% in the next 10 years.
- The price of the green electricity used in the electrolysis process.
- The cost of generating solar and wind energy has come down spectacularly in the past decade.
In countries and regions blessed with abundant sunshine and wind power – such as the Middle East, North Africa and Latin America – green electricity prices have come down to around 2 euro cents per KWh.
… Mr van Hulst highlights.
In the meantime, green hydrogen can be transmitted around the world to places that are less well endowed with cheap renewable energy sources.
Japan has several important pilot projects underway with countries, including Australia, Saudi Arabia and Brunei, to determine the best way to transport green or blue hydrogen over large distances by ship.
Finally, Mr van Hulst believes that countries’ policies will affect hydrogen’s future.
The Dutch government announced the broadening of its low-carbon program. This will help the market-driven activation of blue hydrogen projects and, depending on how costs evolve, hopefully that of green hydrogen projects in the near future.
France’s hydrogen strategy includes indicative targets for greening the current use of grey hydrogen in industry. The French government has set a target of 10% green hydrogen use in industry for 2022 and 20% to 40% for 2027.
A proposal from some industry players in Germany (Shell, Siemens, Tennet) aims to organise combined auctions of offshore wind fields for electrolysis, which would imply connecting the value chain in one single tender.