‘Green’ hydrogen could greatly benefit developing countries – but the risks are still significant

Hydrogen is mainly used to make chemicals such as fertilizers and in oil refineries. Most of the world’s hydrogen is now produced from natural gas or coal – processes that entail large carbon emissions. Industrialized countries are therefore opting for “green hydrogen” instead – produced from renewable electricity such as solar and wind power. Energy experts Rod Crompton and Bruce Young discuss the potential benefits and challenges of green hydrogen.

What is hydrogen used for?

Global hydrogen demand reached 94 million tons in 2021 and contained energy equivalent to about 2.5% of global final energy consumption. Only about 0.1% of current global hydrogen production is green, but large expansions are planned.

New applications for green hydrogen are also being considered.

Liebreich’s classification is a useful indicator of potential green hydrogen markets.

Reproduced with permission from Liebreich Associates.

Since the goal of using green hydrogen is actually to reduce carbon dioxide, the applications that result in the largest emissions reductions should be targeted first. Liebreich’s ladder shows what they are. The applications in the (green) top row are efficient uses of valuable green hydrogen.

But green hydrogen currently costs a lot more to produce than less clean types of hydrogen. Using it to produce the 180 million tons a year of ammonia needed for global fertilizer production would have a serious impact on food prices.

So it is difficult to see how this transition will take place.

How is green hydrogen produced?

Green hydrogen is made from water. Using renewable (“green”) electricity, so-called electrolysers separate the hydrogen from the oxygen in the water (H₂O). The process is called electrolysis.

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Green hydrogen production does not emit carbon dioxide, but building renewable electricity infrastructure currently uses fossil fuels that emit carbon dioxide.

Hydrogen has traditionally been produced from non-renewable energy sources such as coal (“black hydrogen”) and natural gas (“grey hydrogen”). When these methods are combined with carbon capture and storage, the hydrogen produced is known as “blue hydrogen”.

What challenges does green hydrogen entail?

Although the cost of renewable power generation has come down, the cost of electrolysis is still not commercially competitive.

Today, green hydrogen has an estimated energy equivalent cost of between $250 and $400 per barrel of oil at the plant gate, according to the International Renewable Energy Agency. Future cost reductions are projected but uncertain. Current oil prices are around $100 a barrel — much less than it would cost to use green hydrogen instead of traditional petroleum products.

The cost of transporting hydrogen must also be taken into account.

Unfortunately, hydrogen physics speaks against inexpensive hydrogen transport. It is much more demanding than oil-based liquid fuels, LPG or LNG. The sea transport of hydrogen has to be done at very low temperatures (-253℃). Gasoline or diesel does not need expensive cooling: it is transported at ambient air temperature.

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And hydrogen carries only 25% of the energy of a liter of gasoline, making the same amount of energy much more expensive to transport and store.

Alternative ways of transporting hydrogen have been explored. Because ammonia (NH₃) is much easier and cheaper to ship than hydrogen, the International Renewable Energy Agency has recommended that hydrogen be “stored” in ammonia for shipping. But that requires additional equipment to convert the hydrogen into ammonia and remove it at the destination. According to the agency, these processes result in additional costs of around US$2.50 to US$4.20/kg (equivalent to US$123 to US$207 per barrel of oil).

Hydrogen is more difficult to handle than traditional fossil fuels. Unlike conventional hydrocarbons, it is a colourless, odorless and tasteless gas. This makes leak detection more difficult and increases the risk of fire or explosion. Hydrogen fires are invisible to the human eye.

In the past, hydrogen was controlled within factory boundaries and managed by trained personnel. The widespread adoption of hydrogen in society will require new measures and skills, including insurance, material handling, firefighting and disaster management.

Where are the first hydrogen mega-projects expected to be built?

Construction of the first gigawatt-scale green hydrogen project in Saudi Arabia has already begun. Many of the pioneering projects are being built in the southern hemisphere, mostly in developing countries. Because they are less densely populated and have better renewable energy sources (sun and wind) to generate the necessary electricity.

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While this may sound positive for developing countries, the development of hydrogen mega-projects carries great risks. On the one hand, the “iron law” of mega projects is: “Over budget, over time, under performance, over and over again”. Project owners bear the project execution risk.

Risks also include exchange rate risk, remote locations, breakthrough technologies and a lack of skills. Future host countries must weigh these risks against the temptations of better investment, employment and balance of payments. They would do well to demand guarantees from their customer countries to avoid the injustice of the Global South subsidizing the Global North in the clean energy transition.

After many years of government funding, South Africa now has a “Hydrogen Roadmap”. The energy company Sasol and the vehicle manufacturer Toyota speak of a “Hydrogen Valley”, a geographical corridor of industries for the production and use of concentrated hydrogen. And the South African government and Sasol are talking about building a new port on the west coast in Boegoebaai for the production and export of green hydrogen. Hive Hydrogen is planning a $4.6 billion green ammonia facility in Nelson Mandela Bay.

Namibia also has big plans for a $10 billion green hydrogen project.

The key to lowering the cost of green hydrogen in the future lies mainly in technological improvements and cost reductions related to mass production and a scale-up of electrolysis. And to a lesser extent, incremental cost reductions in transportation and handling.

This article first appeared on The Conversation.