Hydrogen Uses

Investment Analysis Clubs Macro Economic Trends and Risks
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Oil companies are not stupid. Benevolent? Probably not. But definitely not stupid.

Over the past couple of years, I’ve seen several of my customers at oil majors moving into roles related to hydrogen. I kept wondering why because hydrogen simply doesn’t seem like it has a chance in the automotive world–too little, too late, and too expensive compared to electric cars.

I also remember the documentary “who killed the electric car?” The documentary talked about how hydrogen was a panacea sold by the oil companies to delay adoption of electric cars. Pretty much the same arguments as today–range anxiety, charging time as negatives for batteries whereas hydrogen would be completely clean and anyone could fill up whenever they want just like today. I even remember Governor Arnie signing the “hydrogen highway” bill in CA–and 20 years later there are a total of 45 hydrogen refueling stations in the entire state.

The documentary pointed out many flaws in hydrogen such as the low energy density, difficulty to seal, and cost. The current crop of hydrogen fuel cell cars are closer to solving these issues, but there is still a lot of work to do.

The cars themselves cost $50,000–$60,000, which is likely a subsidized price.
To have enough hydrogen fuel, it is compressed up to 10,000 psi in the car’s tank. I’m not sure how I would feel about having that kind of pressure in a tank a few feet from me.
And the fuel is still expensive. 1 kg of hydrogen (energy equivalent of about 1 gallon of gasoline) is still $12-$16.

My take is that hydrogen is just not there yet for cars. Maybe in 20 years, but I suspect electric cars will “cross the chasm” before then.

So, why are these big companies diverting teams of engineers to hydrogen? This is not mere PR hype. They are actually pursuing commercialization.

And one of my contacts pointed out where they think they will go–heavy industry. If you want to decarbonize a cement plant, how are you going to make the high temperatures needed to make cement? Bill Gates has a solar plant idea, which is nice. But if you want to retrofit the existing sites for zero CO2 emissions? You need a zero CO2 fuel. Hydrogen.

And I’d rather have a 10,000 psi tank of hydrogen sitting static at a cement plant than underneath my back seat.

sf

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My take is that hydrogen is just not there yet for cars. Maybe in 20 years, but I suspect electric cars will “cross the chasm” before then.

Sandy Munro said that hydrogen does not make sense for cars but it does for heavy trucks like semis.

It was not that long ago that nat gas trucks (converted diesels?) died in North America probably for lack of refueling stations but nat gas busses in Portugal (in Europe?) are very popular.

The Captain

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So, why are these big companies diverting teams of engineers to hydrogen? This is not mere PR hype. They are actually pursuing commercialization.

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H2 can be used for making electricity, steel, and other industrial uses that need heat. It is already being used in some of these industries. They can sell carbon free electricity, steel, and our industrial products made with hydrogen energy in stead of fossil fuel energy.

Jaak

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Air Products is probably the leader in hydrogen for now. They make hydrogen from natural gas and know how to handle it safely–mostly as a compressed gas. Or for processes like ammonia synthesis or hydrogenation of vegetable oils to harden and stabilize them (protecting from air oxidation and rancidity). They also make liquid hydrogen for rocket fuel. And they are experimenting with green hydrogen and blue hydrogen.

Battery electric vehicles have limited energy capacity. Larger vehicles like trucks and railroad locomotives and even larger SUVs are likely to do better with hydrogen. Fuel cells to convert to electricity are the key technology. People are out there developing them. Nicola plans to be a fuel cell truck company. There are others like Plug Power.

They talk of transporting hydrogen as ammonia. Its heavier and requires pressure more like propane. Steel cylinders can hold much more. And its easy to convert back to hydrogen and nitrogen. People are working on it.

If hydrogen becomes the fuel of the future, I think you expect the big guys to jump in in a big way. Oil companies and those who own natural gas pipelines have potential to enter the business. That oil companies keep an eye on the business is not a surprise. They have lots of capital available if they decide to make a move. This could be a matter of timing. If all goes well the real question is when. Until then its a game of wait and see.

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Hydrogen in Steel Production - Hydrogen as an alternate injection material:

Green hydrogen as an alternate injection material to pulverized coal injection (PCI) improves the traditional blast furnaces’ performance.

Green H2 can reduce carbon emissions in blast furnaces by 20%. However, carbon neutral steel is not produced as the blast furnace still uses coal as a reducing agent.

Hydrogen as a reductant substitute can produce direct reduced iron (DRI), which can then be transformed into steel in an electric arc furnace (EAF). Natural gas is currently used as a reductant in this DRI or EAF pathway by industries in the Middle East that have access to a cheap natural gas supply.

Hydrogen can be used in the direct reduction process. A DRI/EAF arrangement offers a carbon-neutral steelmaking process thanks to the utilization of green hydrogen and renewable electricity from the sun, wind, or water power.

https://www.azocleantech.com/article.aspx?ArticleID=1606

Jaak

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Major steelmakers and disruptive start-ups look to hydrogen and renewable electricity to make green steel:

Aside from churning out 1.86 billion metric tons (t) of steel last year, steelmakers generated over 3 billion t of CO2, corresponding to an astonishing 7–9% of all human-made greenhouse gas emissions, according to the World Steel Association. No other industrial material has a greater climate impact.

Green Steel

Steelmakers have flirted with these methods for decades, but industry insiders say the business case for transformation is now stronger than ever. Advances in chemistry, metallurgy, and engineering have significantly improved the efficiency of these alternative routes to steel. “They’re also associated with renewables, hydrogen, and other technologies that are on a pretty relentless cost-reduction pathway,” says Thomas Koch Blank, senior principal of the Breakthrough Technologies program at RMI, a nonprofit focused on the clean energy transition. “That’s going to fundamentally challenge the structure of the industry.”

Many of the most ambitious approaches are being pursued in Europe, which makes about 10% of the world’s steel. Rising carbon taxes set by the European Union threaten to squeeze companies’ profits if they fail to decarbonize, and this policy is spurring billions of euros of investment in green steel.

This investment could seed change elsewhere. Although some steel companies may be pursuing these projects as a way to burnish their environmental credentials, Lord says, they are also laying the groundwork for a low-carbon future. “I think they’re getting involved so that they’re ready to switch.”

https://cen.acs.org/environment/green-chemistry/steel-hydrog…

Good diagrams of the old and new processes for making steel in the link that technical readers may enjoy and learn.

Jaak

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Air Products is probably the leader in hydrogen for now. They make hydrogen from natural gas and know how to handle it safely–mostly as a compressed gas.

If you are going to use NG to make hydrogen, and then use the hydrogen to make cement (for example) why not just use the NG to make the cement? The Laws of Thermodynamics are giving me a hint that this would be more efficient.

Now, perhaps the argument is that we “could” convert the hydrogen making process from NG to electrolysis over time…but we now how that goes in the business world when being a low cost producer is involved.

Mike

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Now, perhaps the argument is that we “could” convert the hydrogen making process from NG to electrolysis over time…but we now how that goes in the business world when being a low cost producer is involved.

IMO the strongest argument for hydrogen is as a way to store excess energy. Wind and solar are more variable than fossil fuel or nuclear so you have to overbuild a bit to account for low winds or cloudy days. This means that when things are optimal, there is a lot of excess energy. It is unclear whether batteries will ever be good enough for long-term storage and it is certainly the case that we currently can’t make enough batteries. In contrast, using the excess energy to produce hydrogen is simple and scalable, and the hydrogen can be stored for as long as you need it.

There are also legitimate environmental issues with batteries with respect to their disposal, even with recycling. Less so with hydrogen reverse hydrolysis.

Work is ongoing to produce hydrogen from sea water: https://www.chemistryworld.com/news/seawater-splitting-syste…

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So, why are these big companies diverting teams of engineers to hydrogen? This is not mere PR hype. They are actually pursuing commercialization.

And one of my contacts pointed out where they think they will go–heavy industry. If you want to decarbonize a cement plant, how are you going to make the high temperatures needed to make cement?

Ditto for refineries, chemical plants, steel making, fossil fuel power plants, etc. These are the areas where electricity can’t substitute for fossil fuels without a complete plant rebuild. But hydrogen can substitute for natural gas.

And the production of hydrogen from natural gas (methane) yields a relatively high concentration byproduct of CO2 - much easier to capture and sequester than from flue stacks. And, if there is some huge surplus of power from solar or wind, it can be used for electrolysis of water - no CO2.

As you note, oil majors aren’t stupid. And fossil fuels find many uses beyond just gasoline for light vehicles.

Exxon Mobil has announced plans for a big hydrogen project on the Gulf to convert one of their process plants to hydrogen fuel. They expect it to be profitable.

“The carbon capture infrastructure for this project would have the capacity to transport and store up to 10 million metric tons of CO2 per year, Exxon said.”

https://www.reuters.com/business/sustainable-business/exxon-…

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EU approved $5B to support 35 hydrogen projects in 13 countries. Called the HY2Use initiative. To build infrastructure for hydrogen production, storage, and transportation. $6.8B private investment expected. Completion by 2036. Emphasis on electrolysis of water. Companies participating: Air Liquide, Borealis, Shell, and Solar Foods of Helsinki.

C&EN News item from Oct 3 issue.

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The idea is to eliminate the creation of CO2 along the way, not to have the highest thermo efficiency.

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When you make hydrogen from natural gas, the carbon dioxide is concentrated and easier to collect. From there it can be sequestered or converted for other uses. This is the essence of the blue hydrogen concept. Of course the added processing is not free.

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Good point. On the flip side, under the current use of fossil fuels, the negative impact of CO2 generation is also not free, but also not charged to the system that creates it. Which is a problem because it does not create an economic incentive to fix the CO2 problem, rather it is seen as an expense.

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That’s a reason we need a carbon tax of some sort to encourage non-carbon generating processes. Carbon sequestering processes such as planting trees should get credits.

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My fear is that Big Oil is touting the benefits of Green Hydrogen, while trying to sell us Blue Hydrogen as a gateway. Electrolysis (green hydrogen) will always be “a few years away” from being competitive. Then they will argue for reduced CO2 capture levels for SMR, as it makes it too expensive for the consumer, and hurts the economy.

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I’m all for eliminating the CO2. But first, I’d like to see the analysis comparing the efficiencies of both processes. If the difference is large enough it might be better to “spend” that difference on another carbon sequestration process, for example.

Mike

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Dublin is running some of her fleet of buses as hydrogen powered. The city is switching over.

NYC, LA, and others could do this.

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Jaak,

Is Donald Sadoway’s MIT carbon free steel making it to market?

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side note

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The major problem is not enough green electricity. Green hydrogen fits very well with storage from intermittent electricity. But installation and investment are tiny compared to what is needed. All those natural gas wells and pipelines are here and now. Green electricity seems little more than a vision in most areas.

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