It is increasingly difficult for anyone working in the UK energy sector to be unaware of the way hydrogen has crept back into the discourse for transitioning to a low carbon economy. Just a few days ago Alstrom announced it was set to make the UK’s first hydrogen train fleet and through the Clean Growth Strategy – published in October 2017 – and last weeks announcement of the £20 million Hydrogen Supply programme, the UK Government has committed political and financial support to accelerate the cost effective production of hydrogen. The Government is right to target investment here as reducing the high cost of producing large volumes of low carbon hydrogen is crucial if hydrogen is to significantly replace natural gas.
With such a flurry of announcements by Government and industry, this has led some to declare we are on the verge of a new ‘hydrogen economy’. But what does this mean? The hydrogen economy refers to a vision of using hydrogen as an alternative low carbon energy source that can be used as a replacement in transport, heating fuel and energy storage. These different uses and the methods of production are likely to be highly interconnected, with one service creating a supply for other uses. It is precisely this interconnectedness and interdependency that creates a hydrogen economy.
Hydrogen has a number of characteristics that lend itself to this vision. First, it is the most abundant element in the universe. Second, at the point of use, no harmful emissions are produced when it is burned – only water vapour. This gives it a fundamental advantage over conventional fossil fuels, from an environmental perspective at least. Third, hydrogen has the ability to act as an efficient energy vector, storing and transporting energy. But it is not just a battery play, it can also be used to power vehicles and used for power-to-gas to which can be injected into the gas grid.
These characteristics are a pursuit of those seeking a truly sustainable energy system, and thus underpin the concept of a ‘hydrogen economy’. Despite the notion existing for some time, and recognition of the environmental benefits that this entails, it is yet to materialise fully.
So why isn’t hydrogen already used in this way? In fact, hydrogen in the energy system is not new, nor is the concept of a hydrogen economy. Indeed, up until the 1970s hydrogen made up 50% of the local gas supply. A combination of rising coal prices and the discovery of North Sea Gas in the UK Continental Shelf ultimately led the UK Government to adopt a new national policy for gas supply, which aimed to convert all UK supply and associated infrastructure from hydrogen (or town gas as it was known) to natural gas – a transformation that was largely seen as successful.
Hydrogen is now back on the agenda for several reasons: 1) greater commercial maturity of hydrogen and fuel cell vehicles; 2) changes in the energy policy and technology landscape, such as the rapid deployment of intermittent renewables that require grid scale storage; 3) the response by gas incumbents to the threat of stranded assets in a decarbonised world and 4) the continuing difficulty in decarbonising heat.
Where the application of hydrogen has utility is in the role it can play in the global and national energy transition that is underway. As such, its role should not be limited to one application but should be focused on the challenges of this transition and examined through a systems lens, focussing on: how best to integrate variable renewables; decarbonising hard to reach sectors and fossil fuel feedstocks; and how it can perform the function of an energy system buffer, one that is currently provided by natural gas.
But before a hydrogen economy can be become a reality there are a number of technological, economic, regulatory, institutional/political and social barriers that need to be addressed.
A major drawback is that the most commonly used production method – steam methane reformation – produces CO2. The adoption of hydrogen is therefore contingent on the development, scaling and wide deployment of some form of carbon capture and storage (CCS) or carbon and utilisation and storage (CCUS) to avoid releasing CO2 to the atmosphere. A higher carbon price will certainly help in this regard. Both the capture and storage is technologically possible, yet CCS development has been slowed by political and economic barriers and the cancellation of the planned CCS Commercialisation Programme was a significant set-back to the development of CCS in the UK.
A number of other countries have begun production, but this is still embryonic. For example, Japan intends to become a ‘hydrogen society’ with plans for 40,000 hydrogen-powered cars on the road by 2020, growing to 800,000 by 2030. However, underpinning this is an agreement between the Australian Government and Japan’s Kawasaki Heavy Industries, with the partnership intending to turn Australia’s brown coal into hydrogen for use in Japan. During the trial phase, no CCS is planned. Analysis shows that the production carbon intensity using coal is over 400g/kWh which is incompatible with global emissions reduction targets. Clearly any benefits of using hydrogen are negated if production doesn’t include CCS. There is also potential for using the high temperature from nuclear Small Modular Reactors and concentrated solar to produce hydrogen through thermal chemical splitting.
Other sustainable production methods exist, notably electrolysis coupled with renewable energy and a number of schemes have been piloted. For example ITM power in the UK and their partnership with Shell in Germany.
But as Michael Liebreich (founder of Bloomberg New Energy Finance) said, while it is fashionable to posit electrolysis as the perfect way of using up surplus wind and solar power, this is probably wrong. The challenge is whether this can cost effectively scale in order to make a substantial contribution to overall hydrogen production- something that looks doubtful.
Policy Exchange is currently examining if this is possible and how public policy can facilitate its commercialisation with competitive prices, quality, reliability and security of supply.
Putting aside the beneficial role hydrogen can play in facilitating the transition to a low carbon economy, until cost effective, scalable and sustainable production methods reach mass market, the proliferation of a hydrogen economy will remain on the precipice.
A version of this blog was first published by Business Green.