The Future of Decarbonization: Is Hydrogen the Next Big Thing?

While there is much talk in the energy industry about the potential impacts of hydrogen to meet aggressive global decarbonization goals, there is debate as to whether it is ready as a viable energy solution today. Hydrogen’s scalability and flexibility make it a pragmatic choice for a variety of successful applications in both the near term and long term.

Hydrogen Types and Use Applications

The industry has historically used a color scheme to describe feedstock and energy source used to produce hydrogen. This has created confusing, and, in some cases, misleading information about the environmental benefits of hydrogen production. As a result, carbon intensity (in units of kilograms of carbon dioxide equivalents [CO₂e] emitted per kilogram [kg] of hydrogen produced) is increasingly being used to describe hydrogen. For example, the US Department of Energy (DOE) defines “clean hydrogen” as hydrogen produced with a carbon intensity of less than 2 kgCO₂e per kg of hydrogen produced. Most of today’s hydrogen production projects are produced in one of the following ways:

1. Electrolysis of water to produce hydrogen using a renewable source of electricity and typically referred to as “green hydrogen.”
2. Electrolysis of water to produce hydrogen using electricity produced by a nuclear reactor and typically referred to as “pink hydrogen.”
3. Steam methane reforming (SMR) or autothermal reforming (ATR) of natural gas to produce hydrogen with concomitant capture and sequestration of CO₂ and typically referred to as “blue hydrogen.”

Hydrogen end-users vary widely. Often referred to as an energy carrier, hydrogen has diverse applications including power generation, energy storage, industrial processes and transportation. The primary uses today include petroleum refining and fertilizer production, but hydrogen is primed and ready to support rapidly expanding markets and applications.

Current Market Drivers

Newly available federal funding initiatives and aggressive decarbonization goals across a range of industries are driving the current surging interest in developing a hydrogen economy.  Hydrogen’s scalability and flexibility as an energy carrier make it an important asset for the decarbonization of traditionally hard-to-decarbonize heavy industrial and transportation-related emission sources that will be required to meet mid-century global warming targets.

Hydrogen is the preferred decarbonization method for steel, cement, and glass manufacturing, which relies heavily on enormous amounts of energy at nearly every stage of production. Hydrogen is the type of alternative that will enable these industries to decarbonize. For example, steel is the largest industrial consumer of coal, which provides 75% of its energy demand, according to the International Energy Agency (IEA). Steel companies are examining a variety of options for reducing carbon emissions, and hydrogen-powered electric arc furnaces (rather than the coal-fueled blast furnaces), are considered among the highly viable options to achieving a long-term solution to carbon-neutral steel production. Steel production with a lower carbon footprint has inherent value in the market as the drive to lower emissions is now being measured throughout the entire supply chain.

The growth of the hydrogen market is evidenced by private sector investment in a variety of world-scale hydrogen production projects across the United States. These early investors in hydrogen technology are being flanked by additional billions of investments through the Infrastructure Investment and Jobs Act (IIJA) (i.e., Regional Clean Hydrogen Hub Funding) and the Inflation Reduction Act (IRA) (i.e., Production Tax Credit (PTC)).  A total of 33 “Concept Papers” were invited by the Department of Energy (DOE) to submit full applications for Regional Clean Hydrogen Hubs by April 7, 2023. We expect to see a variety of hydrogen projects emerge as finalists are announced and projects begin construction. Ultimately, each hub will begin to create an essential ecosystem of hydrogen production, processing, distribution, storage and use within a geography to demonstrate the ability scale a full lifecycle hydrogen economy within a region.

Challenges and Opportunities of Hydrogen

While there are many benefits of hydrogen as an emerging energy carrier, there are also some challenges, both in the short and longer term.

Opportunities

Clean and Sustainable: When hydrogen is used as a fuel, it has zero emissions and the only byproduct is water, making it environmentally friendly with a huge potential to accelerate the decarbonization of a wide range of industries.

Flexible and Adaptable: Because of its versatility, hydrogen can be used for a variety of applications, including chemicals, transportation, steel, buildings, refining, and power generation. This makes it a viable energy carrier or feedstock for almost any industry and end user.

High Energy Density: Hydrogen can store more energy per unit of mass than other fuels like gasoline or natural gas, which is a major pro. However, on a volume basis it can be a challenge for pipeline transport and energy contracts.

Long-Term, On-Demand Storage: Batteries aren’t needed to store hydrogen. Instead of storing gas, hydrogen is moved by electrons onto the grid, for use on demand, making it available for as long as it’s needed or wanted, rather than using value as other resources can when stored.  However, it should be noted, it can be a challenge on a volume basis.

Current Challenges

High Cost and Energy Intensive: Producing hydrogen is currently more expensive compared to other fuels, which makes it less economically competitive. It also requires more energy to produce than can be extracted, which makes it energy intensive. However, with increased production and improved technologies we expect to see better pricing over time.

Infrastructure Constraints: Hydrogen production has been limited to certain geographical areas due to need (i.e., US Gulf Coast, California), so energy infrastructure is currently limited. Significant investment and regulations will be required to assess and build essential distribution and storage networks. The Regional Clean Hydrogen Hub projects will help overcome these constraints as they fully develop.

Safety and Expertise: Hydrogen is highly flammable and requires special handling and storage, which can present safety challenges. While the hydrogen industry is not new, increased production, processing, and use will require additional resources and expertise to ensure safety remains the top priority of the industry. As projects ramp up, various governmental agencies will need to address gaps in the existing regulatory framework and industry will need more process safety engineers to address safety requirements.

Implementing Hydrogen Today and Tomorrow

Despite some of the current constraints, there are pragmatic reasons to advance hydrogen projects now. And as pilot programs advance and define best practices, applications and technologies, we’ll gain breakthroughs and efficiencies for the future.

The pressure to decarbonize is increasing and action will eventually be required across the country. Steel and automotive manufacturers, heavy trucking, airlines, rail, maritime, power generation facilities and even fertilizer production – all which currently struggle to decarbonize processes and operations – can gain benefits as early adopters of hydrogen as an energy carrier or feedstock. Implementing projects that lower emissions nets long term value creation and a sustainable transition for companies. Taking a proactive approach now on this emerging solution also has benefits for supply chain, public perception, and customer loyalty.

Hydrogen is a Safe Bet for the Future

With the emergence of hydrogen as a viable energy carrier and feedstock, we are on the precipice of changing the game for a sustainable future. It is exciting to look forward to the next phase energy achievements and advances, with hydrogen as a safe bet to be a critical part of the mix.

“In my more than 30-year career supporting the development of renewable energy projects, I have not come across a resource that covers the breadth of applications and end uses that hydrogen does. There may be individual use cases and certain categories that fit better with wind or solar, but hydrogen will play a major role in hard-to-decarbonize industries. And as a commodity, it can help stabilize energy markets and keep prices reasonable.

I’m betting on hydrogen in part because it is a flexible and adaptable solution to the imperative of decarbonizing our world as rapidly as possible, but also because of the ongoing financial commitments of private investors the U.S. federal government and foreign governments. There is a clear recognition that hydrogen projects are the wave of the future. While public funding needs to accelerate and help more projects scale up quicky, the Department of Energy is invested in a Hydrogen Shot of sorts, pushing for innovative solutions on the scale of the Moon Shot or the Earth Shot.”

Doug Kilmer, P.G

Vice President of Renewables and Hydrogen

TRC is deeply engaged in the evolution of the hydrogen market – what it means for our collective future and how the industry will evolve to fill the current demand for decarbonization at scale. In addition to spending the last two years supporting the ARCH2 Clean Hydrogen Hub application effort in Appalachia – from initial project conception to full application submission – our experts are also currently supporting the science, engineering, and business planning of numerous ongoing hydrogen projects in various stages of development. Our work includes analyzing curtailed wind energy for use to create hydrogen and energy storage and hybrid projects involving substation, transmission and pipeline siting, routing, site safety, regulatory, and engineering, community benefits, workforce and environmental justice considerations.

While these projects can be complex and there is much we must still learn and discover, these early applications will help us determine how to use hydrogen most pragmatically and efficiently in the future. And although the industry will be working with hydrogen at an unprecedented scale, we can comfortably leverage knowledge, expertise and best practices from similar and well-established energy fields, including solar, wind and natural gas to make true progress toward a cleaner energy future.