Betting big on the smallest molecule

Across northern Europe, you can almost smell it in the air. Not odorless hydrogen gas, but anticipation from chemical producers, energy companies, engineering firms, and even airport owners as they beat a path to low-carbon hydrogen production.

Hydrogen’s potential as a low-carbon transportation fuel, industrial raw material, and energy storage medium makes it a must-have for meeting reduction targets for greenhouse gas emissions set out in the Paris Agreement. By developing huge low-carbon hydrogen projects, Europeans are hoping to cut costs with economies of scale.

Such projects face many challenges, though. Neither of the two kinds of low-carbon hydrogen—green hydrogen, made by electrolyzing water with renewable energy, and blue hydrogen, made by reforming methane and storing the by-product carbon—has been produced before at the millions-of-tons scale. And there is uncertainty about demand, basic infrastructure, technology, and availability of public funding. Needed regulations associated with producing green hydrogen have yet to be established.

Even if such hurdles are cleared, large consortia of companies building megaprojects—as is generally the case for low-carbon hydrogen—can still falter. Underlying these challenges: green and blue hydrogen are substantially more expensive than gray hydrogen, which is produced from fossil fuels.

Nevertheless, Europe’s politicians and industrialists are firmly behind low-carbon hydrogen. More than 100 major green and blue hydrogen projects are making their way through the planning and public funding processes. The European Union’s goal is that green or blue hydrogen will cover almost a quarter of the bloc’s energy needs by 2050 and that 5.4 million jobs will be created in the process.

In the near term, about $36 billion (€30 billion) in European sustainability funding is potentially up for grabs by companies developing green and blue hydrogen projects. The energy companies Shell, BP, and RWE and the chemical producer Evonik Industries are among the multinational firms seeking a share of the subsidies available as part of Europe’s Green Recovery Challenge Fund for economic revival after the COVID-19 pandemic.

Tellingly, the number of companies joining Hydrogen Europe, the region’s leading hydrogen industry association, has surged in the past year, to over 1,000. Momentum behind green and blue hydrogen is building.

“In Europe we are seeing something resembling a stampede,” says Bernd Elser, managing director and global lead for chemicals at the consulting firm Accenture. Lots of companies are making plans and assembling consortia to try to get a share of the $11 billion in European Union funding that has been ring-fenced for low- and zero-carbon hydrogen production, Elser says.

Despite US president Joe Biden’s promise of billions of dollars for sustainable technologies, the green hydrogen projects planned for the US are an order of magnitude smaller than their European counterparts. In Asia-Pacific, Australia has taken the lead in green hydrogen with a dozen or so projects at advanced stages of development.

But the high cost of producing low-carbon hydrogen is a deterrent to its use and may cause some projects to fail. All the green hydrogen projects will compete with commodity fossil fuel facilities, albeit with some form of government or carbon-credit subsidy. For example, one project, Green Fuels for Denmark, has a goal of displacing 5% of kerosene fuel at Copenhagen Airport by 2027 and 30% by 2030.

“When looking at the price of kerosene from renewable hydrogen, it always makes me wonder how much cost firms are going to be able to pass on to their customers in the near term,” Elser says.

Whatever uncertainties lie ahead, the projects do not lack ambition. Green Fuels for Denmark’s goal is to establish a 10 MW electrolyzer plant by 2023 to generate hydrogen fuel for buses and trucks, and methanol for planes and ships. The project’s goals for 2027 and 2030 are for 250 MW and 1.3 GW electrolyzers, respectively.

Green Fuels for Denmark plans to massively expand the country’s capacity for offshore wind energy, which will provide an electricity source for green hydrogen production. To make methanol, some of the hydrogen will be combined with carbon dioxide from a carbon-capture facility in the city of Copenhagen.

Denmark’s foray into green hydrogen is not finished there. In another project, the Danish Energy Agency has begun seeking co-owners for an energy island it plans to build in the North Sea. Located 80 km offshore, the artificial island would collect energy from surrounding wind turbines. In a second phase, it would produce renewable fuels.

Green Fuels for Denmark is one of a number of European megaprojects intended to produce green hydrogen and then combine it with captured CO₂ to make methanol. Carbon capture and storage (CCS) is also going to be used in a very different way by countries including the UK and the Netherlands. Their goal is to make blue hydrogen from natural gas and then capture and store by-product CO₂ at a scale never seen before.

Jon Gibbins, a professor of CCS at the University of Sheffield and director of the UK Carbon Capture and Storage Research Centre, cautions that Europe hasn’t consistently embraced CCS, on the grounds that it could enable the ongoing use of fossil fuel. “The overall EU policy on CCS is a mix,” he says. “Austria, for example, appears to want to stop it, while other countries want to start it.”

Gibbins contends that keeping a lid on global warming by ending and reversing the atmospheric buildup of CO₂ will require some amount of CCS. “You can’t even get to net zero without CCS,” he says.

Like Denmark, the Netherlands plans to implement a series of major green hydrogen projects in the next few years, including some that feature CCS. NortH2, adjacent to the North Sea, promises to be one of the biggest in Europe. Its backers plan to use wind energy generated in the sea to power electrolyzers that will make green hydrogen.

The goal of its first phase, scheduled to start in 2030, is to generate 4 GW of electricity at a cost of up to $12 billion. A second phase of more than 6 GW will generate about 600,000 metric tons (t) of hydrogen annually.

“The NortH2 consortium is currently preparing a feasibility study,” RWE, one of the project’s partners and a leading operator of offshore wind farms, says in an email. “If this is positive, the first development activities will begin in the second half of 2021.”

NortH2’s partners, which also include Shell, the oil refiner Equinor, and the Dutch gas distributor Gasunie, hope the project will supply green hydrogen to chemical producers, refiners, and steelmakers. The hydrogen will also be used as a transportation fuel. Plans are to send it via pipeline to the industrial ports of Rotterdam, the Netherlands, and Antwerp, Belgium, and even into Germany.

“We are looking at a wide variety of customers,” says Erik Mobach, project leader for NortH2 and a Shell executive. The company, which operates a refinery in the north of the Netherlands, could itself be a customer of NortH2.

As with most of Europe’s green and blue hydrogen projects, NortH2 is a moving target because of uncertainty over where demand will come from and when it will come. “It will take a bit of time before we get the customers we need,” Mobach says. “At the end of the day, hydrogen is inevitable, but the brave ones need to jump first.”

The expertise that Shell and the other partners have gained from participating in substantial oil and gas projects will be invaluable in managing NortH2 and ensuring that each partner is rewarded equitably, Mobach says.

The partners are betting that the cost of green hydrogen production will eventually come down. “It will become a new part of the energy system. You will start to see a large amount of innovation,” Mobach says. “This transition is huge.”

There are signs that efficiency improvements are already happening. By 2050, the cost of producing green hydrogen from renewable electricity will have fallen 85%, according to a report published earlier this month by the market intelligence organization BloombergNEF.

“Such low renewable hydrogen costs could completely rewrite the energy map,” Martin Tengler, the lead hydrogen analyst for BloombergNEF, says in a press release. “It shows that in future, at least 33% of the world economy could be powered by clean energy for not a cent more than it pays for fossil fuels.”

Major European alliances and project developments are being announced on almost a weekly basis and on a scale designed to create efficiencies.

In one of the latest initiatives, Gasunie, RWE, Shell, and the German gas grid operator Gascade Gastransport are expanding their collaboration on the AquaDuctus project to pipe hydrogen generated from wind turbines in the North Sea to the northern coast of Germany.

Starting up in 2035, the pipeline would transport up to 1 million t of green hydrogen annually across more than 400 km. It would be cheaper to build one hydrogen pipeline than the alternative of five high-voltage electricity transmission systems, RWE says.

By the time the AquaDuctus pipeline is in place, Germany should have already made a substantial move into green hydrogen, in part through Get H2, an initiative featuring 35 firms, including RWE and Evonik. In this project, scheduled to come on line in 2024, 100 MW of electricity will be generated by wind turbines in the North Sea to power electrolyzers in Lingen, Germany, that will make 7,000 t of green hydrogen per year. “This would be the largest plant of its kind in Germany,” RWE says.

Get H2 aims to replicate the configuration in 2025 and again in 2026. “The approval planning and the tendering of the large components for a first project under the Get H2 umbrella is in full swing,” RWE says.

Initially, Get H2 will pipe hydrogen in a former natural gas pipeline from Lingen 130 km south, into Germany’s industrial heartland. In subsequent phases, the pipeline will go further into Germany and west, into the Netherlands. Evonik’s contributions to the projects include a section of a gas pipeline it owns that it will repurpose for moving green hydrogen.

“We want to be ready in 2024,” says Rabea Buss, a geoscientist and pipeline manager for Evonik. Get H2 is set to be one of the first green hydrogen megaprojects in Europe, and Evonik wants to apply its learnings to other efforts it may participate in, Buss says.

Evonik and its partners are still waiting on substantial European funding, which they will need if the project is to proceed. If it goes ahead, Get H2 will supply green hydrogen largely for transport use and industrial applications including oil refining, steel-making, and chemical production.

BP’s oil refinery in Gelsenkirchen, Germany, is set to be one of the first consumers of Get H2’s hydrogen. Steel producer ThyssenKrupp also plans to substitute Get H2 hydrogen for coal dust to heat its blast furnaces. The company estimates such substitution could reduce its CO₂ emissions by 3 million t per year—more than is released each year by all domestic flights in Germany. The country’s steel industry claims that transitioning to green hydrogen will help it become carbon neutral by 2050.

Evonik’s biggest manufacturing site, in Marl, Germany, will also be connected to the Get H2 pipeline. The company already consumes hydrogen made from fossil fuel as a raw material for specialty chemicals in Marl.

“Hydrogen is really key to a lot of our important processes and products,” says Oliver Busch, a chemist and head of sustainable businesses for Creavis, Evonik’s research arm. Evonik is considering new ways it might use green hydrogen for customers seeking more-sustainable products. “There are different opportunities we are exploring,” Busch says.

Evonik is also working on technologies for the wider hydrogen economy, including membranes in anion-exchange membrane water electrolyzers, which have the potential to be more efficient than existing alkaline or proton-exchange membrane electrolyzers, Busch says.

It’s going to take such technologies and more to reduce the cost of making green hydrogen. Even then, the transition to low-carbon hydrogen will take decades.

“Green hydrogen is still quite expensive,” Busch says, “but we have a good feeling that it will become cheaper in the future.”