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A Deeper Investigation into Green Hydrogen

Samso Insights Episode 109

Content


Last year, we shared about how Green Hydrogen is set to change the world and gave an overview of the subject. Today, we deep dive into whether Green Hydrogen will be the next gold rush.



Trending renewable energy  | Samso Insights  |  Samso

Part 1 – Trending Renewable Energy


You might have heard the buzz around renewable energy source - green hydrogen.


I often saw news articles about it but would never read them. I knew next to nothing about it. Until recently.


Another topic that I’ve ignored was investing. I assumed only wealthy corporate suits were involved in investing, not marketing students.


Today I decided to challenge my preconceived notions and learn about green hydrogen. I quickly concluded that green hydrogen is a future resource that everyone should know more about, not just investors.


If I were to start investing today, this is one option I would investigate. But that’s just me, and maybe it will be you too.


So allow me to introduce you to green hydrogen.


Part 1.1 - Hydrogen 101


The What?

Green hydrogen is the carbon free renewable energy source that has gained popularity in recent years as a potential fossil fuel replacement. In a bid to halt the environment’s rising temperature, which can cause untold disaster, the only way to do so is with a carbon free energy source.


Renewable energy is part of the green energy process to be truly emission free. It's being touted as the holy grail of carbon free energy for the globe and for good reason. Germany and countries in Asia have been very keen and busy investing in its research and development.


Hydrogen Cheat Sheet

Hydrogen has several colour gradations. Below is a quick rundown on the hydrogen grades that matter.

  • Grey hydrogen is what 95 percent of the world uses with no emission capturing to offset the negative effects of its use.

  • Blue hydrogen is a modicum better with a small attempt to capture emissions, but this process uses more energy to do so.

  • Brown hydrogen is created with brown coal through gasification. These emissions are released into the air, but if they are stored, they can be referred to as blue hydrogen.

  • Green hydrogen is created with renewable energy sources. This means its emission free and the by-product of burning green hydrogen is water.

These variations on hydrogen are important as you will see as we continue.


Part 1.2 - Renewable Fuelled Future

The Why?

Back in 1992 the Earth Summit that was held in Rio de Janeiro had developed countries agree that an attempt at halting the greenhouse effect was imperative. Those countries vowed to get the CO2 emissions down to match 1990 numbers.


That was far from the end of it though. For the next 19 years, a debate raged back and forth on whether climate change was indeed real despite the science.


Fast forward to the Paris Agreement of 2015, the international treaty was signed by 196 countries in the agreed bid to reduce global temperature by 1.5C.


But some countries weren't willing to sign on with a definite commitment. Australia was one of those that did not sign on. (The Paris Agreement , 2016)


Since the Paris Agreement, the fight to end climate change has really picked up the pace. Swedish teen activist Greta Thunberg furthered the climate change cause like no other before her.


Generation Z and millennials rallied around her, supporting their shared belief in climate change and they spread their gospel online via Twitter.


Which brings us to today. Naysayers still exist out there who don’t think climate change is real. There are also those that think green hydrogen is not a viable solution for ending climate change.


The Who?

So, to be clear, Australia is positively engaged with creating renewable energy sources. It's just not at the rates of our overseas friends.


It was time for me to read some of those articles I have been ignoring for months and years. Well not all of them, but I read all I could from the September and October 2021 news articles and industry information on how green hydrogen is created.


I read about what barriers green hydrogen faces and investigated why Australia is dragging its heels to sign on to the Paris Agreement.


I wanted to know everything that a potential investor wants to know. Or anyone who is spending their money would need to know.


These are the essentials: is this sector real, are the projects real, is the business real? Having this information gives investors confidence in an industry, particularly a nascent one.


What's the scoop?

I found out that green hydrogen is at the top of global agendas.


Governments and company interests lie in green energy project actioning and investing for good reason.


Green hydrogen is being promised to deliver the following:

  • Efficiency

  • Emission free energy

  • Support energy systems

  • Supply stability

What I wanted to know now is, if a green hydrogen future is possible, what will it entail?


Hydrogen production potential across regions. McKinsey | Samso Insights |  Samso

Part 1.3 - Overseas Developments


Global green hydrogen news
  • Germany

Clearly in the driver’s seat of green hydrogen innovation, recently invested 8 billion Euros in 62 EU backed hydrogen projects (Meza, 2021)

  • France

Companies Total and Engie have teamed up to create the biggest site in France to produce green hydrogen from renewable electricity. (Total and Engie Partner to Develop France's largest site for the production of green hydrogen from 100% renewable electricity, 2021)

  • USA

Sitting President Biden has committed the US to achieve 50-52 percent greenhouse gas reduction by 2025. The news was delivered during the Leaders’ Summit on Climate that President Biden held between April 22 - 23, 2021. (FACT SHEET: President Biden Sets 2030 Greenhouse Gas Pollution Reduction Target Aimed at Creating Good-Paying Union Jobs and Securing U.S. Leadership on Clean Energy Technologies , 2021)

  • Canada

Canada's second top retirement fund is the first to say no more to oil assets and yes to green hydrogen. (Keidan, 2021)

  • Japan x Australia

Japan’s biggest hydrogen supplier Iwatani Corp plus 5 other parties are in feasibility talks to create green liquid supply chain between Japan and Australia.


It has the potential to create up to 100 tonnes per day by approximately 2026. (Obayashi, 2021)

  • Mongolia

German researchers are interested in the south Gobi region of Mongolia for green hydrogen plant location due to the ideal topographical features. (Matalucci, 2021)

  • Mauritania

A 10GW green hydrogen project could be utilising Africa’s first offshore wind farm. (Collins, New 10GW Green Hydrogen Project in Mauritania could include Africa's first offshore wind farm, 2021)

  • China

China’s president Xi Jinping announced that from now China won’t be building any more new coal fuelled energy projects. Their banks followed suit and shortly after also stated that there will be zero funding for coal powered projects outside of China effective from the last quarter of 2021. (Sun, 2021)


China has committed to net-zero emissions by 2060. (Tan, Thurbon, Mathews, & Young-Kim, 2020)


China’s Hydrogen Alliance has a goal for Beijing to install 100GW of green hydrogen by 2030. (Collins, 'China should install 100GW of Green Hydrogen by 2030 says Beijing Supervised Body, 2021)


Green hydrogen’s online presence as a topic of discussion and as a commercial proposition clearly show the worldwide commitment to climate change.


The EU, in particular Germany, and Asian countries are taking to renewable energy sources like the proverbial duck to water.


What about us?

Australia’s first green hydrogen ASX listed company, Province Resources Limited, Managing Director, Mr David Frances, is in the process of leading the green resources charge in Australia.


Province Resources has the second largest Green Hydrogen project in the country located in Carnarvon, Perth, Western Australia.


Mr. Frances commented that Australia has the chance to play a focal role in green hydrogen exploratory phases. This would be beneficial after our horror years of bushfires and flooding.



The Green Hydrogen Story Province Resources Limited  | Coffee with Samso |  Samso

Green hydrogen is a true challenge that will create critical changes for the Earth, humanity, and the history of renewable energy production.

Even though the Australian federal government is slow to adopt green hydrogen officially, there are other Australians creating organisations for its support.


Analyses into our climate change policies have revealed that they are underdeveloped. This has instead supported the continued investment into fossil fuels. (Lowe, 2021)


Call for Support

‘Twiggy’ Forrest has launched a green hydrogen organisation called GH2 to encourage and motivate carbon emission reduction. Its mission is to have one quarter of the world using green hydrogen by 2050.


GH2 will be chaired by Malcolm Turnbull and the goal is to bring government and developing organisations together to ramp up support for green hydrogen.

We now will move on to the product specs in Part Two.

 

Part 2 – The Product


6 Current Key Aspects of Green Hydrogen

1. It’s not ‘new’ tech

You could be forgiven for thinking that this is all brand-new technology, but electrolysis, the process of splitting water bonds into hydrogen and oxygen, is 100 years old.

Getting green hydrogen technology to a place of widespread adoption is new.


2. It’s not a one and done job/transition phase

If humans never worked out how to burn carbon, we would not be where we are today. Carbon has played an essential part of human development, there is no doubt. But green hydrogen won’t be able to replace fossil fuels overnight but preferably within the deadlines given of 10 – 30 years. (Jovan & Dolanc, 2020)


Globally we use a mix of grey, brown, blue, renewable energy and nuclear energy sources.


3. It's weight conscious

It is a light product. For storage and transportation, it's either kept at a temperature of – 253°C liquefied or compressed at a high temperature. (Huang, 2019)


4. Transportation

The factors that will influence transportation are dependent on the distance the product is travelling domestically or in export. Different products require different methods for their travel.


5. We can’t use it now, but we can in the future

Will we be able to repurpose existing infrastructure for green?


Yes. Certain infrastructure can be retrofitted and repurposed, such as the existing pipelines for green hydrogen.


Green hydrogen is cheaper to be distributed via pipelines rather than cables.


Pipeline conversion requires this checklist:

  • Conditions of the pipeline - is it fit for purpose?

  • Cleaning

  • Quality assurance

  • Hydrogen compression

  • Valve integrity and seals

  • Measuring equipment for chromatograph

  • Operational software

Pipeline alternative conduits:

  • Marine terminals

  • Shipping

  • Truck loading

  • Railway in gaseous hydrogen carriers or specialised containers

  • Liquid organic hydrogen carriers

  • Liquefied hydrogen

  • Pressurised hydrogen

  • Synthetic gas

  • Ammonia

  • Methanol

(ENTSOG, 2020)


The modification of existing pipelines not only saves on infrastructure production but will also keep prices lower than expected.


There is some concern about metal deterioration in the pipelines if reused. This is in respect to material integrity, unusual interior pressure changes and simultaneously being in the presence of atomic hydrogen.


The likelihood of pipelines being subjected to this highly specific triad of concerns is very low. (Findlay, 2020)


6. Storage

Storing green hydrogen in the EU consists of three options:

  • Salt caverns

  • Depleted fields

  • Aquifers

In Australia storage of green hydrogen as a solid is looking to be the ideal method.


Storage as a solid provides these three benefits:

  • Decreased costs

  • Safety

  • Easier processing for overseas

Green hydrogen insights by Samso | Samso

While we wait for green hydrogen will we compromise with blue and brown instead?

Australia and the US use and proffer blue hydrogen as a ‘cleaner’ alternative to grey hydrogen.


It’s promoted by our government and the gas industry as an ideal way to integrate the transition.


Blue hydrogen is used for generating electricity and storing energy. However, it also needs extra energy to capture and store the emissions.


Approximately 10 – 20 percent of carbon generated can’t be caught and stored. (Giovannini, 2020)


Brown hydrogen is particularly bad for carbon emissions. Each time it is produced it creates 10 to 12 tonnes of carbon. This is then released into the atmosphere, along with the emissions created by the system employed.


The reality is that blue hydrogen will probably figure in the integrative process due to the current support of the Australian federal government, politicians, and key corporations.

 

Part 3 – Pricing; Cost Factors and Boundaries


Research and development

With the zero emission targets, green hydrogen as the renewable energy source is the only option.


A functional green hydrogen economy has three important aspects:

  1. Production

  2. Storage and delivery

  3. Consumption – converting to other energy sources

(Huang, 2019)


Industries such as:

  • aviation

  • long haul transportation

  • steel

  • shipping

  • chemical plants

require massive amounts of energy and need to be emission free by 2100.


Green and Grey Current prices

Green hydrogen costs approximately $3 per kilogram. However, its price has already dropped 40% since 2015 and is expected to continue to fall. (Rais, 2021)


Grey hydrogen costs approximately $2.20 per kilogram. (Giovannini, 2020)


But it won’t remain so for much longer with market forces indicating a price rise. The EU emissions trading system also charges $20 - $25 EUROS per tonne of CO2 to bring it into their countries.


Green hydrogen is the only option to reach zero emissions compared to blue and brown. The global push to end climate change is optimistic and increasing daily.

Currently there are 228 large scale green hydrogen projects in operation worldwide. These projects are equal to approximately 300 billion dollars and consist mostly of governments that have officially pledged a commitment to zero emissions. 24 of them are in Oceania. (Magill, 2021)


A report by the Hydrogen Council and McKinsey & Company stated that:

75 countries representing over half the world’s GDP have net-zero carbon ambitions and more than 30 have hydrogen-specific strategies.” (Magill, 2021)
 

Part 4 – Technology


Technology costs lie in these areas:

  • renewable electricity production

  • research and design of the electrolyser stack which needs to be updated to industrial size

  • standardisation of balance of plant components

Renewable Electricity

This is the most expensive aspect of green hydrogen production today. For a truly zero free emissions product, renewable electricity is mandatory.


Finding the ideal topography is essential as wind and water are essential ingredients in the creation of green hydrogen.


Electrolyser Technology

The electrolyser stack is where research and development are needed to create green hydrogen in the amounts necessary to reduce costs.


The Polymer Electrolyte Membrane (PEM) is the category of electrolyser that would be used in the synthesis of green hydrogen.


Inside the Electrolyser

Stack - The stack inside the electrolyser is where the action of splitting of water into hydrogen and oxygen occurs.


Plant - The balance of plant encompasses the remaining parts of the electrolyser.


It consists of:

  • water and power supply

  • water purifier

  • compression

  • hydrogen processing

  • buffering of hydrogen and electricity

Both the balance of plant and stack share similar pricing, but the balance of plant has more potential for cost to be decreased.


The stack requires scalability from 1MW today to 20MW. For small scale production the stack represents almost 50 percent of the costs, but at larger productions it drops considerably to approximately 30 percent.


Another cost-effective aspect to note is to standardise the components used to create the surrounds of the plant as well as the plant design.

  • To summarise, the electrolyser design and components need optimisation to provide the necessary expandability and manufacturing to create green hydrogen.

  • Production efficiencies need further augmenting to reduce the cost of electricity.

  • Electrolyser equipment needs to be resilient and robust to enable costs to be extended in tandem with larger production output.

(Bianco & Blanco, 2020)

 

Part 5 – Australian Politics


Can’t see the wood for the trees

Province Resources are being supported with their project by the WA government for their Carnarvon project. (see Coffee With Samso Episode 93)


Together they are creating a framework for green hydrogen to guide the processes and procedures required for their project.


By collaborating, they will come up with a comprehensive plan as well as a fiscal regime including royalties.


On the other hand, the Australian federal government is of the slow burn mindset.


The federal government’s concern is that there will be job losses in mining and agriculture and that is why they are not wholly on board. Along with the federal government there is the fossil fuels lobby and individual politicians that would prefer to go the slow route.


‘If rapid scale-up takes place in the next decade, green hydrogen is expected to start becoming competitive with blue hydrogen by 2030 in a wide range of countries – e.g., those with electricity prices of USD 30/MWh – and in applications.’

(Bianco & Blanco, 2020)

 

Part 6 – Is it a Green Gold Rush?


Part 6.1 - Will interest in raising capital for green hydrogen projects die off or remain stable?


Some see green hydrogen as being a ‘flavour of the month’ case with no longevity. All the signs are pointing to the interest in renewable energy sources with green hydrogen being the real deal.


Currently the level of global support from EU governments, Asia, policy makers, financial institutions, and tech giants etc continues to accelerate.


Google Maps, which covers approximately 98 percent of the Earth will now display low carbon emission travelling destinations. This move is predicted to save approximately 1 million tonnes of carbon dioxide a year announced Google’s CEO Sundar Pichai. (Milmo, 2021)


Every week there is a plethora of green energy updates from around the world.



Part 6.2 - In 15 – 20 years what industries will be likely to use green hydrogen?


Which industries would potentially take up green hydrogen first?

The schematic diagram above identifies the fields and industries that are likely to adopt green hydrogen when available.


Mr. Frances also stated on Coffee With Samso Episode 93 that the following are the series of shifts that would occur with the adoption of green hydrogen.

  • The first shift would be to gas blending - combining a percentage of green hydrogen with a current energy form.

  • Domestic and export of green hydrogen to a country like Japan.

  • Long haul transportation and smaller trucking companies.

  • Then the crucial areas for decarbonisation - creating green steel, aluminium, and cement. Cement production is the single largest producer of carbon emissions.

Human side to renewable energy source conversation

We are a society that expects immediate gratification, yesterday. We forget that great discoveries take time and what we can’t live without, say the transformation of the mobile phone to the smartphone, has had its teething issues.


Obstacles often come before breakthroughs and that is where the R&D and support come in.


For now, it appears that we will continue to employ fossil fuels during their phase out for the foreseeable future.


Part 6.3 - Conclusion


Ultimately, it’s always better to be part of the solution, then continue to be part of the problem. I will be keeping an eye on green hydrogen as it progresses through continued research and exciting developments. I credit it for getting me interested in looking into investing.


Investing allows you to be part of the bigger picture for altruistic, purely fiscal reasons or both.


I know I will see green hydrogen in use sooner rather than later.


The way forward

The way forward is going to be a combination of these factors:

  • Continued Research & Development

  • Innovation & Scalability & Standardisation

  • Tech adoption, when will we fully commit as a country?

  • Government support at a local and federal level

  • Collaborations and partnerships of like-minded businesses

to successfully solve the challenges of an emission free future.

 

References

  1. Bianco, E., & Blanco, H. (2020, November 01). Green Hydrogen: A guide to policy making. Retrieved from irena.org: https://www.irena.org/publications/2020/Nov/Green-hydrogen

  2. Collins, L. (2021, September 22). 'China should install 100GW of Green Hydrogen by 2030 says Beijing Supervised Body. Retrieved from rechargenews.com: https://www.rechargenews.com/energy-transition/china-should-install-100gw-of-green-hydrogen-by-2030-says-beijing-supervised-body/2-1-1071599

  3. Collins, L. (2021, September 28). New 10GW Green Hydrogen Project in Mauritania could include Africa's first offshore wind farm. Retrieved from rechargenews.com: https://www.rechargenews.com/energy-transition/new-10gw-green-hydrogen-project-in-mauritania-could-include-africas-first-offshore-wind-farm/2-1-1074316

  4. FACT SHEET: President Biden Sets 2030 Greenhouse Gas Pollution Reduction Target Aimed at Creating Good-Paying Union Jobs and Securing U.S. Leadership on Clean Energy Technologies . (2021, April 22). Retrieved from whitehouse.gov: https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030-greenhouse-gas-pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadership-on-clean-energy-technologies/

  5. Findlay, C. (2020, September 11). What's your purpose? Reusing gas infrastructure for hydrogen transportation. Retrieved from siemens-energy.com: https://www.siemens-energy.com/global/en/news/magazine/2020/repurposing-natural-gas-infrastructure-for-hydrogen.html

  6. Giovannini, S. (2020, November 13). 50 Shades of (Grey and blue and green) hydrogen. Retrieved from energy-cities.eu: https://energy-cities.eu/50-shades-of-grey-and-blue-and-green-hydrogen/

  7. Huang, Z. (2019, March 19). Hydrogen fuels rockets, but what about daily life? Retrieved from theconversation.com: https://theconversation.com/hydrogen-fuels-rockets-but-what-about-power-for-daily-life-were-getting-closer-112958

  8. Jovan, D. J., & Dolanc, G. (2020, December 14). Can Hydrogen Production be Economically Viable Under Current Market Conditions. Retrieved from mdpi.com: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjW8-PXsa3zAhVpIbcAHRz5Cg4QFnoECCEQAQ&url=https%3A%2F%2Fwww.mdpi.com%2F1996-1073%2F13%2F24%2F6599%2Fpdf&usg=AOvVaw2OVBPUcL4UfJcf-lJ0OUDA

  9. Keidan, M. (2021, September 29). Canada's second largest pension fund says first to exit oil assets. Retrieved from reuters.com: https://www.reuters.com/business/sustainable-business/canadas-second-largest-pension-fund-caisse-reveals-new-climate-targets-2021-09-28/

  10. Lowe, I. (2021, October 6). 5 Reasons Why the Morrison Government Needs a Net Zero Target, Not Just A Zero Plan. Retrieved from theconversation.com: https://theconversation.com/5-reasons-why-the-morrison-government-needs-a-net-zero-target-not-just-a-flimsy-plan-169015?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20October%206%202021%20-%202079020518&utm_content=Latest%20from%

  11. Magill, J. (2021, February 24). Europe, Asian Nations Leading the World in Hydrogen Development. Retrieved from forbes.com: https://www.forbes.com/sites/jimmagill/2021/02/24/europe-asian-nations-leading-the-world-in-hydrogen-development/?sh=6acc6fb54112

  12. Matalucci, S. (2021, September 28). The Hydrogen Stream: Mongolia's Potential for Producing Green Hydrogen at $3.30kg. Retrieved from pv-magazine.com: . https://www.pv-magazine.com/2021/09/28/the-hydrogen-stream-mongolias-potential-for-producing-green-hydrogen-at-3-30-kg/

  13. Meza, E. (2021, May 28). Germany invests 8 billion euros in 62 EU backed hydrogen projects. Retrieved from cleanenergywire.org: . https://www.cleanenergywire.org/news/germany-invests-8-billion-euros-62-eu-backed-hydrogen-projects

  14. Milmo, D. (2021, October 6). Google Maps to show the lowest carbon route for car journeys. Retrieved from theguardian.com: https://www.theguardian.com/technology/2021/oct/06/google-maps-to-show-the-lowest-carbon-route-for-car-journeys

  15. Obayashi, Y. (2021, September 15). Japan, Australia to build Green Hydrogen Supply Chain. Retrieved from maritimeprofessional.com: https://www.maritimeprofessional.com/news/japan-australia-build-green-hydrogen-370613

  16. Rais, A. (2021, March 5). Green Hydrogen is the future . Retrieved from process-worldwide.com: https://www.process-worldwide.com/green-hydrogen-is-the-future-a-1005639/

  17. Sun, Y. (2021, September 28). China Will No Longer Build Overseas Coal Power Plants - What Energy Projects Will It Invest In Instead? Retrieved from theconversation.com: https://theconversation.com/china-will-no-longer-build-overseas-coal-power-plants-what-energy-projects-will-it-invest-in-instead-168614

  18. Tan, H., Thurbon, E., Mathews, J., & Young-Kim, S. (2020, October 8). China Just Stunned the World With Its Step-Up on its Climate Action - And the Implications for Australia may be Huge. Retrieved from theconversation.com: https://theconversation.com/china-just-stunned-the-world-with-its-step-up-on-climate-action-and-the-implications-for-australia-may-be-huge-147268

  19. Total and Engie Partner to Develop France's largest site for the production of green hydrogen from 100% renewable electricity. (2021, January 13). Retrieved from TotalEnergies.com: https://totalenergies.com/media/news/press-releases/total-and-engie-to-develop-france-s-largest-site-of-green-hydrogen

 

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The information or opinions provided herein do not constitute investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not take into consideration, nor have any regard to your specific investment objectives, financial situation, risk profile, tax position and particular, or unique needs and constraints. Read full Disclaimer.


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