Is it time you had a hydrogen powered net zero pathway?
Our 'Innovating 2030' series takes a look at Hydrogen. With the potential to play a key role in shaping a net zero energy system, this article covers the basics of this technology, what our view of the next ten years look like and can it help your net-zero transition?
Your business net zero energy pathway to 2030 and beyond will rely on a mixture of technologies. Today technologies like solar on-site generation and energy optimisation exist to get you started towards a low carbon future, but what actions will you take to tackle those stubborn emissions from heat and transport? How will you get ahead of the innovation trends to seize the financial and environmental benefits? And what can you do today to prepare for these coming technologies?
There is no silver-bullet sustainable energy solution; a net zero future will require a mixture of technologies to deliver the transition, some are available today, others developing and no doubt some we haven’t even thought of yet. That said, there are trends in technological evolution that help us preview the future of low carbon energy solutions.
In this article series, we will examine three of the most important technology trends; Hydrogen, Electrification of Everything, and Connected IoT technologies and Artificial intelligence (AI). Each piece will look at the trend in detail, take a view on the commerciality of the technologies, the implications of government policy and discuss what it might mean for your businesses net zero energy strategy.
Read the full article, or jump to a section of interest below.
Pathway to sustainable business
When we look to the future our energy system will be very different. It will be almost fully decarbonised, digitalised, decentralised and distributed. For organisations to access the opportunities this future brings, one certainty is that doing more of same is no longer enough. Innovative new solutions are required to tackle the climate crisis, control rising costs and improve energy security.
Many organisations are already seizing the opportunities of digitalisation and localisation to gain energy independence; driving out cost and emissions. This decentralised shift will accelerate dramatically in the next few years, enabling businesses to convert energy from a cost to a driver of value and growth.
Achieving emissions targets
Nearly 200 countries are committed to the Paris Agreement to keep global temperatures well below 2°C above pre-industrial levels and aim to limit to 1.5°C. But there's a growing recognition of the need to go further. Ahead of the COP26 UN Climate Change Summit in November 2021, President Alok Sharma has warned that existing commitments fall far short of what is required. He is asking every country to pledge further cuts in carbon emissions by 2030 and to reach net zero as soon as possible.
Our Decarbonisation Technology Outlook diagram below layouts the wide scope of potential net zero energy solutions that we view as having the most potential today.
Decarbonisation is not something that we can achieve overnight. Organisations will need to be flexible in how developing technologies are implemented, while at the same time limiting reliance on future technologies negating the need for action today. It’s therefore important to have an energy partner like Centrica Business Solutions that supports your business in building a roadmap to net zero that utilises today’s solutions in conjunction with future technologies.
The basics of hydrogen
Starting off the Periodic Table, hydrogen contains more than double the energy per unit of mass as natural gas and is highly reactive. It is one of the most abundant elements in the world and is seen as a versatile, long-term alternative to burning fossil fuels. Hydrogen produces no carbon emissions at the point of use and has the potential to be produced with low or zero emissions.
Many large organisations are currently developing energy decarbonisation plans and thinking strategically about how hydrogen can fit in. The short answer is that for most businesses, hydrogen will not play a role in the near-term, due to the expense and lack of local and national infrastructure. But, as a developing technology for commercial and consumer energy use, hydrogen has the potential to complete the shift to a sustainable energy system.
In this extended piece we aim to layout the basics of hydrogen, what it is, its potential, where it could work and some of the challenges that need to be overcome to make hydrogen widely available to commercial, public sector and industrial organisations.
There are 3 main methods by which hydrogen can be generated today.
- Grey hydrogen is created by steam methane reforming; that is, combining steam (H2O) and methane (CH4) at a high temperature to create hydrogen (H2) gas. Carbon dioxide (CO2) is released as a waste product. This is the process by which most hydrogen is produced today.
- Green hydrogen is produced by electrolysis (electric splitting) of water. An electric current is run through water, separating it into hydrogen (H2) and oxygen (O2) gas. If the energy used to power this process is renewable, then the green hydrogen is emission-free.
- Blue hydrogen is created by steam methane reforming plus carbon capture. Carbon capture has the potential to reduce emissions from hydrogen production by 60-85% on a life cycle basis. However, carbon capture does not yet exist commercially.
Today, approximately 70m tonnes of hydrogen (plus 48m tonnes as a by-product) is produced globally across industry each year, used mainly in oil refining and the production of ammonia for fertilisers. But, around 97% is created from fossil-fuels using the SMR process.
Business benefits of hydrogen
To achieve a true transition to net zero, it will not be acceptable to produce grey hydrogen using SMR (unless these CO₂ emissions are captured and stored). Blue and green hydrogen can play a pivotal role in accelerating decarbonisation through to 2030 and beyond.
Recent analysis from Bloomberg NEF concluded that the large-scale, global deployment of renewable hydrogen across the energy, transport and industrial sectors could reduce their annual emissions by up to 34% by 2050.
Hydrogen production via electrolysis is a promising option for increasing the utilisation of electricity from renewable resources in a world where we may often have surplus production of renewable electricity from wind and solar.
In a similar way to electricity, hydrogen works as an energy carrier, rather than an energy source. Hydrogen can complement electrification by allowing the energy system to be less flow based, providing the flexibility required for power system balancing and reduce the need for peaking capacity and provide greater resilience.
In its 2020 Future Energy Scenarios report, National Grid says that hydrogen's role in providing zero carbon flexibility and peaking plant will be very important in all scenarios. Even its most cautious net zero scenario will require at least 15TWh of hydrogen storage by 2050.
Commercial uses for hydrogen
Huge progress has been made in decarbonising power systems, but transport and heat have been left behind. Industrial heat emissions are particularly problematic.
- Replacing natural gas for industrial processes that are difficult to electrify due to high-grade heat requirements (e.g. glass, steel, ceramics) and estimated to account for around 10% of global CO2 emissions.
- Replacing natural gas for heating, particularly for homes or businesses that are unsuitable for heat pumps, or without significant insulation, potentially in combination with heat pumps.
- Providing energy flexibility through use as longer term power storage by converting power to hydrogen during excess supply and then converting back when demand increases or supply drops.
- Powering heavy duty transport, such as HGVs, shipping and aviation, where the long-range travel plus weight and volume considerations require a high energy density fuel is essential.
According to the Bloomberg New Energy Outlook, in approximately two-thirds of the world, wind or solar now represent the least expensive option for adding new power-generating capacity. Hydrogen has the potential to help decarbonise many of the most difficult sectors and applications.
Watch our short video summarising the basics and opportunities of hydrogen.
Government policy on hydrogen
Scaling-up and commercialising hydrogen production and deployment requires a strategic approach on a global level. It is critical that policy makers across the globe collaborate to prepare infrastructure and create the right market conditions to capitalise on the hydrogen opportunity and bring down costs.
The International Energy Agency has made 7 key recommendations for governments and other stakeholders to scale-up hydrogen: 1) Establish a role for hydrogen in long-term energy strategies, 2) Stimulate commercial demand for clean hydrogen, 3) Address investment risks of first movers, 4) Support R&D to bring down costs, 5) Eliminate unnecessary regulatory barriers and harmonise standards, 6) Engage internationally and track progress; and 7) Focus on four key opportunities to further increase momentum over the next decade:
- Make the most of existing industrial ports to turn them into hubs for lower cost, lower-carbon hydrogen.
- Use existing gas infrastructure to spur new clean hydrogen supplies.
- Support transport fleets, freight and corridors to make fuel-cell vehicles more competitive.
- Establish the first shipping routes to kick-start the international hydrogen trade.
UK and Europe policy progress
The UK government is expected to release a 2050 Heat Roadmap this year (2020), which should provide some much-needed clarity on government direction. In its Hydrogen in a low-carbon economy report, the CCC (Committee on Climate Change) states that hydrogen is a credible option to help decarbonise the UK energy system, but its role depends on early government commitment and improved support to develop the UK’s industrial capability.
The European Union Commission has signalled strong policy support for the sector, with the formation in July 2020 of its new hydrogen strategy and European Clean Hydrogen Alliance. From 2020 to 2024, the Commission will support the installation of at least six gigawatts of renewable hydrogen electrolysers and the production of up to one million tonnes of renewable hydrogen.
Some targeted support for demonstration projects exists today, particularly across heavy industry. One enabling steps required by all countries will be the conversion of iron gas distribution pipelines to plastic, which will assist in preparing the hydrogen delivery infrastructure of the future.
Huge potential... just not yet
Our view on the net zero hydrogen opportunity.
Hydrogen has significant potential to progress the energy transition, although its practical obstacles means that it is unlikely to reach large scale commercial usage in the near-term. Producing carbon-free hydrogen is currently expensive, today’s available hydrogen is produced in a way that is carbon intensive, existing infrastructure requires upgrading or replacement and there are additional safety issues compared to using methane or shifting to electrification.
However, it remains that the decarbonised future lies in low carbon 'Blue Hydrogen' and zero carbon 'Green Hydrogen'. Importantly, Hydrogen has the potential to help ‘hard to reach’ sectors, such as shipping or aviation and high temperature industrial heat.
There is near-term potential for hydrogen clusters to develop around industrial sites where there is demand for hard to decarbonise processes, with organisations taking advantage of shared infrastructure to deliver benefits as wider infrastructure is developed nationally.
Making hydrogen a part of your long-term Energy Pathway planning is therefore key for many businesses to fully decarbonise. But, with uncertainty on timelines and the need for governmental intervention and support, organisations should not view hydrogen as a silver-bullet to deliver their net zero commitments. Implementing a rolling decarbonisation plan that utilises existing technologies, such as solar and heat pumps, but makes space and preparation for developing technologies such as hydrogen is still the best bet to transitioning to a net zero future.
Today's opportunity for business
While the wide-scale deployment of hydrogen could take time, there are opportunities to capitalise on this versatile technology today and help to accelerate the commercialisation of hydrogen.
Hydrogen blending in natural gas network
Hydrogen can be deployed speedily and cost effectively by blending it with natural gas. This could provide an easy win to decarbonise gas-powered end uses and serve as a market entry point for green or blue hydrogen.
A mix of up to 20% hydrogen can be transported in the existing natural gas pipelines, without needing substantial upgrades. This is far less costly than transporting hydrogen by truck or ship.
Technical feasibility has been proven and pilot projects announced in the UK and Germany for 20% hydrogen blending in public natural gas networks. The ‘HyDeploy2’ project – led by Cadent with Northern Gas Networks – will blend hydrogen with natural gas to heat around 750 homes in two 12-month trials.
Hydrogen Combined Heat and Power (CHP)
Blending hydrogen with natural gas opens opportunities to use hydrogen Combined heat and Power (CHP). This technology is ready now and provides an opportunity to decarbonise CHP and use this proven technology to enable energy system flexibility.
Commercial, industrial equipment and generators that currently run on natural gas could be modified to be able to burn hydrogen, which would result in no carbon emissions at the point of use. This could provide a more commercially attractive alternative to the direct electrification of heat for high temperature heat users.
A view of the 5-10 year outlook
For many end-uses that use fossil fuels today, particularly heating and industry, replacing this source with clean hydrogen is seen as the simplest pathway to reduce emissions in the long term. The commercialisation of hydrogen at wide scale, will however take time. Below is our best-view of a possible roadmap of hydrogen developments of the next 10 years.
In the next 5 years
- Continued use in industrial processes of grey (carbon intensive) hydrogen
- Green hydrogen likely to be limited to niche use cases
- Exploratory low carbon hydrogen pilots and research projects, backed by governments
- Strategic planning underway - e.g. formation of the European Commission's new hydrogen strategy and European Clean Hydrogen Alliance
- Conversion of iron gas distribution pipelines to plastic
Between 5 -10 years
- Distributed green hydrogen becomes commercially available but still high cost
- Limited adoption of industrial equipment and residential appliances that can burn hydrogen
- Low carbon hydrogen limited to niche projects focussed on highly energy intensive processes
- From 2025 to 2030, the European Commission aiming for at least 40GW of renewable hydrogen electrolysers
10 + years’ out
- Blue and green hydrogen could play a major role in the low carbon economy after 2030.
- Most UK gas distribution pipelines will be converted to plastic
- Use of clean hydrogen at scale dependent on the level of regulatory and government support
- If governments support the technology and develop hydrogen distribution sector, then:
- Wide use of hydrogen boilers
- Hydrogen transmission pipelines could supply homes and businesses
- Blue hydrogen could become cost competitive to replace natural gas in power generation
Start today towards net zero
Hydrogen is potentially essential to our net zero future and can deliver a cost-effective solution in the longer term. Although commercialisation is some way off and highly dependent on government support, all businesses should flexibly factor hydrogen into their energy pathway beyond 2030, which means doing some planning now. This means considering how your existing systems, such as CHP engines, might be adapted to run on hydrogen.
The upcoming publication of the UK heat strategy should help inform planning. One key regulatory step would be to increase the current limit of hydrogen blending in the UK gas network from 0.1% to 20%. This could unlock opportunities to blend hydrogen into the existing gas network.
Meanwhile, energy intensive industries should work with their energy partner to examine how they can use hydrogen to decarbonise heat in the near term. These industries must find medium-to long-term alternatives to fossil fuel heat, which makes up two-thirds of industrial energy demand and almost one-fifth of global energy consumption.
Today's opportunity for business
Hydrogen is the perfect complement to renewable electrification and energy optimisation and is critical to delivering on net zero. It can resolve the hard to decarbonise challenges and plug the gaps that other technologies can't yet reach; such as fuelling heavy transport; heating energy intensive industrial processes and providing long-term storage.
It offers enormous potential, but it's also the technology that is most challenging to roll-out at scale, due to complex infrastructure requirements and expense. There is much excitement about the decarbonising role of hydrogen, but its future will be highly dependent on regulatory support. There are positive policy commitments, particularly from the EU, which provide encouraging signs that hydrogen may deliver on its rich potential to contribute to net zero goals.
To discuss your net zero strategy and how hydrogen and other innovative new technologies could provide a pathway to decarbonisation, speak to our expert team.