FST BLOG

Hydrogen and its role in the low carbon economy

• 3 March 2021
• Environment
• Nilay Shah

As we embark on the transition to net zero, there has been increasing interest in low-carbon hydrogen as an energy vector, and in energy vectors more generally. We expect future low carbon industrial and energy systems to be more heterogenous than today’s systems, which rely primarily on large-scale, centralised energy conversion technologies. These systems will need at least four low-carbon energy storage and transmission vectors: electricity, hydrogen, synthetic fuels and biofuels. The relative proportions of these will depend on national and local circumstances and are likely to vary between regions of the same country.

Hydrogen is best understood using a systems approach. When considering individual applications, it is contrasted against e.g. electricity for transport and heat, carbon capture for industrialisation and an array of technologies for energy storage and there is often a debate as to which is “best”. Hydrogen comes into its own because it can support all of these applications as well have new roles (e.g. reducing feedstock for industrial processes such as iron and steelmaking). Hence the concept of a hydrogen “hub” where a local economy is based partly around producing and using hydrogen to complement other energy vectors has received recent attention.

Hydrogen is an energy vector rather than a source of energy; it has to be produced from some starting primary resources such as natural gas, coal, biomass or electricity. Once produced, it can be stored for short or long periods (and hence support seasonal energy storage) and transported by pipeline, road, ship or rail.

Low carbon hydrogen has two likely production pathways. Blue hydrogen is produced from natural gas reforming. This process produces CO2 emissions which can be captured and abated carbon capture and storage. It relies on the presence of carbon dioxide transport and storage infrastructure. If this is present, low carbon hydrogen can be produced at large scale and at relatively low cost.

Green hydrogen is produced through electrolysis of water using low carbon energy, such as from renewables or nuclear power. This requires demineralised water and produces oxygen as a by-product. Currently, green hydrogen is produced at lower scale at higher costs than the projected cost of blue hydrogen, but does not require CO2 transport and storage and is flexible in terms of location. The costs of green hydrogen are expected to fall as the capital costs of electrolysers fall with cumulative production and the cost of input electricity reduces as well.

A key challenge with hydrogen is that the benefits of adopting it as an energy vector become evident when operating at scale. Hence there is a need to identify an efficient deployment strategy which enables rapid scaling in an economically efficient fashion. One such strategy is to focus large-scale production on industrial decarbonisation, noting that the latter is a priority for net zero and that hydrogen has a strong role to play as fuel and feedstock. Industrial processes tend to sit in clusters (e.g. Teesside, Humberside, Grangemouth, Merseyside and South Wales) and multiple users of hydrogen are adjacent. This may lend itself to large-scale production of blue hydrogen for these multiple users. This low carbon hydrogen can then also be used for secondary applications such as supporting transport hubs (e.g. local buses and local authority vehicles) and feeding into the local gas distribution network. In parallel with this, green hydrogen produced at small scale and in distributed fashion can be used for fleet transport throughout the UK; this will help establish a complete value chain (electrolysers, hydrogen compression and storage and fleet OEMs) in the UK.

It will become clear from the discussion above that a hydrogen strategy is not only an energy strategy but also an industrial one. The UK has strengths in electrochemical and hydrogen process technology, with leading small and large companies; there is an opportunity to develop technology here that can be exported globally.

A hydrogen strategy must therefore consider the whole hydrogen system. This whole-system strategy should address how the individual components will work together, and how the system will evolve and operate alongside other parts of the net zero system. This approach will also need to account for social and political issues including the acceptability of hydrogen to end-users. Learning from past policies and transitions (e.g. from town gas to natural gas will be critical.)

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