Hydrogen On Track To Become A $1 Trillion Per Year Industry
New reports suggest that the hydrogen market could be worth $1 trillion per year by 2050 as it becomes viewed as a vital energy source in the transition from fossil fuels to greener alternatives. With greater numbers of energy companies and governments investing in hydrogen projects, it could form a major part of the energy mix in the coming years. Hydrogen is expected to be worth a fortune in the future if investment trends in the energy source continue. Several countries around the world are producing hydrogen, but the type of production varies significantly. Many oil and gas firms produce grey or blue hydrogen, transforming waste carbon from fossil fuel into hydrogen, which still relies on gas operations. But now, following two years of pandemic and the COP26 climate summit, several countries are looking to invest in green hydrogen, creating the energy source using water electrolysis.
Michele DellaVigna, commodity equity business unit leader for the EMEA region at Goldman Sachs, explained, “If we want to go to net-zero we can't do it just through renewable power." And “we need something that takes today's role of natural gas, especially to manage seasonality and intermittency, and that is hydrogen.” He also highlighted the plethora of potential uses for hydrogen, “We can use it for heavy transport, we can use it for heating, and we can use it for heavy industry.”
To reach this $1 trillion a year estimate, hydrogen would have to occupy around 15 percent of the global energy market. With oil companies seeing hydrogen as a way to reduce their carbon footprint by using carbon capture and storage (CCS) technology to transform carbon waste into usable energy, hydrogen production is likely to increase substantially over the next decade. This will be further supported by government and energy company investment in green hydrogen projects, which are cropping up across Europe and Asia.
The International Energy Agency (IEA) predicted the growth of the hydrogen market long ago in its 2019 report on the Future of Hydrogen. Hydrogen demand has increased threefold since 1975, with 6 percent of the world’s natural gas and 2 percent of coal going towards hydrogen production in 2019. Although it criticised the high level of carbon emissions created by the industry.
And now, it's not just European and Middle Eastern countries developing their hydrogen economies, Namibia has big plans for a new green hydrogen plant. At an estimated cost of $18 million, the hydrogen plant will be situated in the Erongo region, with construction commencing this year to be operational in 2023.
The project will be carried out as a joint venture between the Ohlthaver & List (O&L) Group and CMB.TECH. The executive chairperson for O&L, Sven Thieme, explained of the plan “While the move away from fossil fuels may take several paths, green hydrogen is one that shows tremendous potential in getting us there.” He suggested that Namibia is the perfect location for a green hydrogen project thanks to its existing solar, wind or hydroelectric power operations.
India is another country looking to increase its hydrogen production by introducing new policies to welcome hydrogen into the energy mix. The government’s new Green Hydrogen Policy responds to India’s National Hydrogen Mission, which aims to establish the country as a green hydrogen hub and reduce the quantity of carbon emissions being released. India aims to produce five million metric tonnes of green hydrogen per year by 2030. The new policy allows green hydrogen producers to access renewable energy or set up their own projects more easily, waiving several related charges and facilitating related licensing processes.
And now Japan is trialling its first hydrogen train, putting the energy source into action. In February, the train company JR East debuted its first hydrogen-powered hybrid train, a zero-emissions means of transportation developed by Hitachi and Toyota at a cost of $34.8 million. The first phase of testing will begin in March, with plans to launch a commercial service by 2030. The train, Hybari, is powered by hydrogen fuel cells and batteries, with tanks supplying hydrogen to the fuel cells and electricity generated through a chemical reaction with oxygen in the air. Energy is stored by the batteries each time the train brakes.
The combination of energy sources allows the train to reach a greater range than if it ran on batteries alone. It is expected to reach a top speed of 100kph and a range of 140km on a single filling of high-pressure hydrogen. However, the cost of a hydrogen-powered train will likely remain higher than traditional diesel-fuelled trains.
So, will hydrogen be the energy of the future, forming a large proportion of the green energy mix of the next decade? Many countries and energy companies seem to be betting big on hydrogen, both the kind derived from fossil fuels and the green type. As hydrogen projects appear across many countries, it’s likely that the energy source is here to stay in one form or another.
By Felicity Bradstock for Oilprice.com
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