Much potential but far to go for nascent hydrogen economy
The most abundant element on earth, hydrogen, already has industrial uses, but it could do much more to transform the global energy mix as industrialised economies and the global south decarbonise. Judged by the welter of governmental and corporate statements, hydrogen is featuring large in the thoughts of planners and project promoters. These range from Chinese hydrocarbons giant Sinopec’s plans to reallocate some of its Rmb87bn ($13bn) cash pile to projects “all along the hydrogen chain” to Australian junior miner AVZ Minerals’ green lithium mine project at Manono in Democratic Republic of Congo.
Most of the currently available industrial hydrogen is produced from natural gas through a steam methane reforming process. Without any carbon capture element this hydrogen is labelled ‘brown’ or ‘grey’, but when the resultant CO2 is captured and then utilised or stored, it becomes ‘blue hydrogen’. Most excitement surrounds ‘green hydrogen’, which is produced when renewable power is applied to water, breaking H2O into its hydrogen and oxygen components. This could be used to generate electricity, store energy (stabilising grids), fuel transport and drive industrial and other applications.
For all the excitement, hydrogen’s worldwide application is still largely limited to pilot projects and big ambitions. Sinopec built China’s first hydrogen filling station only last year; it plans to roll out 1,000 filling facilities across China over the next decade, to support 1m vehicles. Critical is the element’s potential to be scaled up. Existing transport applications may be most appropriate for isolated mines and urban bus fleets, while the fuel’s wider use requires huge investment in infrastructure.
The figures are daunting, for all the talk of a future ‘hydrogen economy’ replacing carbon across the globe, as expressed in enthusiastic reports like PwC’s Unlocking South Africa’s Hydrogen Potential. BloombergNEF estimates that generating enough green hydrogen to meet one-quarter of global energy needs – the sort of ambition regularly stated – would take more electricity than is generated now from all energy sources, with an $11trn estimated investment in production and storage.
Diverse governments are seeking global leadership to meet this challenge. Australia’s ambition to become a major export hub is helped by big investments in using hydrogen by its key markets Japan and South Korea. African Energy’s sister publication Gulf States Newsletter has highlighted big-spending efforts by the UAE and Saudi Arabia. Countries that lack large-scale hydrocarbon resources like Morocco and Tunisia are talking up their green hydrogen and fuel cell technology potential (AE 430/1). Egypt recently signed an agreement with Siemens to launch a green hydrogen project using its abundant new renewables capacity.
It is perhaps time to dream big as the world is rethought following the coronavirus pandemic. Africa has shown it can lead in making technological transitions and the continent’s gas and renewables resources suggest it is well placed to exploit the opportunity. PwC observed that although “exceptionally energy dense per unit of weight… [energy-efficient hydrogen] is no more difficult to store and transport than liquified natural gas”. When cheap clean energy and water are available, “hydrogen can decarbonise a greater range of sectors than renewable electrical energy alone”.
This represents an opportunity for South Africa, where Sasol has long produced hydrogen-rich syngas from another cheap, abundant resource: coal. The first green hydrogen fuel cell electric mining trucks are being tested at Anglo American’s Mogalakwena mine. Rare metals needed to build the emerging hydrogen economy, such as platinum used in fuel cells, are most abundant in Africa. Recognition of this has boosted the share prices of Implats and other producers.
Hydrogen will play a role in specific situations, and may eventually replace gas and other fossil fuels. But planners may find it requires too much investment to be a major solution any time soon, if a Bank of America research paper was correct when it commented: “Hydrogen can offer additional abatement [from fossil fuels], but it’s not an early 2020s story.”