According to the Hydrogen Council, which represents the emerging business, 400 million metric tonnes of hydrogen will be transported across great distances each year by 2050. Hydrogen is not always a green fuel.
Australia, Brazil, and Chile, three nations with abundant affordable renewable energy resources, aim to become H2 hubs that are just as important to the world economy as the Persian Gulf is in the current hydrocarbon era. Even Saudi Arabia is constructing a green hydrogen plant for $8.5 billion.
Source: World Bank Blogs
Will the global hydrogen market develop to play the same role that the oil sector does at the moment? It is unlikely. In order to understand why, it is important to explore the similarities and differences between future flows of commodities and how green hydrogen will be produced, delivered, and utilized.
Since the beginning of time, transportation costs have been a barrier to business. Only more expensive things are worthwhile to transport over large distances. Silk and glassware were traded between ancient China and Rome, but not wheat or rice. In the modern era, not much has changed.
Undoubtedly, the cost of renewable energy varies from nation to nation, but not significantly enough to solve the transportation problem. Being extremely reactive, much less dense than liquefied natural gas, and extremely cold, hydrogen is difficult to carry in its raw state. It only melts at minus 253 degrees Celsius, which is almost indistinguishable from LNG in terms of temperature as ice is from steam. The more cold something gets, the more expensive it is to chill it.
If you burn ammonia directly as fuel instead of trying to convert it back to hydrogen, you can reduce these costs substantially. However, the difficulties involved have prevented engineers from achieving this goal since World War II, and chemists are still learning how to handle the related processes. Ammonia burning is a significant producer of NOx particles, one of a number of important pollutants that cause roughly 6.7 million fatalities annually. It even produces nitrous oxide, a substance that is hardly ever created by modern industrial activity but which significantly warms the environment (273 times more than carbon dioxide).
Source: Bloomberg Quicktake
Green hydrogen might yet completely alter the energy landscape. By the end of this decade, it will be well within range of the natural gas cost of $7 to $10 per million British thermal units in various parts of the world, according to Bloomberg NEF.
This should make it possible for it to replace fossil fuels in a variety of applications that call for high-temperature heat, massive energy storage, or molecules for chemical synthesis. It won’t, however, lead to the creation of global fleets of tankers. It will be used close to where it was created, just like sulfur and ammonia, as well as the present hydrogen market, which consumes close to 100 million tonnes annually. It’s possible that many nations aim to be like Saudi Arabia in the green hydrogen era. None will achieve that dream.
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