Energy & Infrastructure Insight - Issue 3

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12 Hydrogen can be stored in pressurized or liquefied form. Unlike batteries—the current preferred approach to storing renewable power—hydrogen in storage does not deteriorate over time. From storage, hydrogen can be converted back into energy for electricity generation. It can also be used as a feedstock for zero-carbon or reduced-carbon fuels—especially in hard-to-electrify industries such as aviation and freight logistics/shipping— chemicals and fertilizers. There are many potential markets for green hydrogen, and diverse supply chain options for its delivery. Hydrogen gas can be liquefied and transported in vehicles and vessels, or combined with nitrogen to create green ammonia, a liquid, which opens up even simpler methods of transporting the zero-carbon energy such as bulk shipping. The ships themselves could be powered by ammonia or by hydrogen fuel cells. Green hydrogen can be easily deployed in existing industrial processes such as refining, petrochemical and metal production. However, when hydrogen production is scaled up, the opportunities become much wider ranging. According to the International Energy Agency (IEA), hydrogen and ammonia will start to be used together with, or instead of, natural gas and coal in power generation, while hydrogen's storage capabilities also help mitigate grid-balancing challenges associated with increasing the share in the power mix of weather-dependent sources such as wind and solar power. The aviation and shipping sectors, which have limited low- carbon fuel options available, represent an opportunity for hydrogen-based fuels to take significant market share. Norway, for example, has just announced Europe's first commercial green hydrogen aviation project, which will create enough zero-carbon jet fuel to supply its five most popular domestic aviation routes. The export opportunities are particularly exciting. As the "shipping the sunshine" motto encapsulates, green hydrogen ammonia is the first truly scalable medium, or energy carrier, for the export of one country's renewable power resources to another country. For regions with abundant solar and wind resources (and land on which to locate them), such as the Middle East, there is an important new role to play in decarbonizing the global economy. The NEOM Company/Air Products/ACWA power project exemplifies the first project to capture this opportunity. Green hydrogen imports will be attractive to countries that cannot produce renewable energy resources quickly enough, or at all, to meet their decarbonization objectives. In many places, demand for green hydrogen will outstrip the supply of renewable energy needed to produce it, at least for some decades. For example, according to Hydrogen Europe, an industry association, EU hydrogen demand is forecast to be 16.9 million tons per year by 2030, nearly 75 percent of which will need to be imported from outside the bloc. In Japan and South Korea, government policy dictates that all hydrogen imports must be carbon-free by 2030, and Japan's Ministry of Energy, Trade & Industry (METI) expects Japan's annual consumption of hydrogen to grow from 4,000 tons in 2020 to 300,000 tonnes by 2030 and 5 million–10 million tons by 2050. Japan is already looking at switching from coal and imported LNG to hydrogen for its gas-fired power plants. IHS Markit has estimated, consistent with findings by the China hydrogen alliance, that hydrogen could constitute 10 percent of China's energy mix by 2050, contributing to a 65 percent decrease in China's carbon emissions from 2015 levels. On the supply side, though, other than the NEOM Company/ACWA Power/Air Products project, there are few projects of sufficient scale currently in operation or under intensive development to meet this rising global demand. The IEA estimates that less than 0.1 percent of global dedicated hydrogen production today comes from water electrolysis. Current Electrolyser facilities are smaller than 100MW, 5 percent of the scale of NEOM's. Hydrogen – Is It the Answer to Clean Energy? (cont.)

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