Will Green Hydrogen Deliver for the Industrial Sector?

by | Mar 1, 2022

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Producing cheap green hydrogen has long been elusive. But as the relevant technologies become more mature and gain scale, it could accrue to the benefit of the industrial sector. 

Uniper’s partnership with Salzgitter AG is a case in point: The German company Uniper focuses on making hydrogen produced from green sources like wind and solar. And Salzgitter is one of Europe’s largest steel manufacturers — one that wants to produce steel using green hydrogen. In this case, Uniper is developing two green hydrogen projects: one will convert green ammonia back to hydrogen, and the other will use an electrolysis plant with a 1,000 megawatts capacity. 

Green hydrogen is a step closer because wind and solar power are getting cheaper. But certain sectors of the economy are difficult to decarbonize: aviation, maritime, long-haul trucking, and large parts of heavy industry that are responsible for 35% of global CO2 emissions, says DNV, an analytics and consulting firm. Hydrogen could be a life-saver for these companies.

We are aligning Salzgitter AG to low CO2 production processes and the circular economy,” says Gunnar Groebler, with Salzgitter AG. “The secure and economically viable sourcing of green hydrogen is a fundamental prerequisite on our journey toward SALCOS – Salzgitter Low CO2-Steelmaking.” 

Almost all steel is produced using iron oxide and met” coal. That coal is put in ovens at 1100 degrees Celsius to remove water and other chemicals. In the end, it produces a pure-carbon source called coke that is ultimately used to make steel. Can renewable energy work instead?

Right now, 99% of the world’s hydrogen production has been from fossil fuels. That’s called grey hydrogen. Hydrogen produced from natural gas in which the CO2 is captured and stored is considered “blue.” The objective is to get to green hydrogen, whereby solar panels or wind could produce electricity through an electrolyzer to create pure hydrogen gas.

Until that point arrives, manufacturers will use battery storage to ensure against outages or when the weather is not agreeable. 

Greening Operations

The advantage of hydrogen is that it can be stored in tanks and used later to keep operations going for much longer times. Solar panels and wind turbines may be producing excess electricity that must be stored in a battery and used in an electrolyzer to create pure hydrogen gas. That gas is stored in a tank before it is piped to a fuel cell, which uses hydrogen to produce electricity. 

Grey hydrogen is commonly used today in petroleum refining and fertilizer production. Specifically, it cracks heavier oils to form lighter petroleum products and produce ammonia for fertilizers. But green hydrogen has a lot of potential in transportation and electricity markets. Consider that Amazon and Walmart use hydrogen-powered forklifts. Toyota and Hyundai are betting big on hydrogen-powered cars. Meantime, FedEx has a delivery truck running on hydrogen in New York State that can go 240 kilometers on a full tank. 

A recent DNV study says that hydrogen will start to meet 5% of the global energy demand in 2050 — a figure that needs to hit 13% of the Paris climate agreement is to be realized. While other examinations have brighter green hydrogen outlooks, all analysts conclude that policymakers must be more proactive. 

“Government incentives, similar to those given to renewables, are needed to stimulate technology development and accelerate the uptake of hydrogen and e-fuels,” says DNV. “Green hydrogen from electrolysis will be the main long-term solution for decarbonizing hard-to-abate sectors.”

Thyssenkrupp in Germany and Japans Nippon Steel are already making carbon-free steel. So is the Swedish steel company SSAB. Its goal is to produce electricity from renewable energy and hydrogen and to have a fossil-free steel-making process by 2035. 

Moreover, Australian-based Fortescue Metals Group now mines iron ore, exporting much of it to China. It then makes steel and ships it back to Australia. Fortescue founded the Green Hydrogen Catapult to generate 45,000 megawatts of green hydrogen by 2027 using an electrolyzer. That is enough hydrogen to power 45 average-sized steel mills. 

However, without government support, it will be an expensive undertaking: the cost of green hydrogen as an energy source would tack on 20%-30% more to the cost of steel production in the early years. But given the falling cost of wind and solar-powered electricity, it is possible to decarbonize hard-to-abate sectors — especially if there is a price put on carbon. 

In the years ahead, it will be possible to produce it at low cost using wind and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills,” writes Kobad Bhavnagri, with Bloomberg New Energy Finance in its Hydrogen Economy Outlook. “If the clean hydrogen industry can scale up,” he concludes, “many of the hard-to-abate sectors could be decarbonized using hydrogen, at surprisingly low costs.”

If green hydrogen can hit its potential, manufacturers will be one of the primary beneficiaries. The industrial sector could reduce its production costs and emissions — a win-win in an intensively competitive global economy.

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