Green Hydrogen for the Industry
- Oct 21, 2020 9:38 pm GMT
There is no doubt that climate change is extremely important and that it must be dealt urgently. Also, that it needs to be done in a way that value chains can be decarbonized without endangering their economies. This article will discuss how green hydrogen can be used as a clean energy carrier and carbon free feedstock for the industry.
To begin with, the industrial sector is responsible for 20% of the global Carbon Dioxide emissions. Having said this, we can relate the energy transition to decarbonization of both the energy and industry sector. Renewable energy technology is great for mitigating emissions in the electricity generation, but sadly power is not everything. There are many sectors to decarbonize, where emission free electricity cannot by applied. However, if it were considered the possibility of electrolyzing water, from renewable energy sources, it would be a carrier of clean, carbon free, molecules for the industries.
Electrolysis could be seen as a link for connecting power generation with hard to decarbonize sectors. Renewables would be the primary source and green hydrogen could be used for sector coupling, peak shaving, grid optimization and industrial feedstock. One quick way of implementing such value chain would be from decentralized business models, reducing costs of infrastructure and generating an immediate demand for sustainable gases, carbon free fuels, clean chemicals, and feedstock for several industries.
Considering the drivers for investing in such type of business models would be assuming a commitment to ensure a better environment for future generations, increasing the installed capacity of renewables generating a decline on the levelized costs of energy and also, depending on the country, it would mean tax reductions for such projects and investments.
Today we are currently facing the phase in the energy transition where stakeholders and investors are the main actors. These next 5 to 10 years will be the decade of proof of concept, pilots and small-scale projects. Trying to address who will be the off takers, what will be the focus applications and figure how will these new supply chains look like. 2030 might be the year where, due to all of these projects being operational, companies can make larger investments to achieve a greater scale. Reaching those levels will produce an immediate drop in the costs of equipment’s, distribution, and transmission.
To accelerate the pace of the implementation of a hydrogen-based economy, focus should be set on existing off takers and decarbonizing those sectors first, such as replacing the use of grey hydrogen for blue or green. This could be easier to implement in the ammonia and methanol value chain. Ammonia offers great opportunities and one of the most interesting ones would be detaching the price of ammonia from the commodity of oil, this would ensure a slightly higher price in the beginning, but stable in time, without depending on the volatility of the oil and gas industry. Also using a clean on demand feedstock for other industries such as the hydrogen peroxide, chemical and pharmaceutical production would enable a decentralized production of hydrogen with an existing demand.
Finally, we can conclude that green hydrogen is important to the energy transition, but still there are many variables to consider. Beginning with small, decentralized projects with medium term contracts with the industrial sector. In conclusion, green hydrogen partnered up with renewables and industries is a business approach that will accelerate the transition to a more sustainable future.
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