Some thoughts ahead of my upcoming keynote interview at the FT Hydrogen Summit...
The FT's 4th Hydrogen Summit takes place at the Marriott Hotel Grosvenor Square, London, on 12 June 2024. I will be the keynote interviewee, and the organisers asked for some preliminary thoughts.
The organisers of the forthcoming FT Hydrogen Summit have assembled a brochure containing Q&As with the various speakers. It is worth reading in full, but I thought I might share my contribution more widely. As you can see, I will be trying to make sure the day kicks off with a dose of physical and economic reality, and we’ll have to see where it goes from there!
What do you see as the biggest challenges and opportunities facing the low-emission hydrogen industry today?
The biggest challenge facing low-emission hydrogen is that it is expensive to produce, expensive to transport, expensive to store, expensive to distribute and expensive to use. The world has been lulled by wishful thinking, aided by hydrogen’s boosters, into believing that hydrogen will display the same dramatic cost reductions as solar photovoltaics and batteries. But hydrogen is different: its production cost is mainly driven by the cost of electricity and the cost of compressors, tanks, civil works, power supplies and so on – none of which are about to drop by a factor of ten. Hydrogen’s transport and distribution costs are driven by its physics – it is astonishingly bulky, hard to liquefy, hard to contain, damaging to metals, explosive and so on. You can transport it as a derivative like ammonia, methane or methanol, but then it is inefficient to make and inefficient to turn back into electricity. When it comes to usage, in almost every case there is a cheaper, safer and more convenient solution – which is why 50 years of public spending on clean hydrogen has achieved almost exactly zero market uptake.
How do you foresee the low-emission hydrogen market evolving in the next 5-10 years?
What we are going to see over the next 5-10 years is the reassertion of the laws of economic gravity. The bulk of potential buyers of hydrogen and its derivatives will not pay a green premium, and carbon prices are limited in geographic scope and in level. This means that the scale of the clean hydrogen industry will be directly proportional to available subsidies. Say each kg of hydrogen needs just $2 of subsidy – an optimistic figure even for 2035 – and say production facilities need a ten-year offtake in order to be built, that means each million tonnes per year by 2035 would require a committed subsidy today of $20 billion. Cleaning up just the existing 100 million tonnes per year of hydrogen by 2035 would require $2 trillion – ten times current global hydrogen subsidies – and that excludes the cost of transporting hydrogen from where it might be cheaply made. Pushing clean hydrogen into sectors where it is not currently used, like steel, road transport or shipping fuel, will drive up the number exponentially. So the story of the next 5-10 years is easy to predict: the minority of projects that secure subsidies will go ahead, while the rest simply fall away.
Looking 20 years into the future, how do you envision the role of clean hydrogen in the global energy mix?
In 20 years, I very much hope we will have cleaned up the sectors currently using 100 million tonnes of fossil hydrogen – namely fertiliser production and petrochemicals. In addition, I expect hydrogen to have found a role in steel, shipping fuel and sustainable airline fuel (outside a few executive jets there will be no hydrogen in aviation because of the near-impossibility of getting liquid hydrogen to airports). There will be no hydrogen in space heating because of its cost – at least twice as much as fossil gas – and safety challenges. We will have started decommissioning gas distribution networks. There may be a niche use for hydrogen in long-distance trucking, but almost all freight traffic will be on track to go electric, along with all cars and light trucks, buses, trains, scooters and ferries. There may be some hydrogen used in high-temperature industrial processes, but even there, I would expect electrification to have begun displacing it. On the plus side, I would like to think that within 20 years we will have started building strategic stores of some form of zero-carbon fuel – which could be hydrogen or one of its derivatives.
If you want to attend the 4th FT Hydrogen Summit, sign up here: https://hydrogen.live.ft.com/home