By David Sanguinetti, VP Technology
As part of our work accelerating the transition to a green economy, Foresight conducts research into market trends, needs, and opportunities that guide cleantech innovation. This discussion paper builds on The Road to 2050: Energy, published by Foresight in August 2020 and offers additional insight to augment the provincial government’s recently released B.C. Hydrogen Strategy.
Discussions related to the use of hydrogen in the emerging clean economy frequently degenerate into a polarized debate between two camps. On one side, hydrogen proponents state there’s a role for both electrification and hydrogen but then champion hydrogen for any possible use including those that don’t make economic sense. On the other side are the electrification champions who acknowledge the need for hydrogen but seem to spend most of their time attacking it. While a certain amount of debate is healthy, the level and tone of debate frequently makes constructive dialogue difficult. This article is a reflection on the opportunities for hydrogen for BC, attempting to balance perspectives from both camps.
Primary Potential Uses of Hydrogen in BC
There are a number of generally agreed long term-applications for hydrogen. Some of the most significant are steel, shipping, aviation, and chemicals (1). Other than steel-making, there are good opportunities for all of these in BC.
Deep sea shipping in particular is a good fit for BC, with the two major ports in Vancouver and Prince Rupert. While short, regular shipping routes like coastal ferries have potential for electrification, the energy density possible from even the most advanced batteries is nowhere near sufficient for long trips (or even relatively short distances like from Vancouver to Prince Rupert). There is still debate in the industry as to what is the best option for fueling deep sea ships, with liquid hydrogen, ammonia, and e-methanol all being tried. However, since hydrogen is required for all three, there is a high likelihood for significant demand for hydrogen. As chemicals, methanol is used as a precursor chemical for a number of products, and ammonia is a critical ingredient for fertilizer, so either of these will have markets beyond shipping.
Similar to shipping, long-haul flights will not work with electrification. The likely option is sustainable airline fuels (SAFs), and many of the routes to making SAFs require hydrogen.
It is worth noting that all of the above uses of hydrogen are industrial in nature, and the quantity of hydrogen required will therefore be large. There is also a potential opportunity in the export of liquid hydrogen, methanol, or ammonia to Japan and Korea. These two countries have a relative lack of renewable electricity generation options, and as a result are looking seriously at the option of importing hydrogen and/or hydrogen-based fuels. Australia has taken an early lead in supplying into these markets but there is room for at least one competitor, and both countries are looking seriously at Canada.
Road Transportation: Fuel Cells vs Batteries
While the use of hydrogen in fuel cell electric vehicle (FCEV) passenger cars and light trucks is the application that people are the most familiar with, most experts agree that this will likely remain a niche application for people who frequently take long road trips and are willing to pay significantly more for their fuel in order to refuel quickly. For the majority, the ability to refuel (charge) cheaply while parked overnight or while working will make battery electric vehicles (BEVs) far more attractive.
For long distance trucking, however, especially where there are significant mountain ranges to traverse as is the case in BC, it will be a long time before BEV trucks make sense. Long distance trucking is also a place where a good transition option exists now in the form of hydrogen-diesel dual fuel technology, which allows diesel trucks to reduce their diesel use by up to 40% through co-combustion of hydrogen. The hydrogen fueling infrastructure that is established to facilitate dual fuel use can then be used for FCEV trucks when they are ready for use. It is worth noting that the infrastructure roll-out required for trucking is substantially less than that required for passenger vehicles. It is also worth noting that independent analysis by some in the trucking industry (2) suggests that by 2050, BEV technology will have advanced to the point that it is the preferred option for long distance trucking as well. Even if this is the case, however, a significant industrial supply chain for hydrogen will mean that it is available for road transportation if the demand exists.
How Will We Produce Hydrogen?
If we accept that there is going to be demand for hydrogen, we must consider how it will be produced. A recent article, How Green is Blue Hydrogen received a lot of press. Many experts have challenged the assumptions that lead to its controversial conclusions, but the key premise of the article is valid: a full life cycle analysis (LCA) of all emissions from production to consumption needs to be done for any type of hydrogen (including emissions from the production and transportation of methane, and power and emissions associated with water purification for electrolysis as two frequently ignored examples).
Reassuringly, BC’s Hydrogen Strategy recognizes the need for an LCA and compares different hydrogen production methods based on the carbon intensity (CI). It also proposes having a maximum CI that decreases over time. Assuming that the rate of decrease is in line with the province’s emission reduction goals, then the question of how to produce the hydrogen becomes one of economics.
It seems at first glance that the decision as to how one should generate hydrogen is fairly straightforward: if there is appropriate carbon sequestration available and a means to economically transport the hydrogen, at current costs, hydrogen produced from natural gas with carbon capture and storage (“blue”) is the cheaper option. If no means of carbon storage is available, or a relatively small quantity of hydrogen is desired, using renewable electricity (“green”) is the best currently available option, although there are some new methane pyrolysis technologies on the horizon that may give hydrogen producers more options as they don’t require CO2 sequestration.
Unfortunately the issue is more complicated than it first appears. One problem with the above simplification is that it is based on today’s costs. There are many agencies, including the International Renewable Energy Agency (IRENA) and Energy Transitions Commission (ETC), that are predicting the cost of green hydrogen will reach parity with blue by 2030. These predictions are very similar to those of the International Energy Agency (IEA) about the cost of solar power through the 2000’s, which are well known for having significantly underestimated the rate at which those costs fell. Similar to the situation with solar, there is a dramatic amount of green hydrogen production being built in the next 2-4 years, including in China, Oman, and elsewhere (4,5). With this level of roll-out, it is highly likely that the cost of electrolyzers will drop at least as fast but more likely faster than predicted. This is significant because the cost of a large blue hydrogen plant will be amortized for at least 10 years. Considering that no blue hydrogen plants are currently under construction in BC, and they will take multiple years to build, any that are built could become stranded assets before they are fully paid for, assuming that there is enough low cost green hydrogen available.
All this suggests that for the medium and long term, green hydrogen is a better bet for BC. On reading this, many will question where BC will get the electricity required for industrial quantities of green hydrogen on top of all of the electricity required for BEVs, heat pumps, and the other added loads of the future clean economy. This is an important question since BC Hydro has predicted that in approximately 10 years’ time BC will no longer be able to provide for all of the anticipated demand for electricity. One possibility is by building lots of solar and wind in Alberta and strengthening the grid interconnections, as discussed recently by Pembina. Other possibilities include buying cheap solar from California on sunny days when they have excess or having more distributed power production in Greater Vancouver. Whichever of these is chosen (and a combination seems likely), it is critical that planning and implementation proceeds quickly enough that a lack of clean electricity doesn’t slow economic growth in the province.
Another possibility is that we accept that there won’t be enough electricity to provide for all of the hydrogen we need, so we stick with blue for a significant fraction of our needs. It seems plausible that this will happen to a certain extent, but it presents a problem. If green hydrogen is indeed significantly cheaper than blue, relying on blue will put BC at a competitive disadvantage vs. jurisdictions that have opted for green. BC currently has a great competitive advantage in its low-carbon grid and relatively low-cost electricity. While a solution to extend that advantage into the future by cheaply adding to our renewable energy supply is a significant challenge and far beyond the scope of this article, it is certainly a challenge that is well worth the province taking on.
Recommendation: Commit to Build Actions
BC’s Hydrogen Strategy (similar to Canada’s) suggests a broad approach to creating a hydrogen economy, supporting all of the different areas where hydrogen could play a role, without differentiating between those areas where hydrogen is certain to be important vs. those areas where it will only play a niche role. At the same time, it proposes a step-wise roll-out such that areas such as marine, which are certain to be a key part of the future clean economy, aren’t seriously looked at until 2025 at the earliest.
It’s widely recognized that incremental change will not be enough to address climate change. If BC truly wants to lead in the future hydrogen economy, it needs to commit to some bold actions, particularly in those areas where hydrogen has the highest likelihood of being used well past the current transition time.
The potential for hydrogen use in shipping is significant. Moller-Maersk has already ordered ships built with methanol-fueled engines. BC should engage with them and other like-minded shipping companies and ensure that Vancouver and/or Prince Rupert become ports of call for these new ships, by ensuring that a renewable source of methanol is available.
Similarly, BC should aggressively court the production of sustainable airline fuels and provide incentives similar to those offered to LNG for liquid hydrogen export facilities. It is through decisive leadership such as this that BC will place its economy on a strong footing for the future.
- Making the Hydrogen Economy Possible: Accelerating Clean Hydrogen in an Electrified Economy, Energy Transitions Commission (ETC), April 2021.
- NACFE report: Viable Class 7/8 Alternative Vehicles https://nacfe.org/report-library/guidance-reports/