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4. Consumer Landscape

Hydrogen has a broad range of applications in industry, transport, buildings, and the energy sector. This chapter introduces the various sources, users, and uses of hydrogen in more detail, examining its use as fuel and in chemical and industrial processes. Its impact on the energy industry is also covered in more detail. Attention is given to its potential for decarbonizing the various areas of potential hydrogen use, and to the relevant economics required for making that use cost-effective.
4.1

Chemical and processing industries 

Source: Getty Images

Chemical and processing industries 

Hydrogen is currently used in the chemical and processing industries mainly as feedstock. When combined with carbon dioxide, it can be used to produce substances such as ammonia, methanol, olefins, and hydrocarbon solvents. In steelmaking, hydrogen can replace coal-based blast furnaces currently in use. Today, nearly all synthetic hydrogen is derived from fossil fuels, mainly based on steam reforming, which emits CO2. Green H2 could be cost-competitive while also (through combination with CO2) creating a carbon sink instead of emissions. 

Industrial sectors where hydrogen has been used for decades (refineries, ammonia production, and so on) are expected to be key early markets for power-to-hydrogen, as they would be able to generate immediate scale effects and hence rapid cost reductions. In the long term, hydrogen produced from renewable energy via electrolysis has enormous potential to contribute to the deep decarbonization of industry.  

4.1.1

Ammonia

The most important hydrogen-nitrogen compound is ammonia (NH3). Ammonia is manufactured on a large scale using the Haber-Bosch process, which combines hydrogen and nitrogen directly by synthesis. Nitrogen is generally extracted by the low-temperature separation of air, while the hydrogen originates from natural gas steam reforming. It is this hydrogen supply that will need to be greened in the coming years. 

Almost 90 percent of ammonia goes into fertilizer production, making agriculture a significant contributor to CO2 emissions and climate change in need of deep decarbonization. Ammonia is often used in refrigeration plants as an environmentally friendly and inexpensive refrigerant due to its high evaporation energy. 

Global hydrogen demand and production sources
Source: IRENA based on FCH JU (2016)
4.1.2

Industrial

 

Hydrogen is used in various industrial applications; these include metalworking (primarily in metal alloying), flat glass production (where hydrogen is used as a protective gas), the electronics industry (where it is used as a protective and carrier gas), in deposition processes, for cleaning, in etching, in reduction processes, and others. It also has applications in electricity generation – for example, for cooling generators or preventing corrosion in power plant pipelines. 

The direct reduction of iron ore, which consists of the separation of oxygen from iron ore using hydrogen and synthesis gas, should develop into a key industrial process in the steel manufacturing sector. In traditional blast furnaces, large amounts of carbon are released. While direct reduction with natural gas is well established in steel production, production methods based on hydrogen exist only at pilot scale. 

 

Industrial Heat

Industrial heat applications are categorized by temperature. High-grade applications run at above 500 °C, medium-grade applications at 100 to 500 °C, and low-grade applications at less than 100 °C. Hydrogen has the most promise in high-grade heat, where replacing fossil fuel combustion with low-carbon hydrogen as a source of heat could be the most cost-effective option, offering several key advantages. For the low- and medium-heat segments, providing electrification for electric heaters, boilers, and furnaces reduces emissions.  

High-grade heat is used primarily by the iron, steel, non-ferrous metals, bricks, ceramics, and chemicals industries. In the US, it represents a quarter of all industrial heat used. Chemical and petrochemical industries produce by-product hydrogen that could find use in retrofitted equipment such as ethylene crackers, and in aluminum recycling, where companies can retrofit gas-fired furnaces to run on hydrogen, with a gradual transition to green hydrogen. Cement production can combine hydrogen with waste-derived fuels. The paper sector uses hydrogen to drive the high-purity flame used to flash-dry paper.

 

4.2

Fueling Mobility

Source: Getty Images

Fueling Mobility

Hydrogen could overtake electric batteries as the main pathway for decarbonizing the mobility sector (which accounts for about one-third of CO2 emissions in the EU alone) and bring about a breakthrough for fuel cells. Based on a similar number of vehicles refueled per unit of time – an important parameter in the scoping of filling stations – the far more rapid refueling times for hydrogen vehicles and hence the much faster turnaround time per vehicle means that hydrogen refueling stations are about ten times more compact than fast battery recharging stations. Green hydrogen could be used as fuel for individual mobility, haulage, public transport, and aircraft.

Fuel cell electric vehicles are a low-carbon mobility path when powered by green hydrogen. They compare well with the performance of conventional-fuel vehicles in terms of refueling time and range. Green hydrogen-powered fuel cell vehicles expand the market for decarbonized mobility to many heavy-use applications such as trucks, trains, buses, taxis, ferry boats, cruise ships, aviation, and forklifts, where using batteries does not always make for a good fit.

4.2.1

Trucks and Buses

Hydrogen and fuel cells will play an important role in trucks and buses and have clear advantages over battery electric vehicles for users in terms of refueling time and driving distance. Fuel cell buses have been demonstrated and validated in real-life environments. Production costs have dropped significantly over recent years and will continue to do so as volumes increase. 

Fuel cell trucks are under development, and large-scale deployment is expected to start in the coming years, particularly in the US through companies like Toyota and Nikola. In this segment, hydrogen will experience competition from vehicles running on natural gas and biogas, which are also being developed and deployed around the world. 

4.2.2

Large Passenger Vehicles

Should several key factors materialize, including refueling supply chains and infrastructure, there is significant potential for green hydrogen in this segment. Applications include vehicles with high utilization rates that require short refueling times need (taxis, last-mile delivery). 

In commercial terms, such vehicles are still in their infancy, with only 8,000 on the road in 2017. Several global carmakers, such as Toyota, Hyundai, Honda and the Chinese car manufacturer SAIC, have begun commercialization in certain parts of the world, including Europe, Japan, the US (California), and China. 

The movement away from individual vehicle transport and towards mass transport, especially in urban areas where pollution is a danger, will drive this market forward. Combined with massive political pressure should see a rapid uptake of such vehicles in those niches most suited to their strengths. 

4.2.3

Aviation

Nearly 87,000 flights use 1.56 million barrels of jet fuel every day in the US alone. The industry is looking for alternative fuels and technologies to reduce environmental impact and decarbonize the industry. In the US, the Air Transportation Action Group has set targets for aviation through to 2050, capping net carbon emissions from aviation to carbon-neutral growth by 2020. By 2025, net aviation carbon emissions should be reduced by half compared to 2005 levels. 

Two competing technologies at different maturity level form the focus of aviation decarbonization today: combustion and fuel cells. A recent EU report indicated that hydrogen combustion could reduce climate impact in flight by 50 to 75 percent, and fuel-cell propulsion by 75 to 90 percent. In order to effectively scale hydrogen-powered aircraft, several technological developments are needed:  

  • Enhance overall efficiency with lighter tanks (12 kWh/kg) 
  • Improve fuel cell systems (2 kW/kg including cooling) 
  • Improve liquid hydrogen distribution within aircraft 
  • Develop turbines able to burn hydrogen without emitting much nitrogen oxide 
  • Create efficient refuelling technologies with flow rates similar to kerosene  

Experts project that these advancements are possible within five to ten years. From that point onwards, an increasingly rapid uptake can be expected. 

4.2.4

Rail Transport

Hydrogen can contribute to decarbonizing rail transport in the medium-to-long term. Hydrail is the generic term describing all forms of rail vehicles, large or small, which use on-board hydrogen fuel as a source of energy to power the traction motors, or the auxiliaries, or both. Hydrail vehicles use the chemical energy of hydrogen for propulsion, either by burning hydrogen in a hydrogen internal combustion engine or by reacting hydrogen with oxygen in a fuel cell to run electric motors. 

The first fleet of hydrogen trains by Alstom is being deployed for commercial service in northern Germany to replace diesel trains on non-electrified lines, avoiding the capital cost of electrification. Other countries are planning to do the same, including the UK, the Netherlands, and Austria.  

So-called hybrid rail traction trains use a mixture of hydrogen and other power sources, either conventional fuel or electricity, and offer several exciting niche applications. One example would be routes with partial electrification. Advantages over conventional technologies include: (1) regenerative braking (savings of 10-25 percent), (2) the prime traction technology operates at efficient fuel-use levels, (3) it can be used as an energy booster for achieving higher acceleration, (4) it can be run as a fully zero-emission vehicle (ZEV). 

4.2.5

Maritime Sector

Fuel cell ships are at the demonstration stage in various shipping segments, including ferries and shuttles. A robust regulatory push is creating an opportunity for more rapid development. Hydrogen fuel cells can also be used to replace on-board and onshore power supply, currently often based on diesel or fuel oil to eliminate pollution in harbors, while avoiding expensive installation costs for electrical connections.  

For long-distance ship runs, liquefied hydrogen is being considered as an option to facilitate meeting the International Maritime Organization’s greenhouse gas (GHG) emission reduction target of 50 percent by 2050. Fuel cells also have several potential applications relating to on-board power supply – specifically, when including co-generation of heat and power that could be rapidly deployed.  

Here, dominant technologies in the near to middle term will depend on feedstock availability and the production cost of each low-carbon bunker fuel. A possible alternative candidate is ammonia from green or low-carbon hydrogen. Ammonia is produced at scale and is safe to transport with appropriate handling.  

In an ambitious hydrogen scenario, the marine sector could transition fairly rapidly to either liquid hydrogen or ammonia (or both) as a decarbonized fuel source. Should 20 percent of bunker fuel be displaced by ammonia, it would require an estimated 1 million metric tonnes of hydrogen – ideally green. 

The wide-scale use of green hydrogen fuel cell-based transport of all types requires a massive rollout of dedicated refueling infrastructure. The types and numbers of vehicles directly influence the required typology of that infrastructure, structured according to capacity and hydrogen output pressure levels of 350 or 700 bar. The availability of that infrastructure, conversely, dictates the uptake of green transport. This dilemma is the primary challenge facing the hydrogen industry in the mobility sector.  

4.3

The Energy Industry

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The Energy Industry

Hydrogen is an ideal mechanism for inter-sector coupling through conversion, storage, and re-conversion of excess (green) power for sectors other than electricity to achieve an optimal balance between supply and demand, e.g., power-to-gas conversion and hydrogen storage for heat and power generation. With a fast ramp-up time, hydrogen electrolyzers are valuable, flexible, and dynamic assets that contribute to grid stability and make business more predictable for operators through techniques like dispatchable generation, frequency control, and buffering. 

For grid operators, utilities, and others involved in long-term planning, the challenges include determining which sectors may adopt hydrogen sooner, which ones later, and why. Such assessments are shaped by numerous factors, such as the impact of the lack of suitable infrastructure; situations where business cases are not applicable; and complex cost-benefit calculations. Furthermore, the scope of potential hydrogen demand must be predicted for each sector. 

4.3.1

Powering Buildings

Hydrogen can be used to provide electricity, heating, and cooling in a variety of building types. A combination of storage and pipe-fed hydrogen increases energy resilience and has very high efficiency. Stored hydrogen is often used to provide backup or uninterruptible electrical power to buildings, especially those that require extra resilience because they form part of critical infrastructures or are especially at risk from natural and other disasters.

If the heat that is produced is also used, the process is called combined heat and power (CHP). Such plants are often used in the domestic heating sector, where they are known as micro-CHP or mini-CHP plants because of their smaller size and comparable output.

Combined heat and power plants can be operated using two strategies. The plant either covers most of the electricity or most of the heat demand. When electricity prices are high, an electricity-led mode of operation is very cost-effective. Electricity purchases from the grid can be reduced; alternatively, excess electricity generation can be fed into the grid and a higher repayment realized.. 

The heat produced as a by-product of combined heat and power is generally used to cover a portion of the heat needed in the building. The electricity-led mode of operation results in lower thermal output from fuel cell heating systems. The remaining heating needs of the building are usually covered by complementary heating systems, including electrical boilers and heat pumps. Thus, fuel cells are particularly suitable for buildings with a low heating requirement, such as low-energy or zero-energy buildings.  

Potential hydrogen demand for heating in buildings and spread of competitive energy prices in selected markets, 2030
Source: IEA

Due to their modularity, fuel cells are often used in decentralized applications, offering electricity grid-like support and black-start capability for microgrids. In Japan, residential fuel cell systems are deployed to provide consumer grid independence, especially in remote and rural regions. The government of Japan plans to install a projected 1.5 million residential co-generation systems by the end of 2020, and 5.3 million by 2030.

Other areas of use include telecommunications and IT systems, such as radio towers or data processing centers. Fuel cells with low-wattage electrical outputs are often used as portable fuel cells with weight advantages over batteries and generators.

The building sector is very accessible to green hydrogen penetration, and early uptake is expected. 

4.3.2

Decarbonizing the Gas Grid

Injecting hydrogen into the gas grid allows natural gas consumption to be reduced. Gas grid injection could be a further revenue source for electrolyzer operators in addition to their hydrogen sales to mobility or industrial markets. 

Hydrogen blending limits in natural gas grid by volume
S&P Global Patts

This will help the industry to reach the volumes necessary to enable cost reductions through economies of scale and improve competitiveness in the longer term. A key advantage of power-to-hydrogen via green electricity is the ability to store hydrogen on a vast scale, which allows energy systems to deal with large variations in demand. Inter-seasonal storage to meet seasonally oriented demand peaks, such as the need for heat in winter, could then be equalized with renewable energy stored during the summer.

Should standards and related requirements be aligned, little stands in the way of increasing the amount of hydrogen that can be initially mixed into and later be fully carried by gas pipelines.

 

4.3.3

Energy Storage, Transport, and Distribution

In the medium to long term, hydrogen will become a way to transport and distribute renewable energy over long distances, especially in regions where the electricity grid has insufficient capacity or where the construction of new gas infrastructure is too impractical or expensive. 

This is the case with offshore wind energy generation, where hydrogen could be produced offshore and then be transported inshore via natural gas pipelines (either converted or newly installed ones). Here, the costs are lower than laying submarine cables. Areas with cheap and plentiful renewable energy resources could produce hydrogen for transport to regions with limited potential or a higher cost of renewable power generation.  

Transport of renewable energy using hydrogen could develop at several levels, from local to international. The latter option is being investigated in several countries. Those with abundant renewable energy potential, including Australia, are examining ways of using cheap renewable resource to generate and ship massive quantities of hydrogen to renewable energy-poor countries such as Japan. Extensive studies have been done to show feasibility. Countries with limited renewable energy potential, such as Japan, are examining similar options.  

Hydrogen carriers such as liquid organic hydrogen carriers or ammonia would likely be more feasible for long-distance transport than hydrogen in gas or liquid form. Pipelines remain the most economical method of transporting hydrogen in large volumes. This is the root of the idea behind greening the gas grid, which allows transport and sales volumes to ramp up rapidly and provide the economies of scale necessary to reduce the cost of hydrogen transport, storage, and distribution.

Rapid uptake and growth is indicated by the fact that readily available characteristics of hydrogen, often hand-in-hand with a partner technology, lend themselves so well to the storage and distribution, together with a high level of political and environmental pressure for growth in this sector to serve the deep decarbonization demands of other sectors. 

Cumulated supply chain costs for green hydrogen
Based on HINICIO (2016), present costs estimate at the pump from US DOE (2018). However Japan current estimate is 10 USD/kg. Target prices for production: IRENA analysis. Target prices at the pump of 3 USD/kg for Japan, 5 for US and 6-7 for Europe.

New Wine in Old Skins: Repurposing Gas Pipelines for Hydrogen

Conventional natural gas pipelines can achieve very high energy density. The amount of energy transferred in a regular steel pipeline is about ten times that of a standard overhead power line, at a fraction of specific cost. By using this existing infrastructure for green hydrogen, operators could avoid massive investments as well as planning efforts. However, some adaptations are required if a natural gas pipeline is to be repurposed for conveying hydrogen.

  • Due to the comparative densities and flow velocities of hydrogen and methane, a regular pipeline can transport three times as much hydrogen as methane in a given timeframe, at only slightly diminished energy density.
  • Compressor stations are needed to condense the hydrogen to the operating pressure of the pipeline along the way. Depending on the amount of hydrogen in the mix, some compressors or parts (e.g., seals and membranes) may need to be upgraded or replaced altogether (at >50 percent hydrogen).
  • In order to use a legacy pipeline exclusively for hydrogen, more turbines and stronger compressors must be installed.
  • The structural integrity of steel pipes and fittings can be compromised by cracks and embrittlement if atomic hydrogen (H rather than molecular H2) is used, and if pre-existing fractures are compounded by internal pressure changes due to load alternation. This combination of factors can be avoided in regular operations, however.

Suitable tools for monitoring internal changes and anomalies in a pipeline are available and have been tested in connection with hydrogen conveyance.