Hydrogen takes place in energy system

The corona crisis pushes a lot of other news into the background, but good news is definitely there to report. The letter to the House of Representatives sent by Minister Wiebes on the Cabinet’s vision for the basic industry 2050 testifies to guts. After all, where industry did not always seem to be directly on the political retina in recent years, the vision of the Minister of Economic Affairs and Climate can be called very complete and realistic. Another gem that has been overlooked is the report by the Task Force Infrastructure Climate Change Agreement Industry. In it the Task Force provides insight into the infrastructural conditions for decarbonisation of industry. Hydrogen plays an important, if not the main, role in both visions. Although other CO2-emission-reducing solutions are certainly not overlooked.

And those who want it more concrete may also have overlooked Neste Oil’s announcement. That invests in the world’s first multi-megawatt high-temperature electrolyser for hydrogen production. Shell has similar plans and is linking an investment in an offshore wind farm to plans for a two hundred megawatt electrolyser at Maasvlakte 2.

Electricity transition

The news looks like grist to Noé van Hulst’s mill. The economist is no stranger to the energy world. He was director general of Energy at the Ministry of Economic Affairs and was a member of the board of directors of the International Energy Agency (IEA) for a number of years. Van Hulst has been a hydrogen envoy on behalf of the Ministry of Economic Affairs and Climate since 2018.

Van Hulst is convinced that ‘it’s good that the national hydrogen strategy is beginning to take shape, but we can’t do this alone’. The hydrogen chain is a broad, globally oriented market with major international players. The Netherlands can certainly become part of that chain, and we can also entice international companies to establish themselves here. If you connect ecology and economy, you stimulate local initiatives and cut both ways’.

It strikes Van Hulst that the energy transition so far has mainly been an electricity transition. The fact that the share of wind and solar electricity is increasing is good news. But so far only twenty percent of the energy consumption is electric. Decarbonisation of the remaining eighty per cent will therefore be a much greater challenge. Some processes can now be electrified, but the realistic scenarios show that it will not be possible to achieve more than forty to fifty per cent of the final energy consumption. Then you still have to find an alternative to the other half.

After all, there are sectors that find it difficult to say goodbye to fossil fuels because of the high energy density of oil and natural gas. Heavy road transport, shipping and aviation are all so energy-intensive that they are difficult to electrify. The same applies to industry, which has few alternatives for certain high-temperature processes. Part of the energy demand could be replaced by biogas. However, there are volume limitations because biomass is not always available in large quantities.

Start

Despite the high expectations, most concrete hydrogen projects in the Netherlands are still in the feasibility or planning phase. Last year, for example, Gasunie commissioned the first electrolysis unit and invested in underground storage capacity. The plans announced by Neste and Shell are promising, but have yet to be implemented. Chlorine chemical company Nouryon is investigating the possibilities for green hydrogen production. Vattenfall is also considering using hydrogen as fuel in one of the turbines of the Magnum power plant in Eemshaven. This would initially be blue hydrogen.

Van Hulst: ‘The contribution of hydrogen to the energy system is not large at the moment. But don’t forget that we are at the beginning of an entirely new development. In order for emission-free hydrogen to really fly, interventions are needed on the production, transport and storage side as well as on the user side. Numerous parallel developments are currently underway that will ensure that really big leaps can be made in the next five to ten years. The production plans are promising. But I also think we can be pleased that Gasunie is taking such a proactive stance. Incidentally, it is not alone in this. The Gas for Climate report of the European Transmission System Operators (TSOs, ed.) was published in April. It contains three scenarios for an emission-free energy supply in 2050. Biogas and hydrogen play a major role in all scenarios. The European gas networks are reasonably easy to adapt to the smaller hydrogen molecules. In fact, the report’s authors believe that sustainable molecules will make energy supply some two hundred billion dollars a year cheaper in 2050 than other decarbonisation scenarios’.

Bottom up

On the user side, Van Hulst sees both top-down and bottom-up initiatives that give hope. In the development of a hydrogen market, the government is quickly looked at. But I think we have to remain realistic and assume that we can’t or shouldn’t steer everything from an office in The Hague. If a residents’ collective in Naarden opts for hydrogen for heating in the city centre, that helps just as much as the port companies’ plans for an industrial hydrogen pipeline. On the contrary, I think that the more premium applications such as hydrogen for heavy transport will make the joint business case a lot more interesting. The role of the government will therefore be more facilitating. There are plenty of public-private partnerships to be devised in which governments and semi-public authorities will enter into a connection with private parties. That works better than a government that just puts something down and says to the market: “figure it out”. These kinds of new technologies will only get off the ground if you are willing to learn together by simply carrying out projects. Of course, the government can allocate certain risks better than private parties. The fact that both blue and green hydrogen have been included in the list of options for SDE++ subsidy indicates that the government is prepared to contribute to the extra operational costs associated with new technology in a new market’.

International

This transition is so big that you have to look at opportunities much more broadly. Japan has ambitious plans for sustainable hydrogen. But less obvious countries such as Brunei, Morocco and Saudi Arabia are also looking at their role in a changing energy world’.

Price drop

Whether the corona crisis is favourable or unfavourable to the pace of scaling up the hydrogen market, Van Hulst does not yet dare to say. Companies like BP and Shell are also looking seriously at their role in the hydrogen market. They could use the current corona crisis and the fall in oil prices to bring plans forward. But if profits are under pressure, that can also have a delaying effect. In any case, I am sure that the transition will not go away, it will continue. I see it as my task to maintain the right track by means of policy. And for the pessimists who thought that making energy more sustainable would only make it more expensive: so far energy prices have only fallen. That creates room for sustainability measures that would imply a somewhat smaller drop in energy prices’.