How hydrogen can change the energy landscape

Produced from natural gas, it is the lightest and most abundant element in the universe

Sheikh Ahmed bin Saeed Al Maktoum, with Joe Kaeser, CEO Siemens, at the foundation-stone laying in Dubai of the new hydrogen facility. WAM

In 1964, the Methane Princess tanker made the first ever delivery of liquefied natural gas (LNG), from Algeria to the UK, sparking what is now a $100 billion (Dh367.31bn) industry. This February, Dubai began constructing a “green hydrogen” pilot plant to fuel vehicles at the Expo. Can the “hydrogen economy” learn from the experience of LNG?

The lightest and most abundant element in the universe, elemental hydrogen does not occur in significant quantities on Earth. It is chemically combined in water, biological materials and other substances.

World fuel has gradually moved from wood which has 10 times as much carbon as hydrogen, through coal, with about one hydrogen atom for each carbon, to oil with twice as many hydrogen atoms, and natural gas with four hydrogens per carbon.

Of course, a major part of the energy future revolves around energy sources with neither carbon nor hydrogen: solar, wind, hydropower and perhaps nuclear, charging the batteries of electric vehicles.

But hydrogen could become an indispensable store and carrier for energy. It can be produced from natural gas. This process also yields carbon dioxide, contributed to climate change unless it is captured and stored. Or, it can be made by splitting water through electrolysis, with no emissions except those from generating the electricity – which can be a low-carbon method such as renewable or nuclear energy.

Interest in hydrogen has waned and waxed. George W. Bush’s administration promoted it as a diversion to avoid tackling climate change seriously, and late US senator John McCain dismissed it as a “nice little PR ploy”. It was hoped hydrogen fuel cells could power vehicles, but they have been overtaken by electric cars. Hydrogen is relatively expensive and requires bulky tanks, refuelling infrastructure is not developed, it is less efficient than batteries once allowing for generating the hydrogen, and fuel cells are costly.

But hydrogen has now returned as a key focus, as former Masdar and International Renewable Energy Agency executive Frank Wouters notes. The element has four key advantages. Firstly, it is much more energy-dense than batteries, which still carry too little charge for long-distance transport – lorries, ships and planes.

Secondly, home heating in Europe, North America and increasingly north-east Asia depends on natural gas. Replacing this with electricity would tax the generation and distribution capacity in a cold winter. But hydrogen can be delivered through the existing gas network, firstly as an additive to natural gas in small quantities, later perhaps as the sole fuel.

Thirdly, hydrogen can generate high-temperature heat and is a feedstock for other industrial processes, such as steelmaking. Amid a plethora of plans to make European and American economies zero-carbon by 2050, there are no current commercial processes that can decarbonise most heavy industry.

Fourthly, electrolysing water to make hydrogen can be used to save renewable energy at times of abundance – such as solar power on a sunny but cool spring day in the Middle East – to be used in high-demand periods. Batteries are probably cheaper for storing electricity for short periods, but hydrogen could win for seasonal storage.

Hydrogen could be an answer to the two conundrums major oil and gas producers are facing today. How do they diversify their economies and exports? And how do they make the most of their massive hydrocarbon resources while tackling climate change, and not being stranded in a decarbonising world?

The MENA region has four key advantages in leading the hydrogen economy: abundant low-cost solar power; large, reasonably-priced gas resources; underground storage space for carbon dioxide captured from hydrogen production; and a geographic location ideal for reaching both European and Asian markets.

The process of making hydrogen, whether from natural gas or electricity, is well-understood. Hydrogen can be transported in modified gas pipelines, such as those existing from North Africa to southern Europe, or as a liquid in ships similar to LNG tankers. It can be used in industries and homes with some modifications, though transport is a bigger step. Japan, short of domestic energy, has targets to bring down the cost of hydrogen to about $7 per million British thermal units (MMBtu), about the current price of LNG.

To become a major part of the energy economy, hydrogen needs cost reductions, a business model, and infrastructure. This is where it resembles the early days of LNG. Abu Dhabi, in 1973, was the first Middle Eastern LNG exporter; Japan was the earliest big buyer and is still the world’s largest customer for the fuel.

Hydrogen producers, shippers and consumers have to be linked by viable commercial contracts and markets. Governments have to make a clear commitment and invest directly in early deployment and perhaps pieces of infrastructure. Along with European governments, Japan could kick-start hydrogen as it did LNG. They could mandate a certain share of hydrogen mixed into marketed natural gas, and limit carbon dioxide emissions from gas-fired power plants.

To have confidence in this approach, consumers would have to be sure the green fuel will be available at reasonable prices. Japan has already begun to engage Brunei, Australia, Norway and Saudi Arabia. Brunei was one of its earliest LNG suppliers; Australia is now by far its biggest provider. The UAE, a pioneer of LNG, carbon capture and solar power, should also be a natural partner, along with a hydrogen-curious big gas company such as Shell or Total.

The “hydrogen economy” will not just happen – it faces plenty of challenges, competitors and inertia. There is only a limited window of opportunity. Middle East countries can be inspired by history and build a new energy industry as they did before.

Robin Mills is chief executive of Qamar Energy, and author of The Myth of the Oil Crisis