Marine Fueling Hydrogen Energy Project Follows Trend of Failed Attempts

Low-carbon economy

Every week, we hear exciting news about various attempts to harness hydrogen for energy. For instance, there's talk of a passenger train route that runs on hydrogen, spanning over a distance of 121 km. Or maybe there's a chance that Namibia could someday produce significant amounts of hydrogen through renewable energy, as a memorandum of understanding suggests. On other occasions, we might hear about an experimental airplane that manages to fly for ten minutes, relying on a hydrogen-powered propeller to operate.

Schemes are often abandoned without much fanfare when they prove to be unsuccessful. This happens more frequently than the highly publicized and eagerly anticipated announcements of new programs.

This morning, I was reminded of a piece of news that caught my attention. Apparently, Equinor, Air Liquide, and Eviny have decided to scrap their Norwegian green hydrogen shipping fuel project altogether. If my memory serves me right, they had originally planned to construct an electrolysis plant and produce around six tons of liquefied hydrogen per day on a site situated next to an Equinor refinery.

With a consumption of around 50 MWh per ton of hydrogen for electrolysis, the facility uses approximately 300 MWh each day. Additionally, the process of hydrogen liquefaction consumes about a third of the energy in the hydrogen, adding another 67 MWh. Together with the energy required for miscellaneous activities within the facility, the total energy usage is roughly 380 MWh per day. Assuming stable production output, this translates to roughly 140 GWh annually. The electrolyzer used in the process would typically be able to generate between 12.5 and 20 MW, depending on the level of utilization.

For the past 15 years, major users would have been charged industrial rates of around $58 USD per MWh for electricity. This fee covers various expenses such as multiple generation sources, transmission, firming, and regulatory prices, resulting in an annual cost of approximately $8 million. This cost translates to roughly $3,700 per ton of liquid H2, equivalent to $3.70 per kg. Unfortunately, the cost of electricity is unlikely to decrease in the foreseeable future. Currently, this price is one of the lowest available, and it is unlikely to change until much later when grid decarbonization is in full effect with significant amounts of renewables, HVDC, and storage having been fully integrated. We can safely assume that this will not happen until around 2100, so it is not worth worrying about at this point.

Just the costs to run the machine are already quite high. Assuming the machine is used for 80% of the time, it can produce 16 MW. However, according to the IEA, the cost to buy one of these machines is around $500 to $1,400 per kilowatt hour for alkaline electrolysers, and $1,100 to $1,800 for PEM electrolysers. For solid oxide electrolyser cells (SOEC), the range is even higher at $2,800 to $5,600 per kilowatt hour. Let's take the lower end of the range and assume a cost of $1,200 per kilowatt hour. This means that the cost to buy an electrolyzer is about $19 million, which can be spread out over a few years at a cost of about $4 million per year. This adds an additional 50% to the cost of hydrogen, which brings the total cost per ton to around $5,600. While the cost of electrolyzers may decrease in the future, they will not be cheap to purchase anytime soon.

Naturally, we must also consider the investment required for the other parts of the plant, such as the 27 or so industrial parts necessary for the electrolyzer and the complex process for liquefying the hydrogen. This additional investment will most likely triple the cost of the pricey electrolyzer components, adding up to around $60 million. This equates to an extra $8 million per year when calculated over time. This increases the operating expenses by double, raising the base cost from $3,700 to approximately $9,300 for each ton of liquid H2, or roughly $9.30 for each kilogram without delivery. Unfortunately, this cost will not decrease in the future. These industrial components are already widespread commodities and priced as low as they can be.

This is straightforward calculation that was disclosed in 2021 when the project was introduced with great excitement. Nevertheless, no one utilized a paper napkin and ballpoint pen to work out the figures. That would be dull!

The initiative was promptly selected as a finalist for the IPCEI Hy2Tech program, a massive $5.7 billion fund promoting hydrogen innovation across Europe. Europeans undoubtedly excel in creating catchy project names, but only for those skilled at tying cherry stems with their tongues.

Naturally, Equinor had ulterior motives for their project, which they concealed through a bait and switch. The documents reveal that they actually planned to make blue hydrogen through steam reformation of SMR. This is precisely why oil and gas corporations are heavily promoting hydrogen. Despite not disclosing or likely even calculating the viability of projects such as Aurora, they recognize that producing hydrogen as an energy carrier solely through renewables and electrolysis is unfeasible even in the most distant future.

Forecasting the demand for hydrogen up to the year 2100 with a chart produced by the writer.

Shall we do some calculations? At present, we produce roughly 120 million tons of hydrogen annually. Based on my analysis, once we cut out the largest consumer, oil refineries - which use 38 million tons - and decrease the next largest consumer, ammonia-based fertilizer at 31 million tons, but increase its utilization for steel-making purposes, we will need approximately 95 million tons of hydrogen each year by the year 2100.

In order to provide enough hydrogen for industrial purposes, we need 4,800 TWh, which is equivalent to 50 MWh per ton. Cleaning up all 120 million tons would require an additional 6,000 TWh. In 2021, there was about 8,000 TWh of renewable energy generated from various sources such as wind, solar, hydro and biomass. To clean up current uses of hydrogen, we need to produce between 60% to 75% more renewable energy.

Let's explore some additional numerical calculations. What's the daily consumption of oil barrels? Almost 94 million barrels. Nevertheless, approximately 25% of that quantity is utilized to produce durable goods and industrial feedstocks, which are more advantageous to society, instead of being combusted and creating air pollution and global warming. Consequently, roughly 70 million barrels of fuel remain that have to be replaced.

To replace the fuels in a barrel of oil, we would need approximately 31 kg of hydrogen. While this number may seem manageable at first, it's worth noting that we would need a whopping 2.2 million tons of hydrogen per day and about 800 million more tons of hydrogen per year. This amount is seven times more than our current global production, so the challenge is significant. However, there is hope that we can continue to innovate and develop more efficient methods for producing and using hydrogen to meet this demand in the future.

To achieve that feat, we would need to generate more than five times the amount of renewable energy that we have constructed throughout the entirety of human history. This would leave no additional energy for basic necessities such as lighting, cooling, heating, and even data centers that host our beloved feline videos.

At present, almost all the hydrogen we use is derived from fossil fuels, specifically natural gas, and sometimes coal is also used, which results in higher carbon emissions. This is a major contributor to climate change, and the impact is comparable to the aviation industry on a global scale. To address this, we need to increase renewable energy generation by almost double. But if we want to use hydrogen as an energy source, we will need significantly more renewable energy sources.

It's not feasible for mankind to achieve this. There's no practical financial route where green hydrogen takes the place of fossil fuels. Nevertheless, if the fossil fuel business can persuade individuals that they still require something to burn for power, with hydrogen being that thing, they can append energy-depleting carbon capture technologies to their steam reformation and coal gasification facilities, resolve a minute portion of upstream emissions, fork out substantial sums of lobbying money, and convince governments to buy into the deceptive notion that blue hydrogen has the potential to solve our environmental issues.

And just like magic, their fossil fuel resources have gained more worth, as they can now charge the world extra for producing blue hydrogen. This sudden increase in value may explain why Aurora is located near Equinor's refinery.

However, Equinor, Eviny, and Air Liquide encountered a problem when they attempted to market liquid hydrogen to the shipping industry in Norway. The industry assessed the low energy density per volume of hydrogen, the high cost compared to existing fuels, and the extensive obstacles associated with bunkering liquid hydrogen. Consequently, they unequivocally rejected the offer.

Despite their tireless efforts in seeking out potential clients, they found themselves without any customers who were interested in purchasing their exceedingly pricey and challenging to transport liquid hydrogen that required a strenuous effort to store. It's reasonable to assume that they weren't able to secure a significant portion of the 5.7 billion-dollar European funding that was allocated to hydrogen. As a result, the company ceased operations entirely last week, following a temporary suspension of the project in late 2022.

The shipping industry hasn't necessarily learned from past mistakes with hydrogen. Instead, Maersk has turned to green methanol as a fuel source for their ships. While this may seem like a good alternative, it comes with its own set of issues. One of the biggest challenges is the cost of electrolyzing water to create the hydrogen needed for the manufacturing process for methanol. Additionally, getting CO2 from a reliable source adds to the cost. When you consider all of these factors, methanol ends up being just as expensive as hydrogen. Furthermore, methanol has only 45% of the energy density of diesel, meaning that ships would require larger fuel tanks and bunker areas, which reduces port space. This makes transitioning to green methanol a difficult process. Ultimately, I don't believe that green methanol is a viable replacement for current marine fuels.

Also, Methanex's deceptive marketing of their methanol product as 95% natural gas and only 5% biomethane is not a realistic solution. This is an example of a corporation using greenwashing tactics to boost their profits by trying to increase the demand for their product. They are disregarding the impact that their actions will have on the environment in favor of financial gain.

Some people are thinking about using green ammonia as an alternative. However, it is still made from green hydrogen and faces similar cost challenges. Furthermore, the energy density is even lower than that of methanol. Not to mention, it poses a grave threat to public health and safety, especially when exposed to water. A public health official in the Netherlands, in charge of multiple ports and cities, has shared his concern. He strongly opposes the idea of bunkering ammonia at ports, as it could potentially lead to tens of thousands of fatalities in the event of a spill. The official cannot understand why this alternative is even being considered.

I spent a lot of time researching marine decarbonization before forming my own opinion. Based on my analysis, I believe that most inland and short sea shipping will use batteries, while biofuels will be used for the remaining third. Although green hydrogen will play a role in some biofuel processes, I think it will be limited. In fact, biofuels that don't rely on hydrogen will likely be more cost-effective, according to my assessment of the economics involved.

The use of green hydrogen for energy is facing some common issues: the lack of buyers and sufficient government subsidies. Due to financial analysis, green hydrogen is often disregarded as a feasible energy source. However, electricity is expected to replace most of the oil we consume, and we will achieve this more directly and effectively through grid connections and batteries, without relying excessively on renewable sources. The trend of abandoning hydrogen energy projects, such as the recent one by Equinor, Air Liquide, and Eviny, is becoming more common and may not receive as much attention as new hydrogen projects.

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