Big Oil Companies Push Hydrogen as Green Alternative, but Obstacles Remain

July 26, 2021

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by Sarah McFarlane (Wall Street Journal) BP, Shell want to make the gas using renewable energy, but doing so remains expensive -- Big oil companies have long touted hydrogen energy as a way to reduce carbon emissions. Now they are grappling with how to make that a reality.

BP BP 3.36% PLC, Royal Dutch Shell RDS.A 3.67% PLC and TotalEnergies SE are all pursuing multimillion-dollar hydrogen projects, often with government support, as they seek to redefine their future role in a world less reliant on fossil fuels. Hydrogen made using renewable energy can be produced and used without emitting carbon dioxide.

Still, experts say there are various hurdles to the light, colorless gas fulfilling its potential. Firstly, most hydrogen today is made from fossil fuels, primarily natural gas. The challenge is to make it using renewable power instead and produce it on an industrial scale, in the hope of bringing down costs. Additionally, hydrogen is explosive, as well as difficult to store and transport.

Oil companies are pursuing green hydrogen, which they see as a longer-term goal, while also looking at applying carbon-capture technology to fossil-fuel-based hydrogen production as a way to clean up the gas in the interim.

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As of the end of June, there were 244 large-scale green hydrogen projects planned, according to the Hydrogen Council, an industry group, up more than 50% since the end of January. It estimates tens of billions of dollars have already been earmarked for hydrogen projects.

Historically used to help make fertilizer and chemicals, hydrogen is increasingly being pushed for a much broader range of uses, including for trucks, planes, ships, household heating and as a way to store renewable power.

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Industry executives say green hydrogen is expensive because of the cost of the electricity needed to make it, as well as the cost of the electrolyzer—the system used to split water into hydrogen and oxygen.

Shell hopes it can reduce costs by building hydrogen projects in strategic locations alongside customers’ plants, like at ArcelorMittal SA’s steel mill in the German port of Hamburg, where it can also add hydrogen refueling for trucks.

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In the U.S., the Energy Department has said it aims to reduce the cost of green hydrogen by 80% to $1 per kilogram in the next decade, in part by supporting pilot projects.

Consultants and oil company executives say an interim step to reaching large-scale green hydrogen production is to capture and store carbon generated by making hydrogen from natural gas to reduce emissions—making what is known as blue hydrogen.

Critics of fossil-fuel hydrogen where carbon is captured say the process is expensive, and that extracting and transporting natural gas often results in greenhouse gas leaks, meaning any hydrogen produced likely won’t be zero-carbon.

Oil-and-gas companies want to pursue this approach because it “could extend the life of their fossil assets,” said Cameron Hepburn, director of the Smith School of Enterprise and Environment at the University of Oxford.

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Some U.S. oil companies also are pursuing hydrogen.

Chevron Corp. has signaled that it sees hydrogen having a role in transportation, as an industrial feedstock and in energy storage. This month, it partnered with engine maker Cummins Inc. to explore hydrogen infrastructure and fuel-cell vehicles, following a similar agreement in April with car maker Toyota Motor North America Inc.

Amid the enthusiasm, there needs to be greater focus on where best to deploy green hydrogen, said Michael Liebreich, chief executive of consulting firm Liebreich Associates. The priority should be to replace gas-based hydrogen for tasks like making fertilizer and in hard-to-abate industries such as steel, aviation and shipping, Mr. Liebreich said, adding that it makes less sense where electricity could be used directly, like in domestic heating, cars and trains.

One area where there is an active debate around the merits of switching to hydrogen is long-distance trucking. READ MORE

Shell, Exxon Look to Profit From Capturing Customers’ Carbon Emissions: Big oil companies are exploring charging for carbon storage, hoping to benefit from the drive to reduce emissions (Wall Street Journal; includes VIDEO)

BP Steps Up Green Drive With Hydrogen Deal: Oil major teams up with Ørsted to produce hydrogen using wind power (Wall Street Journal)

Hydrogen Gains a Toehold in Europe as a Cleaner Alternative to Gas and Coal: If it’s going to compete, though, industry needs to figure out a way to store it safely (Wall Street Journal)

GREEN HYDROGEN PLANT IN SAUDI DESERT AIMS TO AMP UP CLEAN POWER: Developers behind the world’s largest planned green hydrogen project hope a growing global thirst for emission-free fuels will pay dividends (Wall Street Journal)

Major Energy Companies Bet Big on Hydrogen: There are plenty of obstacles. But advocates see the fuel playing a vital role in slashing emissions (Wall Street Journal)

The Green Hydrogen Puzzle Is Starting to Fall Into Place: Siemens Gamesa’s hydrogen-producing wind turbine is an example of the innovative projects that will help give shape to the emerging clean-fuel market (Wall Street Journal)

World first for steel: ArcelorMittal investigates the industrial use of pure hydrogen (ArcelorMittal)

ArcelorMittal plans major investment in German sites, to accelerate CO2 emissions reduction strategy and leverage the hydrogen grid (Arcelor Mittal)

Auto Makers Shift Their Hydrogen Focus to Big Rigs: GM, Toyota, Hyundai pivot fuel-cell efforts after years of developing the technology for smaller vehicles, with little success (Wall Street Journal; includes VIDEO)

How Japan’s Big Bet on Hydrogen Could Revolutionize the Energy Market: The country’s effort to be carbon-free by 2050 relies on a fuel source many see as too expensive and unrealistic (Wall Street Journal)

Big Oil Is Spending Big On Dividends And Debt, Not Clean Energy (Oilprice.com)

Hydrogen-powered vehicles: A realistic path to clean energy? (ABC News)

Excerpt from ABC News: To be sure, hydrogen remains far from a magic solution. For now, the hydrogen that is produced globally each year, mainly for refineries and fertilizer manufacturing, is made using natural gas or coal. That process pollutes the air, warming the planet rather than saving it. Indeed, a new study by researchers from Cornell and Stanford universities found that most hydrogen production emits carbon dioxide, which means that hydrogen-fueled transportation cannot yet be considered clean energy.

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Hydrogen has long been a feedstock for the production of fertilizer, steel, petroleum, concrete and chemicals. It's also been running vehicles for years: Around 35,000 forklifts in the United States, about 4% of the nation's total, are powered by hydrogen. Its eventual use on roadways, to haul heavy loads of cargo, could begin to replace diesel-burning polluters.

No one knows when, or even whether, hydrogen will be adopted for widespread use. Craig Scott, Toyota’s head of advanced technology in North America, says the company is perhaps two years from having a hydrogen truck ready for sale. Building more fueling stations will be crucial to widespread adoption. READ MORE