What Are the Realities for Sustainable Hydrogen in Oil, Chemicals and Steel?

(Hydrogen Digest) The International Energy Agency observed in its Future of Hydrogen report (here), that “ the technologies are available to avoid the emissions from fossil fuel use [in industrial sectors] by producing and supplying low-carbon hydrogen.”

Yes, hydrogen is used in vast quantities in oil refining,. chemical production and iron and steel production, with ammonia and methanol production comprising the major chemical applications. In each there are opportunities, particularly in steel and chemicals.

Let’s look at the IEA’s approach to industrial hydrogen replacement — the opportunities and challenges.

Oil refining

More than 60% of hydrogen used in refineries today is produced using natural gas. Hydrotreatment is used to remove impurities, especially sulphur. Hydrocracking uses hydrogen to upgrade heavy residual oils into higher-value oil products.

Hydrogen production – unless supplied as a by-product of refining operations – currently results in considerable CO2 emissions. Globally the production of hydrogen for use in refineries contributes some 230 MtCO2 /yr emissions, which is around 20% of total refinery emissions. Producing hydrogen in a cleaner way is therefore vital to achieving a significant reduction in emissions from refining operations.

There are two main cleaner pathways to hydrogen production for refineries: equipping coal or natural gas-based hydrogen production facilities with CCUS; and using electrolytic hydrogen from low-carbon electricity.

The blast furnace-basic oxygen furnace route accounts for about 90% of primary steel production globally. It produces hydrogen as a by-product of coal use. The direct reduction of iron-electric arc furnace route accounts for 7% of primary steel production globally. It uses a mixture of hydrogen and carbon monoxide as a reducing agent. The hydrogen is produced in dedicated facilities, not as a by-product.

In the absence of sufficiently high CO2 prices to trigger a switch to low-carbon hydrogen, replacing unabated natural gas with renewable hydrogen in the DRI-EAF route would widen the difference in cost between the commercial direct reduction and blast furnace routes.

So, what are the options for sustainable hydrogen in industrial applications? Comes entirely down to the carbon price — or, as we say here in Digestville, the price to dump emissions into the Skyfill. Right now, the discussions around the world are at something like the $20-40 level — that’s not going to be enough to switch the world off fossil natural gas as a source for industrial hydrogen. That might change if the feedstock was at negative cost as part of a landfill avoidance strategy. That’s been the rationale for Enerkem in making methanol, for example.

Where the case for industrial hydrogen gets most interesting is where we have landfill and skyfill aspects — for example, where the waste owner has to pay $70 per ton to dump at the landfill and also pays a carbon price for the emissions as that waste degrades, say $120 per ton for the CO2. The ex=economic attractions are not hard to figure — but it all comes down to a consistent Skyfill policy. READ MORE