Hydrogen Demand
Demand for hydrogen, which has grown more than threefold since 1975, continues to rise – almost entirely supplied from fossil fuels, with 6% of global Natural Gas and 2% of global Coal going to Hydrogen production.
As a consequence, production of Hydrogen is responsible for CO2 emissions of around 830 million tonnes of carbon dioxide per year, equivalent to the CO2 emissions of the United Kingdom and Indonesia combined.
Natural Gas is currently the primary source of Hydrogen production, accounting for around three quarters of the annual global dedicated hydrogen production of around 70 million tonnes [2018].
[Ref.: https://www.iea.org/reports/the-future-of-hydrogen]
In order to meet national energy and climate requirements and our net zero goals, it is necessary that we transition to consuming greener energy at higher delivery volumes. This requires that,
- our energy supplies must come from a variety of greener technologies
- that we must climate-optimise the consumption of existing oil and gas energy resources in an environmentally sustainable manner.
By transforming our oil and gas energy resources, at origin, into carbon-free, clean hydrogen we can maintain energy security in a climate beneficial way. The origin of atmospheric carbon is not where it’s burned, but where it is produced. The downhole removal of carbon from oil and gas exploitation at point-source allows for the continued access to strategic global energy reserves, as hydrogen.
During the medium-term transition to green energy, operators of global oil and gas resources (i.e., energy companies and national governments) can stop the carbon production by instead exploiting these reserves to generate and deliver hydrogen directly to customers. This will both significantly increase the hydrogen supply volumes generated (while also reducing the unit hydrogen generation costs) and accelerate the transition to a hydrogen economy.
Hydrogen storage from green energy sources becomes less of a volume challenge as a consequence, as excess hydrogen demand can be supplied at a shorter notice period from the hydrogen production wells. This is similar to how natural gas is used today as ‘swing production’ for power generation. The hydrogen volume produced on demand from oil & gas fields can be increased when required by either the national electric power grid or hydrogen networks. Linking the green hydrogen to the blue hydrogen distribution networks therefore minimises the cost and space of green hydrogen storage requirements.
All energy carriers, including fossil fuels, encounter efficiency losses each time they are produced, converted or used. It also makes a case for minimising the number of conversions between energy carriers in any value chain. That said, in the absence of constraints to energy supply, and as long as CO2 emissions are valued, efficiency can be largely a matter of economics, to be considered at the level of the whole value chain. This is important as hydrogen can be used with much higher efficiency in certain applications. For example, a hydrogen fuel cell in a vehicle is around 60% efficient, whereas a gasoline internal combustion engine is around 20% efficient, and a modern coal-fired power plant is around 45% efficient, with electricity power line losses accounting for a further 10% or more.
[Ref.: The Future of Hydrogen, page 33. Report prepared by the IEA for the G20, Japan, June 2019]
