The colour of the future hydrogen industry

The multi colours of hydrogen offer an exciting window into an emissions-free future. In this scenario, the steps from grey, to blue, to green lead to a world powered by cheap, plentiful and squeaky-clean hydrogen.

Reality is rarely so obliging. We are currently sliding between air-clogging grey and blue hydrogen, with glimpses of green hydrogen only as the clouds part.

Let's look at Australia’s progress on the hunt for the holy grail. Is there now a genuine hunger – and opportunity - to move past our decades-long reliance on fossil fuels?

The challenges of grey and blue hydrogen

The path from grey/blue to green hydrogen is paved with myriad colours - and challenges around emissions and viability.

Derived from natural gas and coal gasification, grey hydrogen is the typ

e most commonly used in commercial and industrial applications today. Typically used to create fertiliser and refine oil, it’s relatively inexpensive and accessible. But the resulting emissions are released into the atmosphere.

Produced using fossil fuels, blue hydrogen relies on greenhouse gases being captured onsite and stored securely. In this way, it aims to reduce release of carbon dioxide into the atmosphere. But carbon capture and storage (CCS) technology has, to date, failed to meet its volume and cost-reduction targets.

Black/brown hydrogen is in the mix as well - the HESC Project in the LaTrobe valley produces this type of hydrogen, But, it uses black or brown coal, and is only made 'clean' by the purchase of carbon offsets.

Not all types of hydrogen production are proven or viable in Australia, including:

• Turquoise. This is a yet unproven technique using a process called methane pyrolysis to produce hydrogen and solid carbon. There are some projects on the horizon in Australia though, including Pure Hydrogen's proposed turquoise plant in Brisbane.*
• Pink. Pink hydrogen is generated through electrolysis powered by nuclear energy. Nuclear-produced hydrogen can also be referred to as purple hydrogen or red hydrogen.
• White. White hydrogen is a naturally-occurring geological hydrogen found in underground deposits and created through fracking. However, there are currently no strategies to exploit this type of hydrogen.

Which brings us to green hydrogen.

Sustainable green hydrogen is produced through electrolysis using renewable power. By running a clean electrical current through water, hydrogen and oxygen are successfully separated. This closed loop process prevents release of harmful gases. Yellow hydrogen is produced in a similar way, using solar power.

But can green hydrogen be cost-effective?

New research from the Australian National University shows green hydrogen topping its blue/grey cousins on emissions reduction, longevity and cost.*

Report co-author, Dr Fiona Beck, says green hydrogen – while expensive right now - has the capacity to reduce in price very quickly, as electrolyser technology improves. This follows the trajectory of solar energy technology.

Blue hydrogen plants, on the other hand, risk becoming ‘stranded assets’ as we move towards net zero emissions. This is because every CCS facility requires a costly ‘bespoke solution’.

It also becomes harder to capture carbon dioxide as concentrations begin to fall. This means the cost of CCS keeps going up, as the facility closes in on 90% emissions capture.

According to Energy Monitor, escalating global gas prices are also giving green hydrogen a cost advantage. As of November last year, it was cheaper to produce green hydrogen with renewable energy than blue hydrogen with natural gas.*

While the cost of blue hydrogen will fall as gas prices fall, ongoing supply restraints in the gas market make reliance on fossil fuels risky.

In March 2022, Origin Energy chief Frank Calabria estimated that green hydrogen could become cost competitive for the domestic market within the next few years.

For hydrogen producers hoping to export, the colour of their product may be crucial: Buyers in Europe, Japan and Korea may reject hydrogen that is not renewable.

Clash of the titans: Morrison and Forrest do battle

Hydrogen has become a central plank in the Morrison Government’s move towards net zero emissions in 2050.

Yet clean isn’t always green. The Prime Minister regards blue hydrogen as ‘clean’ because of its CCS component. Iron ore magnate Andrew Forrest says only hydrogen created by solar or wind energy is truly ‘clean’.*

With a general election only months away, the distinction is important. Climate change remains a key voter concern, with climate-conscious institutional investors also pushing companies worldwide for greener solutions.

Even if the PM is right, CCS is falling drastically short of its targets. ANU researchers say current CCS emission-saving estimates don’t allow for ‘fugitive emissions’ like methane, either. This potent greenhouse gas leaks into the atmosphere as natural gas is extracted.

Forrest’s Fortescue Future Industries has an ambitious plan to produce 15 million tonnes of green hydrogen annually by 2030.

The Western Green Energy Hub proposed for WA would also produce 3.5 million tonnes of zero carbon green hydrogen*

With the green hydrogen market set to reach an estimated US$2.5 trillion by 2050, there’s a lot to play for. At that point, blue and grey hydrogen may be just a distant memory.

Sources:

* https://www.aumanufacturing.com.au/pure-hydrogen-plans-a-turquoise-hydrogen-pilot-plant
* https://www.theguardian.com/australia-news/2021/nov/18/green-hydrogen-beats-blue-on-emissions-and-financial-cost-australian-study-finds
* https://www.energymonitor.ai/tech/hydrogen/green-hydrogen-cheaper-to-produce-than-both-blue-and-grey-in-europe
* https://reneweconomy.com.au/green-hydrogen-could-be-competitive-within-next-few-years-origin-chief-says/
* https://www.watoday.com.au/national/western-australia/fortescue-confused-by-wa-government-support-for-woodside-hydrogen-project-that-doesn-t-stack-up-20211109-p597gc.html
* https://www.abc.net.au/news/2021-07-14/wa-green-energy-hub-hydrogen-sustainable-power/100292878