Is hydrogen the new diesel?
The issue with using hydrogen as a green fuel is that 99% of hydrogen is produced by carbon emitting processes. Hydrogen production involves breaking down natural gas or coal – ‘grey hydrogen’. Only water electrolysis, powered by renewables, has zero carbon emissions – ‘green hydrogen’. Indeed, grey hydrogen is, overall, more pollutive than using coal and natural gas as a primary fuel. Between grey and green sits blue hydrogen. ‘Blue hydrogen’ is produced the same way as the grey but with carbon capture used. The real challenge for proponents of hydrogen power is how to produce sufficiently cheap green hydrogen.
Can hydrogen be better than battery power?
One of the hardest parts of the transport sector to convert to battery power is long-haul road haulage, because of the volume and weight of batteries needed, and the long charge times during which trucks are standing idle. Hydrogen has significant advantages in these respects – hydrogen storage is lower weight, and refuelling times are short. The long-haul market is more suitable than other modes of road transport: long- haul typically uses only major roads so hydrogen refuelling can be installed with relative ease; also, the haulage industry is easy to legislate over and it is possible to convert internal combustion engines to run on hydrogen at relatively low cost, so switching costs are low.
Why hasn’t the change happened yet?
The main reasons are the structure of the hydrogen production industry, lack of scale and consequently the higher cost of green hydrogen. At present most production takes place, on site, for specific uses – primarily oil refining and chemicals production. For green hydrogen to become a viable fuel for the transport industry, two things need to happen: 1. Heavy scaling up of production to lower the cost of production, 2. Government policy needs to focus on decarbonising heavy good vehicles. The former is starting to happen, with increasing numbers of producers and manufacturers positioning themselves in this field. Secondly, policies in various countries including the EU are moving to promote green hydrogen as a priority.
Chris Redman, Chartered FCSI
Investment Director and Head of ESG Investments