Hydrogen is gaining traction as a critical component in the future energy mix, but still has challenges to overcome. Global chemical and industrial gas firm Linde's vice-president of clean hydrogen for Asia-Pacific Wen-Bin Qian spoke to Argus about the state of hydrogen in the clean energy transition.
How big is the current hydrogen market in the Asia-Pacific region?
Asia-Pacific produces around 30mn t/yr of hydrogen, making up about 40pc of global production. Of this, 20mn-25mn t/yr alone is from China, where hydrogen is produced mostly from coal gasification.
Are you seeing much interest for low-carbon hydrogen from existing customers?
Yes, there is a lot of interest. But interest is one thing and viability is another, especially in terms of cost in the short term. The cost of producing grey hydrogen created from natural gas is $1.50-2/kg. Green hydrogen is almost triple that at around $4/kg or more. The current cost level is making it difficult to convince consumers to switch, especially without support. Both the public and private sectors need to join hands to reduce this cost to facilitate the energy transition.
What is the best way to decarbonise existing hydrogen production?
I think the best way for now is to aim for blue hydrogen in the transition to the ultimate goal of green hydrogen. You see, the cost of blue hydrogen is just $0.50-1/kg more than grey hydrogen, so it is a lot more affordable than green hydrogen, which has technology costs as well. So I see blue hydrogen playing a big role in the next 5-10 years as the transition to net zero picks up pace. Having said that, not all geographies are blessed with suitable geological conditions to store CO2 while producing blue hydrogen.
What are the main challenges for the development of a new low-carbon hydrogen industry?
Firstly, a lack of government support in the face of high costs as hydrogen-related infrastructure is yet to be built. Secondly, hydrogen technologies across the supply chain, from production and storage to transportation and distribution, need to be scaled up. Finally, the cost of renewable power is high. This needs to be halved to $20/MWh or even $10/MWh ultimately to make production cost-effective and encourage the development of a low-carbon hydrogen industry.
What government policies are needed to promote hydrogen?
Definitely subsidies, like those we are seeing in China for hydrogen fuel cell vehicles, as well as government funding like in Japan and South Korea for research and development. There should also be government mandates, especially in countries like China and India that are reliant on thermal fuels. Tax incentives like the US' 45Q tax credit can also help. Mechanisms like the contracts for difference scheme in Germany will also help green hydrogen projects take off.
How is grey hydrogen currently used? How do you expect this to change as more supply and demand for low-carbon hydrogen comes along – could we see it develop into a commodity market like LNG?
On the supply side, more than 90pc of grey hydrogen is produced on site for plant consumption, with merchant sales making up less than 10pc of the grey hydrogen market.
But decarbonisation of existing applications will create a much bigger demand for hydrogen as a key energy carrier and a fuel for mobility, as well as for power and for use in industrial processes. Just like the LNG business, we will one day see hydrogen being traded as a commodity, perhaps also in the form of liquid, with transactions likely to have much in common with LNG contracts.
Does there need to be some sort of international low-carbon hydrogen standard to allow for trading of hydrogen?
This is a must and a lot of countries have advocated for this, from Australia to the EU. Certain standards and certifications are needed for hydrogen to be traded, otherwise blue and green hydrogen cannot flow easily among markets like other commodities due to CO2 footprint counting. We also need standards to maintain uniformity in quality and safety when trading.
How reliant will the likes of South Korea and Japan be on hydrogen imports?
South Korea and Japan have emphasised hydrogen as key in their roadmaps to achieve net zero emissions by 2050. This is why their governments are supporting pilot projects, demonstrations and technology development to bring more hydrogen supplies into Japan and South Korea. These countries rely on fossil fuel imports to cover more than 90pc of their energy needs and in order to become carbon neutral, they will need to turn to imports of a cleaner energy source like hydrogen.
On that note, Linde is also looking to get into the import and export business. We are already a top hydrogen producer globally with 2.5mn-3mn t/yr, although 97pc of our hydrogen is produced from fossil fuels like natural gas. But Linde has set a 35-by-35 target to reduce total greenhouse gas emissions by 35pc by 2035 based on 2021 levels.
What uses of hydrogen do you view as most promising?
Mobility is the most talked about now, especially as hydrogen can easily replace diesel and petrol in large vehicles like buses and heavy-duty trucks. Hydrogen can also be easily converted into electricity in a fuel cell to power ships. Secondly, its use in chemical and industrial processes as it has the potential to decarbonise manufacturing. And lastly hydrogen for ammonia production, especially with ammonia gaining traction as a possible future fuel.
