Barthold Schroot at EBN makes the case for blue hydrogen for the Netherlands now, to minimise emissions and make life easier for green hydrogen later. The country is a big consumer of natural gas that, realistically, cannot be quickly replaced with renewables. So whatâs the best alternative to burning that gas and can be introduced the soonest? Green hydrogen production (emissions-free) will take time to reach scale as it needs to piggy-back off wind and solar generation which itself must prioritise direct power to the grid. Blue hydrogen (made from natural gas where most emissions are captured and stored, or reused) is 2-3 times cheaper than green and has proven technology that can be scaled up faster. Blueâs main problem is that using it still emits carbon, though much less than gas. That all makes an immediate commitment to blue the optimal pathway, says Schroot. In time, green hydrogen â produced domestically or imported â will enter the energy mix as the ideal solution. When it does, it will have benefitted from the hydrogen value chain already in place thanks to a commitment to blue hydrogen today. Schroot uses six Dutch energy system scenarios recently published to give 120 TWh as a conservative estimate of total hydrogen demand for 2050.
The Netherlands is well suited for an energy system in which hydrogen plays a significant role. An extensive gas grid, large industrial clusters, a location on the coast, nearby offshore wind farms, well developed international transport facilities â they are all there. However, the Dutch are dragging their feet when it comes to building a new hydrogen value chain. Now why is that?
Uncertainty about future demand for hydrogen and debating which form of hydrogen we prefer prove to be serious obstacles in developing a hydrogen value chain in the Netherlands. This article will gladly solve both issues and stress the need to take action on a large scale.
We will be estimating demand for hydrogen as an energy carrier in the Netherlands in 2050 based on six recently published scenarios used in energy system modelling. Adding an estimate of the demand for hydrogen as feedstock, we will arrive at a total estimated demand of about 430 PJ (120 TWh) per year. This is a conservative estimate: easily both safe and high enough to build a Dutch hydrogen value chain on.
Moreover, we will compare three ways to provide the supply to meet this demand: import, domestic production of green and of blue hydrogen. This comparison will show that the domestic production of blue hydrogen is the cheapest, easiest and fastest way to reduce CO2 emission. Itâs time to take on our responsibility to prevent CO2 emission and get going.
Estimating domestic hydrogen demand for 2050
In 2020 two studies were published which together considered six different scenarios for the Netherlandsâ energy system in 2050. The first study by Berenschot & Kalavasta (2020) (BK) was conducted at the request of the Dutch TSOâs and was embraced by the Dutch government in the context of the Dutch Climate Agreement. The study contains four scenarios and uses the publicly available Energy Transition Model (ETM). The second study by TNO (2020) contains two scenarios (named âAdaptâ and âTransformâ) and uses their inhouse energy system model OPERA, which works with a cost optimisation approach.
Figure 1 (below) shows that the hydrogen demand in these scenarios ranges from some 250 to almost 600 PJ, representing about 12 â 30% of the Netherlandsâ present day final energy demand of about 2,000 PJ, which is assumed by these authors and others to be at roughly the same level in 2050.
Out of the six estimates of hydrogen demand in 2050 the ones from the âInternationalâ scenario and from the âEuropean CO2-steeringâ scenario by BK both assume an open international hydrogen market. In these two scenarios it is assumed that imported hydrogen will be relatively cheap and therefore will result in a higher domestic hydrogen demand. Because we are trying to establish a conservative, minimal estimate of demand we exclude these two scenarios. The four remaining more nationally oriented scenarios, even though coming from two different models, agree to about 250 PJ of domestic hydrogen demand per year.
Figure 1: Â Estimates of Dutch hydrogen demand in 2050 in PJ resulting from energy system modelling. Data from Berenschot & Kalavasta (2020) and TNO (2020). Dashed red line represents our conservative estimate of minimum demand of 250 PJ/a.
Dutch Hydrogen demand 2050: 430 PJ/year (120 TWh)
We consider this estimate of 250 PJ of hydrogen as a new energy carrier to be a conservative estimate.
To arrive at a figure for total Dutch domestic demand, the demand for hydrogen as a feedstock for industry needs to be added. Estimating this, one may argue that the refining of crude oil is going to stop eventually. On the other hand, there will be an increasing demand for synthetic fuels (e.g., for aviation and shipping), for iron ore reduction in steel plants etc. We assume here that these two developments will roughly even out. Therefore, it makes sense to use the current annual production and consumption of (grey) hydrogen by industry as a reasonable estimate. This is about 180 PJ (1,500 kilotonnes).
So, we establish that 430 PJ (120 TWh) would be a realistic conservative estimate of total hydrogen demand for domestic consumption in 2050. This equals a volume of about 3.5 million tonnes per year.
Deciding on hydrogen supply
Now that we have established that the Netherlands would at least need some 3.5 Mt of hydrogen per year in 2050, where will that hydrogen come from?
There are basically three options:
- Import of hydrogen
- Domestic production of green (or zero carbon) hydrogen: by water electrolysis and using renewable power
- Domestic production of blue (or low carbon) hydrogen: from natural gas and steam by reforming processes in combination with carbon capture and storage or utilisation (CCUS)
Import of hydrogen
Some argue that eventually the production of renewable power and therefore also of hydrogen from renewable sources like solar PV, wind or even hydropower will be much cheaper in distant areas, e.g., closer to the equator, where there is more space and sun than in North-western Europe. Production costs as low as 1 to 2 euro/kg are foreseen. But the costs of transport to the Netherlands need to be added. The IEA in a recent report estimated those costs at some 5 euro/kg for distances of more than 4,000 kilometres. Long distance transport, by shipping and pipelines, will add significantly to the cost of imported hydrogen. At some point imported hydrogen will be able to compete, but it is unlikely that this will happen very soon.
In addition, one should not be naĂŻve about the likelihood of geopolitical (and terroristic and criminal) turmoil. To be dependent on hydrogen production abroad and having long supply routes makes us unnecessarily vulnerable.
Domestic production of green hydrogen
The Netherlands intends to generate its renewable power, which is needed for the production of green hydrogen, primarily from offshore windfarms. Using a load factor of 5,000 hours per year we arrive at some 40 GW of installed capacity needed to produce 3.5 Mt of hydrogen per year. Note that this capacity should be exclusively dedicated to the production of hydrogen. The idea that electrolysers could run on excess power only during periods when there is more wind than needed is not realistic. The volume of hydrogen produced would be too small and the costs per unit too high because of the under-utilisation of electrolyser capacity.
Given the currently installed capacity of 2.3 GW of offshore wind in the Netherlands and the ambitions for building more (see Figure 2 below) there will not be enough renewable power to produce 3.5 Mt of hydrogen. Most of this power from offshore wind will be needed for direct electrification.
Green hydrogen produced in North-western Europe is at the moment two to three times more expensive than blue hydrogen. This price difference may decrease. However, whether and when this will happen is rather uncertain. On top of that, a large hydrogen storage issue should be solved. Finally, the Dutch part of the North Sea already is a very busy place and space for additional wind farms is becoming scarce.
Even if we could solve these problems, developing the renewable energy sources needed for the production of domestic green hydrogen is simply going to take too long. Let us take a look at a depiction of Dutch domestic energy production from 2000 to 2020 and optimistic forecasts for the period 2020-2050 (Figure 2 below).
Gas consumption is not going away soon
Obviously, Dutch gas production is plummeting, resulting in growing gas imports. The Netherlands became a net-importer in 2018 and is no longer able to meet its own domestic demand for natural gas of about 40 bcm/a (1,400 PJ).
Based on even the most favourable assumptions, renewable sources will by no means be able to fill the Dutch need for energy before 2050. Substantial natural gas imports are therefore inevitable until at least the 2040s. The combustion of this gas de facto results in the continuation of large amounts of CO2 emission.
Figure 2: Dutch domestic energy production, realised until 2020 and forecasted for 2020-2050, using optimistic parameters for the development of renewables, including 20 GW of offshore wind in 2030, 47 GW in 2040 and 72 GW in 2050. An optimistic view on the decline of energy demand (black line) is shown as a reference.
Figure 2 shows clearly that we will have to be using gas for at least the next 20 years. In order to prevent the CO2 emission that result from combusting this gas, we seriously need to consider the conversion of gas into blue hydrogen as an alternative.
Domestic production of blue hydrogen
At this moment the production of blue hydrogen including the capture and storage of 90% of the produced CO2 in depleted Dutch offshore gas fields is about 2 to 3 times cheaper than the production of green hydrogen. Of course, this difference will decrease as the costs of power from wind farms and of electrolysers come down. But this will take time.
The most important advantage of blue over green hydrogen, however, is the fact that blue can provide the large hydrogen volumes that are needed already very soon. The decision to build a CO2 transport and storage infrastructure has been taken and plants for steam methane reforming can be built within a few years from now. The technology is proven.
Opposition against blue hydrogen
Now, if it seems such a good idea, why are the Dutch dragging their feet? One of the reasons is the fact that natural gas has gotten a negative image. This is due to the earthquakes in the Groningen field (which led to the decision to stop producing gas there) and to the CO2 emissions resulting from the combustion of natural gas. When it comes to blue hydrogen the fact that its production is not completely emission-free adds to the overall anti-gas sentiment amongst some parts of Dutch society.
Taking responsibility and action
Admittedly, blue hydrogen is not completely CO2 free and therefore not perfect. However, blocking blue hydrogen for this reason will not bring the production of green hydrogen any closer. Worse still, blocking blue hydrogen is in fact prolonging the period in which we keep emitting CO2, which is a highly unwanted effect.
Advocating the import of hydrogen basically means we hand over the initiative to produce hydrogen to parties abroad, while reducing CO2 emissions really is our very own responsibility.
We need to kick start a Dutch hydrogen value chain, based on domestically produced blue hydrogen, on a large scale. And we need to do that now.
Conclusions
At least 430 PJ (120 TWh) of clean or low carbon hydrogen will be needed in the Dutch energy system. The earlier we succeed in developing a hydrogen value chain, the less CO2 will be emitted into the atmosphere. Right now, the domestic production of blue hydrogen turns out to be by far the best option for the Netherlands for now.
It is the cheapest option to reduce CO2 emissions that are now the result of the combustion of gas, it is practically possible to produce large quantities in the short term and it will not present us with extra vulnerability on the energy front.
In time, when imported hydrogen and domestic green hydrogen have become feasible alternatives, these forms of hydrogen can be added into the mix and profit from the demand and infrastructure that has been created by the earlier introduction of blue hydrogen.
***
Barthold Schroot is a Program Manager Advice & Innovation at EBN
References:
TNO (2020), Towards a sustainable energy system for the Netherlands in 2050: https://energy.nl/en/publication/towards-a-sustainable-energy-system-for-the-netherlands-in-2050/
Berenschot & Kalavasta (2020), Climate neutral energy scenarios 2050 (in Dutch): https://www.rijksoverheid.nl/documenten/rapporten/2020/03/31/klimaatneutrale-energiescenarios-2050
IEA (2019), The Future of Hydrogen:Â https://www.iea.org/reports/the-future-of-hydrogen
Those who oppose blue hydrogen because it does not capture 100% of the carbon in natural gas should be aware of just how dirty “green” hydrogen is if the energy used to produce it is not truly surplus.
If the energy used to produce hydrogen by electrolysis could have been used to satisfy other demand, then that other demand must be satisfied by increased marginal supply. That means generation from fossil fuels. The carbon cost of a kilogram of electrolytic hydrogen is the carbon cost of about 50 kWh of generation from fossil fuels. That’s a minimum of 14.8 kg of CO2, in the rare case where marginal kilowatts are being supplied by an GTCC power plant at 60% thermal efficiency. In the more common case where they’re being supplied by a simple CT at 40% efficience, then instead of 14.8 kg of CO2, it’s 26.2 kg. Or if it’s down to ramping a coal-fired power plant, that’s 50 kg CO2.
By contrast, for straight gray hydrogen — no carbon capture at all — the footprint is only 7.86 kg CO2 per kg H2. Yet we’re supposed to oppose blue hydrogen because the easiest CCS option only takes CO2 down to a little under one kg per kg H2?
Only when100% of demand is already being satisfied by zero-carbon resources can you legitimately apply a remaining surplus to hydrogen production and call it green. The problem is, it’s very hard to get to the level of over-building of renewables where it’s normal to have enough surplus renewable energy to support green hydrogen production. Even if you can get there, the amount of surplus will vary widely. For green hydrogen to be real, you’ll need electrolyzers so cheap that they can operate at a 10% capacity factor without much affecting the price of the hydrogen they produce.
Search “Green Hydrogen and Unicorns” on Energy Central for more on this.
Ease transition to Green?
The only big blue hydrogen project in the world is Shell’s Quest in Canada, where the hydrogen is used for oil production from tar sand.
Blue hydrogen is pointless, unless you are a fossil company and want to greenwash extremely dirty operations.
CCS is always very expensive, and would be extremely expensive with a high capture rate. In the real world, usually half the CO2 goes right into the air — and the other half is used for enhanced oil recovery.
The point of green hydrogen is that it makes it possible to integrate more wind and solar. The hydrogen is produced when electricity is cheap. That helps stabilize both grid frequency and electricity price. Once those advantages are priced in, green hydrogen will make economic sense soon.
It’s been a number of years since I’ve followed developments in tar sands operations at all closely, so I could be wrong; however, I’m not aware of any use of CO2 to enhance oil recovery from tar sands.
Bitumen is too viscous to flow through even a highly porous rock formation, and CO2 doesn’t help. Only heating with high pressure steam helps.
Refining of recovered bitumen is certainly consumes a lot of hydrogen. The hydrogen is used for hydro-cracking to break bitumen down into lighter and higher value components. I’ve no doubt that most all of that hydrogen is made by steam reforming of natural gas or heavier hydrocarbons. But I doubt that it’s blue hydrogen. I don’t think that tar sands formations are suitable reservoirs for sequestration of CO2. If you have any references that say otherwise, I’d be very interested.
OK, sorry. I should have searched on “Shell Quest Canada” before I answered. Shell does indeed have a significant blue hydrogen production facility near Edmonton. The hydrogen is used for refining of bitumen from tar sands operations to the north, but the captured CO2 is sequestered nearby, in capped sandstone formations. It’s not used in tar sands operations. Capture is by conventional amine solution scrubbing, which usually captures about 80% of CO2 content from flue gases in one pass.
All that is incidental to what I wrote about blue vs. green hydrogen production. If you want to dispute what I wrote about that, might I suggest that you start with the numbers I cited for the comparative carbon footprints, when “green” hydrogen is produced from renewable energy that isn’t truly surplus? And then maybe explain how we can realistically get to the required level of surplus renewable to support useful amounts of green hydrogen?
1) Quest uses one fossil fuel (natural gas) to produce another fossil fuel (gasoline etc from tar sand bitumen). How green is that?
2) Is there any other example of blue hydrogen in the world?
3) Agree it is a bad idea to produce electrolysis hydrogen with fossil power. But to get to zero, we will have to shut down every fossil power plant, so the electricity will be renewable or possibly nuclear. No coal power, no oil power, no shale power, no peat power, no natural gas power.
Well before the elimination of fossil power, the “marginal” electricity will be renewable, i e the long term marginal — in an investment perspective of years rather than of seconds. When all NEW power plants are green, and a lot of fossil power is being decomissioned, the hydrogen from electrolysis is truly green.
This is not very far from the actual situation in Europe, the UK and the US.
“1) Quest uses one fossil fuel (natural gas) to produce another fossil fuel (gasoline etc from tar sand bitumen). How green is that?”
Using hydrogen to crack bitumen is universal practice in the tar sands business. It’s not peculiar to Quest. It’s also universal in the tar sands industry for that hydrogen to be made from fossil fuels by reforming. All Quest is doing is experimenting with carbon sequestration for a portion of the hydrogen they produce. Presumably, they’re anticipating an eventual tax on carbon emissions, and want to build an experience base for what it will take to reduce their carbon emissions, and what the cost will be.
“2) Is there any other example of blue hydrogen in the world?”
Yes, quite a few. It’s not as if the technology for it is new and exotic. Technology for separating CO2 from a mixed gas stream using amine solution scrubbing is as old as the natural gas industry itself. In most cases, there’s no convenient market for the separated CO2, so it’s just vented to the atmosphere. But in the case of fertilizer plants in the Permian Basin region of Texas and New Mexico, the CO2 from production of hydrogen is captured and sold to operators of aging oil fields. They use it for enhanced oil recovery (EOR).
CO2-based EOR, by the way, is something that anyone who cares about the environment should strongly support. Why? Not just because it sequesters CO2 and mitigates global warming, but because of its effects on world oil production.
World markets for oil and gas are demand-limited, not supply-limited. It’s important to understand what that means. There’s little price-elasticity in the demand for oil. Being able to extract more oil from old fields where the environmental damage of access road building, pipeline laying, and well drilling has already been done undercuts the incentive for finding and developing new fields. In reducing E&D activities, it will also reduce that part of world oil consumption that is consumed by E&D activities themselves. That turns out to be larger than you might think. I’ve seen estimates as high as 10%.