Hydrogen economy

In the second article on the transformation of the chemical industry, we focus on the hydrogen economy. Here we take a look at the different types of production, look at projects that have already been realised and those that are in planning, talk about the chemical industry’s huge demand for hydrogen, but also dare to take a critical look at the currently still very high production costs of green hydrogen through electrolysis.
Does it make sense to transport the hydrogen produced directly, or is green ammonia an economical alternative?

Transformation of chemical industry

Hydrogen is considered a climate-neutral and efficient energy carrier. Its combustion only produces water vapour, and no environmentally harmful substances are released. Hydrogen is used as a chemical element in various ways. It is used to produce fertilisers, to refine mineral oil and used as a coolant for power plants. In addition, in many industries hydrogen serves as a storage and producer of electrical energy. Hydrogen can also be used as a fuel in vehicles such as cars, trains, and other means of transport, enabling longer distances. Moreover, hydrogen is suitable for heating homes and powering factories which previously relied on coal or natural gas. Many of these applications are still being developed but will become increasingly important.

The hydrogen economy refers to the production, storage, distribution, and use of hydrogen as an energy carrier. In essence, it is about using hydrogen as an alternative to fossil fuels such as oil, gas, and coal to reduce CO2 emissions and support the transition to a sustainable energy supply.

If we look at the patent situation on hydrogen worldwide, we see that of the patents filed during the study period of the study conducted by the EPA and IEA between 2011 and 2020, 80 percent were for hydrogen production alone. Of all the patents filed during this period, 28 percent were filed in the EU, and within the EU, Germany dominated with 11 percent, followed by France with 6 percent and the Netherlands with 3 percent.

Source: IEA Study „Hydrogen patents for a clean energy future“, January 2023
(The graph shows the percentage share of international patent families IPF worldwide)

In the beginning, hydrogen was still produced from fossil raw materials, but the IEA’s patent analysis shows that the trend is clearly moving towards low-emission methods such as the production of hydrogen from the electrolysis of water using renewable energy sources.

Turning to the colours of hydrogen: Broadly speaking, we distinguish between the colours green, turquoise, blue and grey. Grey hydrogen is created by splitting fossil fuels and electricity from fossil energies (steam reforming). Blue hydrogen is produced by splitting methane, with CO2 as a by-product which is stored and not emitted (steam reforming using CCS). Then there are the colours turquoise and green. Turquoise hydrogen is manufactured by methane cracking, with solid carbon as a by-product. Depending on the energy source, the extraction of the natural gas and the further processing of the solid carbon, emissions can occur in the process (natural gas pyrolysis).

Using electricity from renewable energy sources, green hydrogen – which we want to look at here – is made from the electrolysis of water, with oxygen as a by-product. But green hydrogen can also be produced using alternative processes such as gasification, pyrolysis and fermentation of biomass, thermochemical cycles, photocatalytic and photobiological water splitting as well as seawater electrolysis. Countries in Europe that produce green hydrogen on a large scale include Germany, Denmark, Norway, the Netherlands, and Spain. Germany and Denmark have a strong wind energy industry and, therefore, often use wind-based water electrolysis to produce green hydrogen. Norway uses its hydropower resources, to power its electrolysis plants with renewable electricity, while the Netherlands and Spain both use wind and solar energy to produce green hydrogen.

In Germany, a large number of projects are involved in the planning and production of green hydrogen. Here are just a few examples:

The demand for hydrogen in Germany is expected to increase strongly in the coming years. In order to achieve the decarbonisation target for 2030 and climate neutrality by 2045, the National Hydrogen Strategy expects a hydrogen demand of between 90 terawatt hours (TWh) and 110 TWh per year in 2030, reaching 110 TWh to 380 TWh by 2050. Other studies forecasting the future demand for green hydrogen in Germany assume that the demand could be two to three times as high.

According to the German Technical and Scientific Association for Gas and Water (DVGW), the demand for primary energy in Germany was approximately 3,300 TWh in 2022, of which only 17 percent was covered by renewable energies, and almost 25 percent by natural gas. By far the largest share, however, still came from mineral oil, coal, and nuclear energy.

When looking at the production costs, however, electrolysis offers great potential to significantly reduce the costs, which are currently still high. According to calculations by the DVGW, electrolysis costs in 2021 were approx. 4.8 EUR per kg of hydrogen provided. The electricity needed makes up the largest share of the costs. It is assumed that the costs can be drastically reduced to about 2.4 EUR per kg of hydrogen provided by 2050.

Source: H2-Erzeugungsverfahren im Vergleich; Wasserstoff-Wochen des DVGW 07.06.2021, Katharina Bär, Janina Leiblein, Michael Kühn; OPEX = Operational Expenditures, which are required for the maintenance of the operational business of a company

The availability of green hydrogen has a significant impact on the chemical industry in Germany. The chemical industry is one of the largest consumers of hydrogen and uses it primarily as a raw material and energy carrier in various processes.

The use of green hydrogen as a raw material will help reduce dependence on fossil fuels and make the production of chemical products more sustainable. There are already projects and initiatives which deal with the use of green hydrogen in the chemical industry in Germany. But overall, there are still too few projects to make the transition. Examples include:

The availability of green hydrogen as an energy carrier can help drive decarbonisation in the chemical industry. Many processes in the chemical industry require high temperatures and are often operated with fossil fuels at the moment. By using green hydrogen as a clean fuel, these processes could be made lower-emitting in the future.

Furthermore, green hydrogen can be used as energy storage in the chemical industry to increase the availability of renewable energies such as wind and solar power. The surplus renewable electricity can be used to produce hydrogen, which can then be used to generate electricity when needed. Overall, green hydrogen will help make the chemical industry in Germany more climate-friendly and sustainable and can open up new opportunities for the development of innovative products and processes.

According to estimates by the German Chemical Industry Association, 1.1 million tonnes (37 TWh) of green hydrogen are currently needed annually as a raw material for the chemical industry. This is expected to rise to around 7 million tonnes (227 TWh) in 2050. An estimated 54 million tonnes of CO2 could be saved through hydrogen in 2050.

According to a research project conducted by the German Technical and Scientific Association for Gas and Water (DVGW) in 2023, the pipelines installed and steel pipelines in Germany are already suitable for transporting hydrogen. So, nothing stands in the way of connecting 1.8 million businesses and 19.6 million homes nationwide to a hydrogen gas network.

The extraction of green hydrogen from green ammonia (NH3) is a promising option for efficiently storing and transporting renewable energies such as wind or solar energy in the form of hydrogen. The idea behind this is that the hydrogen is released from the green ammonia in so-called “ammonia crackers”. For this, green ammonia is first produced using renewable power and nitrogen. The green hydrogen is then released in an ammonia cracker, where the ammonia is split into hydrogen and nitrogen at high temperatures and pressures. The hydrogen can then be used in the chemical industry or as fuel for fuel cells.

A major advantage of producing green hydrogen from green ammonia is that ammonia has a higher energy density than hydrogen, which can facilitate the storage and transport of renewable electricity and hydrogen. The production of green ammonia and the use of the hydrogen it contains have been demonstrated in first pilot projects. Pilot projects are for example:

Wilhelmshaven is striving to become a major hub for the hydrogen economy in Germany. In addition to the already announced terminal and electrolyzer, the energy company BP is now also planning to review the construction of an ammonia cracker. According to the plans, the plant could produce a total of up to 130,000 tonnes of hydrogen per year from 2028 onwards.

Through their subsidiary Oiltanking Deutschland, Air Products und Mabanaft plan to construct Germany’s first large-scale green energy import terminal at the Port of Hamburg. The goal is to supply Germany with hydrogen from 2026 onwards. The location at Mabanaft’s existing tank terminal will provide strategic access to green ammonia from large green hydrogen production facilities operated by Air Products and its partners around the world. The ammonia will be converted into green hydrogen at Air Products facilities in Hamburg and distributed to buyers in northern Germany.

However, technical and economic challenges still need to be solved for the large-scale application of green ammonia, such as the development of efficient ammonia crackers and the optimisation of production processes. As the production of green ammonia from renewable energy sources such as wind and solar energy is currently still expensive, it might be more economical for some companies and industries to import green ammonia from other countries where production is cheaper. Potential suppliers of green hydrogen to European consumers include Australia, Chile, Morocco, and the United Arab Emirates, as well as Spain.

RWE, for example, is pushing ahead with plans for a green ammonia import terminal in Brunsbüttel. The facilities are expected to be ready to import 300,000 tonnes per year, as early as 2026. Although the immediate focus for Brunsbüttel is a new LNG import facility, RWE states that the site will eventually be fully converted to import “green molecules” such as ammonia.

There are also large projects in the Middle East which focus on the production of green ammonia from renewable energy sources such as solar energy and wind energy: “Helios Green Fuels” in Saudi Arabia, for example, which is being developed by the company Air Products. The project is set to become the world’s largest solar-powered green hydrogen and green ammonia production plant. More than 4 GW of renewable solar and wind power will be generated to produce 650,000 tonnes per year of green hydrogen via electrolysis using ThyssenKrupp technology, nitrogen by air separation using Air Products technology, and 1.2 million tonnes per year of green ammonia using Haldor Topsoe technology.

Even greater efforts must be made to really achieve decarbonisation in the chemical industry. The production costs for electrolysis are still too high, the number of projects realised is still too low. The demand for climate-friendly hydrogen is very high, new technologies are needed. But they are still too expensive and not competitive. The infrastructure is not sufficient to meet the demand of the chemical industry; much more needs to be done here. Without state support, it will be very difficult to meet the planned goals in the foreseeable future.

Fields of action green hydrogen

In the next article, my colleague, Dr Francke, will look at the circular economy in the chemical industry, particularly at the projects that have already been implemented, but also at upcoming projects. How can the processes there be made sustainable? How far along is the chemical industry, what works well, where are the problems?

Dr. Ronald Hinz, Market Intelligence Senior Expert