There’s a lot of talk about hydrogen’s potential. But transportation costs represent a big challenge

The buzz round hydrogen has gotten more and more loud previously few years — many see it as an vital software in lowering the environmental footprint of heavy business and serving to economies hit net-zero objectives.

The inexperienced hydrogen sector, which is centered on producing it utilizing renewable sources of power like wind and photo voltaic, has drawn explicit curiosity and boasts some high-profile backers.

They embrace German Chancellor Olaf Scholz, who in 2022 referred to as it “one of the most important technologies for a climate-neutral world” and “the key to decarbonizing our economies.”

In the world of business, multinationals from Iberdrola to Siemens Energy are additionally trying to make performs in inexperienced hydrogen.  

But whereas there’s an enormous quantity of pleasure in regards to the potential of hydrogen — the International Energy Agency describes it as a “versatile energy carrier” — there are additionally undoubted challenges.

For a begin, the overwhelming majority of hydrogen manufacturing remains to be based mostly on fossil fuels, not renewables — a truth clearly at odds with net-zero objectives.

And on the subject of inexperienced hydrogen particularly, manufacturing prices are a big concern, and can must be diminished within the years forward.

Transporting hydrogen from manufacturing websites to customers is one other equally vital issue to contemplate.

“Hydrogen is pretty expensive to move,” Murray Douglas, head of hydrogen analysis at Wood Mackenzie, instructed CNBC throughout an interview.

“It’s more difficult to move than natural gas … technically, engineering wise … it’s just harder,” he added.

Douglas isn’t alone in highlighting a few of the hurdles in delivering hydrogen.

The U.S. Department of Energy, for example, notes key challenges “include reducing cost, increasing energy efficiency, maintaining hydrogen purity, and minimizing hydrogen leakage.”

The DOE provides that extra analysis is required to “analyze the trade-offs between the hydrogen production options and the hydrogen delivery options when considered together as a system.”

In relation to the logistics surrounding inexperienced hydrogen particularly, one space that can want consideration is the placement of manufacturing amenities.  

Often, these are earmarked for areas the place sources of renewable power are plentiful — resembling Australia, North Africa and the Middle East — however many miles away from the place the hydrogen will really be used.

Wood Mackenzie’s Douglas referenced transportation choices when reflecting on the funding horizon for the following 10 years.

“You can obviously pipe it, but you probably need a dedicated pipeline,” he mentioned, noting that this is able to seemingly must be a brand new construct and near end-users.

The solely different practical choice on this funding horizon, he mentioned, pertains to exporting the hydrogen as ammonia.

“You produce the hydrogen, the green hydrogen, and then you would synthesize it into ammonia with nitrogen,” he mentioned.

The transport of ammonia was, Douglas famous, “a pretty established technology and industry — there’s already a bunch of receiving ports in place.”

This ammonia might then be bought straight to finish customers, resembling fertilizer producers.

An various choice could be to “crack the ammonia back into hydrogen,” though this is able to not be with out its personal points.

“As soon as you start ‘cracking’ back into hydrogen use, you start to incur some … quite big energy losses,” Douglas mentioned.   

In a press release despatched to CNBC, Jorgo Chatzimarkakis, the CEO of business affiliation Hydrogen Europe, was bullish in regards to the prospects for inexperienced hydrogen.

He mentioned it might “become a global commodity,” earlier than stressing the significance of getting “an efficient delivery system.”

Chatzimarkakis additionally highlighted the necessity for a certification program, as a result of “green hydrogen needs to prove that it is sourced from renewable energy.”

Despite some clearly large obstacles, partnerships and packages associated to the provision and distribution of inexperienced hydrogen are beginning to take form.

Earlier this 12 months, for instance, Greenergy and Octopus Hydrogen — the latter is a part of the Octopus Energy Group — introduced that they had began a “green hydrogen delivery partnership.”

Elsewhere, German agency Enertrag says it has been “operating a tanker and transport trailer to deliver large quantities of green hydrogen to customers” since 2021.

And again in 2022, Madrid-headquartered power agency Cepsa mentioned it might work with the Port of Rotterdam to develop “the first green hydrogen corridor between southern and northern Europe.”

Though the know-how and data for hydrogen manufacturing and supply are there, one sticking level stays.

“The industry knows how to transport hydrogen,” Wood Mackenzie’s Douglas mentioned, including that the power and chemical substances sectors have been transporting it for “a long time — it’s not new, it’s just expensive.”

Expanding on his level, Douglas mentioned getting manufacturing prices down is vital. The decrease these are, the extra manageable transportation prices would develop into.

“I’m not sure if there’s any sort of magical … cost reduction technology that’s going to come into the transportation side of the equation,” he added.

“We’re not suddenly going to find … a better material to ship hydrogen through,” he mentioned.

“If you’re liquefying it, you have to get it very cold, and that’s just expensive,” he went on so as to add. “If you’re turning it into ammonia, there’s a cost in there, and then there’s a bunch of challenges around toxicity.”

“They know how to do all of these things,” he went on to conclude. “It still just comes down to cost.”