Hydrogen could disrupt and reshape global energy supply chains

The global push in favour of hydrogen as a clean, more prevalent energy source will significantly disrupt and reshape global supply chains, according to an expert panel at the 2020 Global Manufacturing and Industrialisation Summit (GMIS). 

A keynote address given by Elisabeth Winkelmeier-Becker, Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Energy for Germany was followed by an expert panel hosted by Holger Lösch, Deputy Director-General of the Federation of German Industries (BDI).

The panel discussed the future of hydrogen as a source of renewable energy and how many global supply chains would need to be remapped following its introduction as a primary resource.

They admitted that geopolitical and economic challenges lie at the heart of global decarbonisation efforts with hydrogen and renewable energy and that the primary concern regarding the mass appeal of hydrogen as a source is that it is very expensive to produce, so efforts must be made across the board to reduce production costs.

However, the panellists added that renewable energy could be used to make hydrogen, which can then be stored for later use by both industries and households.

Winkelmeier-Becker said that making European industry greener, more digital and more resilient is the main goal of their industrial policy.

She added: "If the industrial sector is to become more independent and resilient, innovative and strategic value chains across Europe and key enabling technologies are of crucial importance. We are determined to continue to promote and give new impetus to the energy transition. Hydrogen that is produced in a climate-friendly manner permits significant reductions in carbon emissions, particularly in industry and transport.”

According to the panellists, producing electricity from renewable sources is likely to be the single most effective way to combat climate change and meeting emissions targets for the future. They claim, however, that the only way to reach the terms of the Paris Climate Agreement, there has to be more consideration the 'green molecule'  - an Industry term for Chlorophyll, that can be used both in replenishing oxygen in the air, but also in aiding artificial photosynthesis that can be used to generate liquid fuel - owing to the world's reliance on gaseous minerals.

The experts claim that global attention has been drawn to greener energy sources such as hydrogen to dethrone fossil fuels in energy-intensive industry sectors to help reduce overall carbon emissions.

They also discussed the challenge in developing and sustaining a global market for green hydrogen and the role it could play in reducing global emissions.

Dr Kirsten Westphal of the German Institute for International and Security Affairs and Member of the National Hydrogen Council, said that renewables have transformed the global energy landscape and hopes that hydrogen could have a similar effect in the future.

She added: "Hydrogen has often been referred to as ‘the oil of the future’ but there is still a long way to go before we see a global hydrogen market on a comparable level to the existing oil market.

"However, a global hydrogen market, if eventually created, would look very different from current oil markets and could potentially offer more flexibility because hydrogen can be produced using renewable energy. This would lead to the development of energy value chains that include opportunities for countries rich in renewable energy as well as opportunities for countries that produce the technology."

She added: “There are more options with hydrogen and it's really also more about who you partner and team up with and this is very important from the geopolitical and geoeconomic point of view.

“It's really about defining joint ventures across the whole value chain. The oil system is very different. It's basically dictated by geology and then infrastructure. Of course, we managed to build up a global oil trading system but this took a long time. My hope is that a similar system will develop for hydrogen, but it will be very different.”

Westphal said there is currently a lot of hype surrounding hydrogen's potential for decarbonisation, which has been amplified both by calls to tackle international climate change and to aid in green stimulus packages in battling a post-Covid economic recovery, such as in the case of the EU.

She concluded with: “I think it's a very important step to include this into the stimulus packages across the world, to encourage an energy transformation, but it's also about building bilateral relationships, import-export relationships, and multilateral governance as well. We have to get a better understanding of life cycles and emissions if we really want to achieve low carbon or carbon-neutral energy system.”

Armin Schnettler, the CEO of Siemens warned that only 20-25% of global energy consumption is electricity, which can easily be decarbonised using renewables. He added that, while it could be possible to jump this up to 50%, that still leaves roughly half of the world's emissions that cannot be easily decarbonised and added that so-called green molecules would be the way forward.

He added that while hydrogen could fill the gap, the primary goal, for the time being, is to reduce production costs of green hydrogen to make it outcompete fossil fuels and to attempt to fully decarbonise industry. This would depend on continually reducing the cost of renewables while ramping up hydrogen production.

Schnettler said: “It is very important to drive costs down and the cost for hydrogen or green hydrogen strongly depends on costs for renewable electricity. This is something we are very focused on to help existing industry transform and reduce their CO2 footprint. And at the same time, we’re moving towards the green hydrogen opportunity by investing in technology development, but also developing renewable electricity in countries with excellent conditions. In the long run, I do see green hydrogen as the key opportunity, the key market.”

Daniel Mills, Product Manager Hydrogen and Clean Energy at Linde Australia (BOC) said that while renewable energy has seen phenomenal growth in gaining a larger share of the energy mix in recent years, the energy is mostly produced in the middle of the day when demand is it its lowest. However, he said that this provides an opportunity to use any surplus energy for hydrogen production.

He added: “We're seeing extremely high peaking power prices in the afternoon as a major challenge to industry and particularly to the manufacturing industries.

What we'd love to see is hydrogen being used as a storage mechanism to help shift that great peak of renewables we see in the middle of the day to when industry and households are really looking for that power.”

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