Hydrogen needs to be able to play to its strengths, according to Rafael Fejervary, global hydrogen director at services firm SLB. That means low-carbon hydrogen is predominantly feasible for industrial use cases because they are a challenge to electrify. While hydrogen can be used as a feedstock to produce other products such as ammonia and methanol, it also serves as a fuel for producing industrial heat or, in the case of steel production, as a reducing agent.
“For now, we need to anchor the use of low-carbon hydrogen in industrial decarbonisation to achieve scale,” Fejervary said. “Once this foundation is established, additional applications can develop.”
Technology is key
SLB is making strides in developing a diversified portfolio of hydrogen technologies with disruptive potential. In addition to its own technology research and development efforts, the company is also counting on unique partnerships and collaborations to scale low-carbon hydrogen production technologies.
Last year, SLB signed a strategic deployment agreement with clean hydrogen technology company ZEG Power to demonstrate and scale their sorption-enhanced reforming hydrogen production solution that employs natural gas with integrated carbon capture. Although it is less mature than other methods, it offers higher efficiency and potentially lower hydrogen costs. This technology allows for smaller-scale production, which is suitable for industries with existing natural gas pipelines.
SLB has also formed a joint venture in partnership with the French Alternative Energies and Atomic Energy Commission (CEA), VINCI Construction, Vicat and the Occitanie region. The public-private partnership, called Genvia, is focused on developing solid oxide electrolyser technology to produce clean hydrogen for industrial use cases.
“This is a technology that is suited when there is industrial heat available. Whenever there is excess industrial heat, we work on understanding from an engineering point of view what it takes to integrate that heat into the technology,” Fejervary said.
Applications
Fejervary noted that industrial processes typically require a constant supply of hydrogen, often supplied by large or small steam methane reforming (SMR) plants. One of the main use cases SLB is working on involves blending low-carbon hydrogen with existing hydrogen production.
“With existing hydrogen production, the customer needs to be confident that the technology will not impact their downstream process because these chemical plants cannot work with an unreliable asset,” he said. “Before fully retrofitting, customers need to trust the technology and achieve the promised technoeconomic benefits.”
Fejervary stressed that there is a great opportunity to decarbonise current hydrogen production, which emits around one gigaton of CO₂/yr. “Some customers are considering blending low-carbon hydrogen with the current carbon intense hydrogen production to reduce their emission intensity while gaining confidence in the technology,” he said. In terms of other use cases, the employment of hydrogen as a reducing agent in steelmaking is gaining a lot of momentum as it is one of the few alternatives for this industry to decarbonise.
“Another use case involves pre-combustion capture, where a blue hydrogen plant is placed upstream of a natural gas turbine, blending hydrogen into the system gradually. This is not about running turbines entirely on hydrogen initially but starting with blending and increasing the proportion as confidence in technology and economics grows,” he noted.
In summary, there will be many cases in which the customers will begin by blending low-carbon hydrogen with either carbon intense hydrogen or natural gas. As technology, economics, regulations, and incentives become clearer, they would increase the blending percentage, eventually aiming to run these systems fully on low-carbon hydrogen.
Lowering costs
To reduce costs, particularly for green hydrogen via electrolysis, the industry needs to focus on technology innovation and scale. Improved chemistries and higher efficiencies are part of this, but mass production is key, Fejervary explained. There are more than 1,500 announced hydrogen projects, but only 4% have passed FID because only 1% have long-term offtake agreements. This means manufacturing capacity increases are waiting on project approvals, he added.
“It all comes down to how fast the industry can move projects to FID, scale up manufacturing and bring costs down. There are huge opportunities to do this. And I think by the end of this decade, we will see more and more projects passing FID as regulations become clear. The reason for that is that most strategies are setting production targets rather than demand requirements. This issue has been identified by various regions and we should start to see more traction on demand creation.”
Standardisation is another key element that can drive down costs. “Once you have a deep understanding of the working envelope for a use case, developing a standard design that applies to similar use cases can save hours of engineering time and associated capex spend,” Fejervary explained.
Regulatory and policy angles
While technology and demonstration projects are crucial, having the right regulatory framework is essential for project developers to create a viable business case. “Without clear regulations, it is very difficult to move forward,” Fejervary said.
Europe is probably the most advanced in terms of regulation. They have a carbon pricing mechanism through the emission trading scheme and have mandated that current hydrogen consumption be decarbonised. By 2035, 60% of hydrogen must come from renewable sources. This dual approach of carbon taxes and mandates drives the market. Additionally, Europe provides funding for demonstration projects through programmes such as Important Projects of Common European Interest and the Innovation Fund.
“In the end, it is all about clarity. Not clarity for the next two or three years; it is clarity for the long term,” he remarked. If regulations are uncertain or short-lived, it becomes much harder to justify the economics of hydrogen projects.
Speaking about the impact of the upcoming presidential elections in the US on investments in hydrogen, Fejervary stated, “I am positive that things will move forward, and regardless of who wins, it makes sense to kickstart this economy to compete with regions like Europe, Japan, and South Korea, who are aggressively advancing their hydrogen initiatives.”
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