Green energy sector seeks to divine demand for hydrogen

Financial Times

On an overcast day at the end of May, the UK’s energy minister climbed aboard the world’s first hydrogen-powered digger. 

After connecting a pipe to refuel the white-and-green backhoe loader, built by JCB, Claire Coutinho vowed that Britain would “stay at the front of the race” to use renewable hydrogen to reduce emissions from the construction industry. 

But not everyone agrees that hydrogen will necessarily be the future fuel for heavy machinery. “I’m sorry Lord Bamford [JCB’s owner], I love that you have built an internal combustion engine that runs on hydrogen, but who is going to buy it?” asked Michael Liebreich, who runs a clean energy advisory firm, as he published his latest assessment of which sectors are likely to switch to the clean-burning gas.

“It takes 16 to 18 tube trailer deliveries of hydrogen to replace one delivery by diesel tanker and I just can’t get my head around the logistics or safety of hydrogen . . . on a construction site,” he explained. 

Around the world, industries rushing to replace fossil fuels with green hydrogen — produced using renewable energy — are also reconsidering where the future demand will actually come from. 

“We were told hydrogen was going to be the Swiss Army Knife of the energy industry, that it can be used everywhere,” says Anne-Sophie Corbeau at Columbia University’s Center on Global Energy Policy. “In theory, this is, of course, correct. But, in practice, the number of sectors where it makes sense to use hydrogen is becoming more and more realistic than it was before.” 

Its high cost is one obstacle. Proponents of green hydrogen believe that it can eventually be produced for $1 per kg, the same as the price of hydrogen produced by fossil fuels; the current price, however, is at least five to 10 times higher. 

At the top of the list of clients for green hydrogen are those for which it is the only viable solution to cutting emissions: businesses involved in ammonia production for fertiliser, the hydrogenation of fats in the food industry, hydrocracking to produce jet fuel and diesel, and steelmaking. 

Other industries where there is likely to be demand for green hydrogen include shipping, aviation, chemicals and power generation. 

Shipping is one industry where there is likely to be a demand for hydrogen as a fuel © Lida Marie David/Bloomberg

“There are certain industries where the carbon emissions simply cannot be abated, other than with green molecules,” says Marco Raffinetti, the chief executive

The full article is available here. This article was published at FT Markets.