Skip to content

Boosting the hydrogen economy

Welcome to the thirteenth series of the DNV Talks Energy podcast, hosted by Mathias Steck. In this series we explore the key insights from DNV’s latest Energy Transition Outlook and what they mean for the future of our planet. We explore the geopolitical developments affecting the energy transition, and what’s needed from technology, finance and policy in delivering net zero. Crucially, we explore: how do we move from ambition, to urgent action over climate change?

In this sixth episode, we draw on key findings from DNV’s Energy Transition Outlook, and ask: how can hydrogen’s growth potential be maximized?

Host Mathias Steck is joined by Drummi Bhatt, Vice President of Market Intelligence & Strategy at Mitsubishi Power Americas, Inc. Together, we explore how policy and industrial strategy, in particular, are crucial components in accelerating hydrogen adoption.

Transcript:

Transcript:

MATHIAS STECK    Hello and welcome to the 13th series of the DNV Talks Energy Podcast. I'm your host, Mathias Steck. During this series will be exploring some of the key insights from DNV's Energy Transition Outlook - our annual independent model of the world's energy system and what they mean for the future of our planet. Across the series, with the help of leading industry guests, we shed light on what's happening right now and the forecast as we move forward. We explore topics from the geopolitical developments affecting the energy transition to what's needed from technology, finance and policy in delivering net zero. Crucially, we ask how do we move from ambition to urgent action over climate change?

In this episode, we discuss the growth, potential and trajectory of hydrogen. We look at what's behind its slow progress. What needs to be done to accelerate its development. And how technology and increased deployment can cut production costs and close the cost gap between hydrogen from renewables and hydrogen produced from unabated fossil fuels. To discuss this, I'm joined by Drummi Bhatt, Vice President of Market Intelligence and Strategy at Mitsubishi Power Americas, which has established the world's first centre for validation of hydrogen-related technologies from hydrogen production to power generation. We hope you enjoy the episode. Welcome to the DNV Talks Energy Podcast, Drummi. It's a pleasure having you with us.

Transcript:

DRUMMI BHATT    Thank you for having me, Mathias. I look forward to chatting with you today.

Transcript:

MATHIAS STECK    So Drummi, before we get into the discussion, it would be great if you could give us a bit about your background, yourself and Mitsubishi Power.

Transcript:

DRUMMI BHATT    Sure, Mathias. So I lead the market Intel and Strategy Division for Mitsubishi Power Americas. As you're aware, Mitsubishi Power, brand of Mitsubishi Heavy Industries is heavily invested in ensuring a safe and decarbonized future. Together with my team of passionate professionals, we are building net zero pathways to get to a net zero future in the most reliable and cost-efficient way.

Transcript:

MATHIAS STECK    So we're going to talk about hydrogen today. And DNV's Energy Transition Outlook predicts that hydrogen will only supply 5% of global energy demand in 2050, so about a third of the level needed for net zero. What are some of the causes of hydrogen slow progress?

Transcript:

DRUMMI BHATT    I wouldn't necessarily say that hydrogen is progressing slowly. However, the need to decarbonize is critical right now, and hydrogen's potential in this regard is very impressive. So essentially the faster is better. I think one of the key reasons why hydrogen might be progressing a little slowly in certain regions would be cost, because producing hydrogen from low-carbon energy right now is still costly. The IEA analysis predicts 30% fall by 2030, but in certain hard-to-abate sectors, the cost is still prohibited for the large-scale use of hydrogen. I think the development of hydrogen infrastructure is also key in this regard and it's holding back a lot of widespread adoption. I think hydrogen is used majorly right now across the world in industries, but it is still not realized its potential to support clean energy transition because of lack of regulatory support in certain key industries. So the demand-supply economics will balance out as soon as a widespread adoption is guaranteed through regulatory pushes, as well as removing certain bottlenecks on the investment side.

Transcript:

MATHIAS STECK    So you just said the faster the better. What would you recommend to speed that development up?

Transcript:

DRUMMI BHATT    All right. So there are a lot of opportunities coming up, especially with all the focus right now on green hydrogen and decarbonization. One of the major ones would be to establish the role of hydrogen in the clean energy strategies for different sectors, including refining chemical industries and transportation. We need to speed that up. Apart from that, we have certain industrial ports such as Gulf Coast in the United States which are ripe and ready to transition to a green hydrogen-based economy through use of the existing infrastructure such as natural gas pipelines. So we could use that to spearhead the widespread adoption of hydrogen across different sectors. We have to expand hydrogen usage through transportation fleet, freights and corridors. That would actually, again, give a lot of boost on the supply side. International cooperation, as much as I would stress, is the key because from a regional, local, community level, people need to collaborate, learn from each other and understand how decarbonization technologies, especially with hydrogen usage, can help them green the grid faster. Using hydrogen as green storage. We also need to stimulate commercial demand for the clean hydrogen, including a broader messaging of its use cases across the investment as well as consumer community. And last but not the least, we need to address investment risks for the first movers. We have a lot of players right now invested in ensuring a clean hydrogen economy, and I think the role of government, as well as the investment community, is key because they are at a crucial point on the learning curve of the commercialization. And some cases I think the tipping point would be reached pretty soon.

Transcript:

MATHIAS STECK    Hydrogen is a sensor to decarbonize sectors that cannot be electrified, like aviation, maritime and high-heat manufacturing. In your view, in which areas does hydrogen have the most growth potential?

Transcript:

DRUMMI BHATT    I think high-heat manufacturing has the best potential to quickly transition because the direct combustion of natural gas can be replaced with hydrogen fairly quickly. Next would be the maritime sector, but there's still an economic feasibility problem and it depends on the voyage routes as well as the tonnage and the last would be the aviation sector, because there is still the space confinement as well as economic consideration that needs to be addressed. But I do see a lot of startup action happening in all of these three spheres. And as I said, the investment community needs to come together to de-risk their use of hydrogen in this sector, as well as understand the value of hydrogen as a reliability resource in a decarbonized future and award it accordingly.

Transcript:

MATHIAS STECK    So there is hope that in future hydrogen, especially green hydrogen, can be used to replace natural gas, also an existing gas infrastructure. But a recent study in the UK has cast doubt on hydrogen's potential for home heating, citing costs and implementation challenges, instead favouring other clean methods, including heat pumps, and district heating networks. Is a similar challenge being faced in other regions? And how can this be overcome?

Transcript:

DRUMMI BHATT    You know, it's important to note that in many regions it is likely more economical to decarbonize using direct electrification for home heating. So essentially you're using hydrogen in the electrification process of home heating rather than using hydrogen as a fuel for home heating. So by electrifying home heating, you are providing electrons which are green, and on the back end you are having a system fueled by renewable as well as hydrogen. So using hydrogen directly as home heating might not make economical sense, but using hydrogen as a part of your electrified portfolio system and then supplying those electrons to electrified home heating would be the better solution.

Transcript:

MATHIAS STECK    The key barrier for low carbon hydrogen is its cost gap as hydrogen produced from unabated fossil fuels. At present, producing hydrogen from fossil fuels is the cheapest option in most parts of the world. But how can technology and increased deployment cut production cost and make hydrogen from renewables cost-competitive with hydrogen from natural gas?

Transcript:

DRUMMI BHATT    You know, the end goal of utilizing hydrogen or even talking about hydrogen economy is its decarbonization benefit. So I don't think it's really fair, or apples to apples, when we compare gray versus green because gray does not have decarbonization benefits. At the same point in time, I think green hydrogen costs are coming much, much lower thanks to advancement in electrolyser technology and costs, as well as the availability of curtailed renewable energy. In some parts of the world, especially as we saw in Europe, green hydrogen was actually at a lower cost than gray hydrogen recently. And then I think a lot of regulation is coming in with IRA in the United States, which is incentivizing green hydrogen production based on cost of lifecycle emissions. So I think apples to apples, green versus gray from a decarbonization perspective, does not match up. And it's just a matter of time wherein in green is not just going to be economically cost-effective, but also with the decarbonization benefits it's going to replace gray hydrogen in many sectors.

Transcript:

MATHIAS STECK    So how can technologies like CCUS help us here to decarbonize the conventionally produced hydrogen in comparison to green hydrogen?

Transcript:

DRUMMI BHATT    At the end of the day, any technology that we talk about in decarbonization has to be evaluated from a market and operational perspective. There are certain regions in the world wherein green hydrogen is the only available option. If you want to safely decarbonize to a net zero future, well, there are certain regions who are endowed to make CCUS economic decisions, such as the Gulf Coast, where I think blue hydrogen does have a bridge future transitioning ultimately to a green hydrogen, if you want to get to a net zero future.

Transcript:

MATHIAS STECK    What are some of the challenges when we look at scaling hydrogen value chains in terms of managing safety risks and employing policies to make hydrogen projects competitive?

Transcript:

DRUMMI BHATT    You know, the safety risk is an engineering problem and as such has engineering solutions and it comes at a cost. So effectively, the risk and competitiveness of hydrogen will be measured against other similar decarbonization technologies. Obviously, incentives will go a long way in ensuring hydrogen remains competitive with other technologies that do not have these safety risks.

Transcript:

MATHIAS STECK    Drummi, How do we change public perception of hydrogen and address safety concerns to get people to understand the opportunities it presents? In your experience, how important is education to the success of clean energy initiatives?

Transcript:

DRUMMI BHATT    Historically, hydrogen has been used in the industrial sector for well over 50 years, and the production generation, storage and transportation of hydrogen has occurred in a systematic manner since the industrial sector has been out of public view. Mainly, the public is not really aware of the engineering community's ability to build a safe hydrogen ecosystem. I think the bankers, the regulators and marketing people have a lot of work to do to educate and inform people about the safety as well as utilization of hydrogen to make the hydrogen economy a success in the near future.

Transcript:

MATHIAS STECK    So the last question today to me would be what your outlook is on the trajectory of hydrogen and how optimistic you are about its uptake in the next 20 years.

Transcript:

DRUMMI BHATT    Obviously, I'm extremely passionate as well as optimistic about having a hydrogen economy in the next two decades happening. The pace of change is overwhelming recently, and public perception around hydrogen is also changing. We have a lot of work to do to make the hydrogen economy possible, but if we are serious about achieving last mile decarbonization, hydrogen as long duration energy storage as well as hydrogen in industrial and transportation sector is a very important and economical use case. And I think we're going to probably see the next decade reach a lot of tipping points in adoption of hydrogen across different sectors. So to reiterate, I think power generation sector has taken major strides in using green hydrogen recently. Our Advanced Clean Energy Storage project, as you are aware in Delta, Utah is the largest single storage site and is on its way to decarbonize the entire western United States. Green hydrogen use cases in the power sector are of immense benefit, especially when you're talking last mile electrification, decarbonization with increased renewables, you're going to see a lot of increased curtailments. And that's where the magic of green hydrogen comes in, as long-duration energy storage in tandem with lithium-ion batteries, which are good for short-duration energy storage. Not only that, using green hydrogen helps us prevent renewable overbuild and thus reduces overall system costs and capital costs. The benefits of all is going to be passed on to the ratepayers with lesser electricity costs as we safely decarbonize to a renewable energy future. As I rightly said before, green hydrogen has use cases in certain regions, whereas blue hydrogen, which is basically gray hydrogen made from natural gas, but where carbon capture and sequestration benefit reducing its lifecycle emissions at the end of the day, from a decarbonization perspective and when we talk about hydrogen, we're talking about total lifecycle emissions. And there are regions wherein gray hydrogen, a hydrogen made out of natural gas might be suitable. But ultimately, if your goal is to decarbonize, we really are talking about blue hydrogen, which has a carbon sequestration benefit over gray hydrogen and a lower lifecycle emissions. And the ultimate would be green hydrogen, which is made out of renewable energy sources and extremely low lifecycle emissions.

Transcript:

MATHIAS STECK    Thank you so much to me for these great insights into the hydrogen economy. Was great having you here with us.

Transcript:

DRUMMI BHATT    Thank you.

Transcript:

MATHIAS STECK    Thanks for listening to this week's podcast. Drummi made a strong case for the widespread adoption of hydrogen technologies as an effective means for reducing emissions within traditionally carbon-intensive industries. She talked about the need to expand the use of hydrogen commercially, as well as its potential use in generating electricity to be used in homes. Drummi noted that some areas of the world are ready to shift wholesale towards hydrogen solutions and also make the point that innovations in engineering have made hydrogen as safe as well as a potentially green fuel. Join us next week for a discussion about how the oil and gas industry can decarbonize and the role electrification can play in aiding this process.

To hear more podcasts in the series, please visit dnv.com/talksenergy.

 

DNV Talks Energy

All series and episodes