Hydrogen Demand Is Going To Fall Even Sooner In Up to date 2100 Projection

Virtually two years in the past I revealed my first hydrogen decade-by-decade demand projection via 2100. My projection has modified over time, most not too long ago with my evaluation of iron and metal demand via 2100, however I hadn’t republished it formally for some time. And now it’s time to try this.

Hydrogen demand via 2100, chart by Michael Barnard, Chief Strategist, TFIE Technique Inc

The set off for this was Michael Liebreich publishing his first replace to his helpful hydrogen ladder in two years, model 5.0. I like to recommend readers dig via that as effectively, as Liebreich’s place on hydrogen has hardened fairly considerably, though I stay extra bearish on the molecule. There at the moment are eight use circumstances within the ladder that are within the row of doom the place there isn’t a hope for any hydrogen demand.

As a body for this dialogue, it’s essential to keep in mind that hydrogen manufacturing as we speak is a greenhouse gasoline emissions downside, and therefore local weather change downside, in the identical vary as all of aviation in every single place on the earth, round 1.5 billion tons of greenhouse gases or equivalents. Decarbonizing hydrogen manufacturing is a requirement.

With decarbonizing hydrogen manufacturing comes important added prices — realistically 3-5 instances the price per ton of hydrogen. Blue hydrogen, manufactured from pure gasoline with carbon seize and sequestration bolted onto the method, has important capital and operational value adders, in addition to extra vitality necessities that usually double the price or extra, and nonetheless leaks methane and CO2 alongside the way in which, including to carbon pricing. Inexperienced hydrogen has capital and electrical energy value curves that imply it’s unlikely to get under US$6 per kilogram on the level of producing. Any distribution of hydrogen as hydrogen could be very costly.

These prices develop into a big issue, and there’s a kicker in any use of hydrogen for vitality which I’ll talk about under.

Metal: A Uncommon Development Space

Going via every demand class, let’s begin with metal. My authentic projection had roughly 40 million tons of recent demand from metal manufacturing. Iron ore has an excessive amount of oxygen within the combine and have to be diminished indirectly. That’s carried out with blast furnaces, direct discount with artificial gases, and now with inexperienced hydrogen within the HYBRIT course of. That latter course of makes use of about 55 kilograms of hydrogen per ton of recent metal.

My projection for metal demand development flattens significantly within the coming a long time as China is coming to the tip of its huge infrastructure and concrete build-out, and different growing areas will likely be slower. Demand nonetheless rises from present ranges, however much more of metal demand will likely be met by scrapping current metal in electrical arc furnaces, one thing the USA has been doing for 70% of demand for 20 years or so. A lot of the fossil gasoline infrastructure goes to be scrapped within the coming a long time, so there will likely be loads of scrap metal to play with.

The mixture signifies that it goes from zero tons as we speak to 30 million tons in 2100. My authentic guesstimate was 40 million tons and a slower development, however the metal demand projection each diminished the overall requirement and introduced it ahead.

Transportation: Biofuels Require A Little Hydrogen For Processing

Hydrogen for transportation, both straight or by way of artificial fuels manufactured from electrolyzed or blue hydrogen mixed with captured CO2, is a non-starter. I spent 9 years taking a look at transportation repowering and analyzing biofuels, batteries, hydrogen, and artificial fuels, and it’s going to be grid-tied and batteries on the bottom, and batteries and biofuels within the air and water.

The kicker for hydrogen for vitality is said to blue hydrogen. The carbon atom that’s a part of the carbon and hydrogen that make up pure gasoline is 45% of the vitality service within the combine. Blue hydrogen takes pure gasoline, removes 45% of the vitality with extra capital and working prices for capturing and sequestering the carbon dioxide, and finally ends up being rather more costly per unit of vitality consequently. Not solely is the per unit value of hydrogen doubling, the vitality embodied within the ensuing hydrogen is about half of what was within the pure gasoline. Probably not an awesome tradeoff.

Within the coming a long time, all inland delivery and most brief sea delivery will likely be battery-electric. Bulk delivery will decline radically as bulk fossil fuels characterize 40% of quantity, and we gained’t be extracting, processing, refining, and distributing the roughly 18 billion tons of them that we do as we speak. Equally, the uncooked iron ore which represents 15% of bulk delivery will diminish as extra processing is completed close to mines with electrical energy and hydrogen as an alternative of coal. Solely transoceanic and the longer coastal routes would require liquid fuels, and so they’ll be biofuels.

Most aviation inside continents will develop into battery-electric too, in my projection. No less than trans-Atlantic aviation and sure trans-Pacific aviation will develop into viable as effectively. My aviation projection has liquid fuels required to at the least the tip of the century in diminishing quantities after 2060 or so, and so they’ll be sustainable aviation biofuels.

The full liquid biofuel requirement is within the vary of 200 million tons yearly, and we already manufacture 100 million tons of the stuff, with about 70 million tons of it being biodiesel. We waste the overwhelming majority of that on floor transportation, and all of that can electrify, so we’ll have capability.

Waste biomass has all of the vitality required to fabricate diesel and jet fuels, that are simply totally different combos of the hydrogen, oxygen and carbons within the biomass. And there are tens of billions of tons of biomass waste generated yearly by the forestry trade, agriculture, livestock, and the meals processing trade. Each ton of dried biomass turns into about 0.4 tons of biofuel.

And all of that waste biomass creates loads of methane because it decomposes, so diverting biomass waste to biofuels is a really local weather virtuous circle, and with carbon pricing and carbon border adjustment mechanisms, a really financial smart one.

The dominant use of hydrogen in refineries is hydrocracking to separate lighter distillates from heavy crude. The decrease quantity makes use of are hydrotreating and desulfurization. Hydrotreating is the dominant one required for biofuels. That in all probability means about 5 kg hydrogen per ton of biofuel, very roughly.

With 200 million tons of biofuels, meaning about 1,000,000 tons of hydrogen for hydrotreating at 5 kilograms per ton, turns into about 1,000,000 tons a yr of principally new demand. There are some biofuels processes that add some hydrogen, however with the elevated value of hydrogen, I believe they’ll show much less aggressive than processes which don’t require. I give one other million tons for that.

I’d put aside 4 million tons for biofuel processing as a guess in my preliminary hydrogen projection, and apparently I used to be beneficiant.

Desulphurization & Hydrotreating: A Plummeting Demand Section

Oil refineries stay the one greatest demand section for hydrogen. About 40 million tons, a couple of third of complete international hydrogen demand, is used to course of and refine oil. The most important portion of that, about 75%, is for hydrocracking which separates crude into lighter and heavier fractions. Hydrotreating removes extra water. Desulphurization removes extra sulfur, which is a critical pollutant and a giant air air pollution and acid rain concern.

The crude oil that generates the most important demand for hydrogen is heavy, high-sulphur crude. That’s the stuff from Alberta, Venezuela, and Mexico. The requirement for about 7.7 kilograms per barrel of these merchandise signifies that the standard low cost goes to multiply as the value of hydrogen multiplies as it’s required to be decarbonized.

Blue or inexperienced hydrogen would add US$25 to $77 to the price of processing and refining a barrel of heavy, bitter oil.

We’re within the decade of peak fossil gasoline demand. The Worldwide Vitality Company, based virtually solely as a fossil gasoline company 50 years in the past, not too long ago declared that every one fossil gasoline demand, not simply oil and coal, would peak this decade. China’s oil and gasoline refining and distribution big, Sinopec, declared that peak gasoline demand as this yr, 2023, two years forward of expectations. Asia’s Lantau Group tasks that China’s coal demand will peak in 2024, a yr forward of expectations. And so on. And so on. And so on.

With the height comes the decline. With declining demand comes main shifts in market economics. In a declining market, the most cost effective oil will win clients, and that oil is gentle, low sulphur, and near water. The primary crude oils off the market consequently would be the ones which might be getting costlier to course of and refine, which is to say those that require essentially the most hydrogen.

This balancing act of worldwide market economics signifies that my authentic projection of declining hydrogen demand in refineries wasn’t aggressive sufficient. Because of this, I’ve steepened the curve of decline for hydrogen for these segments.

Fertilizer: Feeding 8 Billion Individuals Doesn’t Require As A lot Of It

Fertilizer is a number of merchandise, however the essential one for hydrogen is ammonia. That substance is one nitrogen atom and three hydrogen atoms. Vegetation are made up of as much as 5% nitrogen by mass. It’s the one greatest component by mass of their buildings.

Getting nitrogen to crops is a big a part of agriculture. We used to go away fields fallow and planted with clover one out of 4 years to try this. Now we manufacture hydrogen from pure gasoline and coal and bind it with nitrogen from the air in industrial chemical crops to make ammonia, after which additional course of the ammonia in numerous methods for purposes.

We use about 30 million tons of hydrogen yearly for this course of. It’s been an enormous a part of why we’ve been capable of hold producing sufficient energy to match inhabitants development, multiplying crop yield per hectare.

We waste loads of the agricultural vitamins we use as we speak. We over-apply them. We spray them from helicopters and planes over fields, blowing loads of it exterior of the boundaries of the fields and into waterways the place it causes important downstream issues.

And when ammonia is available in contact with moisture within the soil, a few of it turns into nitrous oxides with international warming potentials about 265 instances as excessive as carbon dioxide.

Fertilizer is agriculture’s massive local weather change downside, and that downside goes to be priced. Canada’s carbon value already consists of all greenhouse gases, together with nitrous oxide and methane. The EU’s emissions buying and selling scheme and carbon border adjustment mechanism will embody them beginning in 2026. The projected value per ton of CO2 or equal is satisfactorily excessive for the severity of the issue, reaching about US$203 in 2030 in 2022 greenback values.

That signifies that ammonia goes to get costlier coming and going. The roughly six tons of carbon debt per ton of ammonia for manufacturing will likely be priced, or the expense of blue or inexperienced hydrogen will likely be added. The nitrous oxide emissions of use will likely be priced.

The mixture will imply important downward stress on ammonia demand and a hunt for alternate options. And we have already got levers that we will pull there. Pivot Bio has genetically engineered regular nitrogen fixing microbes within the soil to take away their off change in order that they hold working even within the presence of fertilizer, and brew them in what are mainly beer vats. They had been lowering ammonia fertilizer demand on 1,000,000 acres of US corn by 25% a few years in the past, and have a stretch purpose of 100% for corn, wheat and rice by 2030. Many others are engaged on the identical downside, so good outcomes will likely be achieved. And precision agriculture, together with with heavy spray drones, is reducing product utility volumes for a similar crop yields.

Criticism of my first projection from Paul Martin was apt. I had diminished demand in 2030 by a few million tons, and that was too aggressive of a timeframe. Apart from that, the projection stays unchanged with a discount however not elimination of the demand space.

Heating: Zero Hydrogen Demand

There at the moment are one thing like 45 critical research which all say that hydrogen has no play in business or residential water or air heating and that warmth pumps are the reply. 45% of business warmth is under 200° Celsius, and trendy warmth pumps are delivering that, so it’s not a market both.

That leaves industrial warmth above 200° Celsius. I’ve checked out innumerable makes use of circumstances and applied sciences for industrial heating and haven’t discovered a single one the place there aren’t electrical options. There isn’t a temperature vary that electrical energy and its warmth applied sciences like resistance heating, induction heating, EMF, microwaves, electrical arcs, and electrical gasoline plasmas can’t obtain. Electrical arc furnaces already run as much as 3,000° Celsius.

The one purpose we don’t electrify increased temperature heating as we speak is as a result of fossil fuels are a mud low-cost supply of excessive temperatures, particularly pure gasoline for the previous 20 or so years. However in 2030, the EU’s ETS and CBAM imply that each gigajoule of pure gasoline warmth goes to value about US$14 extra. Pure gasoline averaged about US$5 per gigajoule from 2009 to 2021.

A sensible carbon value, one which the EU is making use of to all items crossing itss border, all items manufactured inside its borders, and one which each US EPA and Canadian social value of carbon is intently aligned with, signifies that the value of warmth from pure gasoline will likely be multiplied by an element of 4 in 2030, and an element of six in 2040. Canada’s carbon value, California’s cap and commerce value, and China’s cap and commerce value are going to pattern to the identical factors, partly as a result of that’s the financial actuality, and partly to align buying and selling worth throughout economies to keep away from being uncompetitive.

The carbon pricing alone would imply huge shifts to electrical heating options, that are lots cheaper and extra environment friendly in most jurisdictions. However hydrogen vitality will all the time be much more costly than pure gasoline vitality.

Keep in mind, blue hydrogen makes use of vitality to throw away 45% of the vitality within the pure gasoline and prices extra. Inexperienced hydrogen goes to be 5 to 10 instances the price per gigajoule of liquid pure gasoline, the costliest type of vitality most economies use as we speak.

Economics imply that each try to make use of hydrogen for warmth will likely be uncompetitive with simply utilizing electrical energy straight. That is no place the place hydrogen will pencil out in my view, or if there may be it’s such a rounding error that I’m comfy ignoring it.

Lengthy-Time period Storage: Nothing About The Requirement Screams Hydrogen

One in every of my projections is the requirement and applied sciences which will likely be used for grid storage. My projection has pumped hydro — particularly closed-loop, off-river pumped hydro with excessive head heights and small reservoirs — persevering with to dominate grid storage because it has since 1907 when the primary website went stay. After that, redox circulation batteries and cell-based batteries battle for second place, with redox circulation taking the lead due to the decoupling of energy and vitality that they supply. Then there’s a 100 GW of also-rans, together with compressed air, liquid air, thermal storage for electrical energy, and hydrogen will combat over scraps.

That takes care of all the pieces besides 10- to 100-year occasions when very massive geographic areas go weeks with out sunshine or wind. Ten years is the island downside, and that’s what Sir Chris Llewellyn-Smith’s modeling reveals for the UK. On continents with extra room and extra related grids, it’s longer than that. In loads of the tropics, there’s all the time sunshine, so it’s a non-issue.

These uncommon occurrences will want some strategic reserves. Lots of people appear to suppose that placing hydrogen in salt caverns sluiced out for the aim is the answer. I believe that’s presupposing that hydrogen is the reply and going on the lookout for use circumstances.

There’s nothing about hydrogen that makes it the plain alternative for very lengthy period storage. Its vitality density by quantity continues to be the poorest among the many alternate options. The price of manufacturing it from vitality or fossil fuels continues to be increased than the alternate options. It’s nonetheless the leakiest molecule of the alternate options, and one of many ones that’s hardest on metals and electronics.

Personally, my guess is on capturing and diverting anthropogenic biomethane from the waste biomass we don’t remove or in any other case diffuse, and don’t use for different functions, and shoving that it into strategic reserves to burn in lavatory customary mixed cycle gasoline generators. That turns a present main local weather downside into an answer for a selected transition downside and containing and monitoring methane is comparatively trivial in comparison with hydrogen.

I’m additionally not significantly involved about this section and suppose arguing about it lots is a distraction. We have now an terrible lot of heavy lifting to do earlier than we get to the final couple of % of decarbonization. It’s nice that there are individuals eager about it, but it surely doesn’t make a lick of distinction to what we have now to do within the subsequent 10 to fifteen years.

The mixture signifies that I believe some hydrogen will likely be utilized in grid storage, however solely about 1,000,000 tons a yr beginning in 2040. Nothing I’ve seen up to now two years has modified my thoughts on that one.

Hydrogenation: Margarine & Trans-Fat Will Decline A Bit

We use loads of hydrogen to make unhealthy meals merchandise proper now. Partial hydrogenation makes trans fat, just about the least wholesome factor we will eat that isn’t actively a poison. With important will increase in hydrogen prices and rising well being consciousness globally, I see a slight decline by 2100 in hydrogen demand for meals hydrogenation.

Unchanged for the reason that first projection, going from about 8 million tons a yr now to five million tons in 2100.

Methanol: Regardless of Business Bait & Change, A Small Decline

My preliminary projection left demand unchanged at about 9 million tons of hydrogen a yr for the roughly 170 million tons of methanol within the international market. I didn’t see a purpose for that to go up or down, however I’ve spent loads of time taking a look at methanol up to now two years.

The methanol trade is a significant local weather downside. Methanol manufacturing, with the hydrogen challenges that feed it, provides extra greenhouse gasoline emissions and results in the vary of 500 to 700 million tons of greenhouse gases or equal a yr. That’s a really massive quantity, about 1.5% of worldwide greenhouse gasoline emissions.

Methanol is a local weather change downside which relies on hydrogen. Methanol is manufactured from pure gasoline, coal, or some waste artificial gases. It relies on its feedstocks being dust low-cost, and having the ability to deal with the ambiance as an open sewer to keep up its commodity costs.

It’s used for a wide range of industrial functions, together with a bunch of stuff that’s going away, like being a gasoline additive, a diesel additive, and a burnable gasoline name DME. It’s used to make formaldehyde, plastics, and solvents.

Cleansing up methanol is a significant requirement, and carbon pricing alone goes to make its prices shoot up. As its value to finish customers goes means up, doubling, tripling, or extra, substitutes will likely be discovered in lots of circumstances. There are different solvents. There are different chemical compounds which may do the identical job. Methanol will get used as a result of it’s helpful and low-cost. When it stops being low-cost, different issues which aren’t as costly will find yourself within the combine.

Which means the pure pathway for methanol is definitely a decline in demand, one thing I hadn’t projected. That’s what my present mannequin reveals, with a decline from 9 to seven million tons by 2100. Not lots, however definitely not a significant enhance.

I’ve been taking note of methanol as a result of the trade is making an attempt actually laborious to persuade the maritime delivery trade that it’s the substitute for the fossil fuels that they at the moment bunker. As I’ve famous, they’re operating a bait and change operation, promoting black methanol as we speak at probably discounted costs and promising inexperienced methanol sooner or later at excessive costs. Maersk has purchased into the story and is spending tens of hundreds of thousands on dual-fuel ships and low-carbon methanol contracts that gained’t decarbonize present methanol and sure gained’t be used a lot in any respect.

Methanol is already 1.6 instances the price of diesel per unit of vitality on common all over the world. When that value multiplies as methanol decarbonizes, biofuels and batteries will likely be vastly extra aggressive. I believe Maersk’s twin gasoline ships will bunker much more biodiesel than methanol.

I don’t see an upside for methanol in maritime delivery. The economics don’t pencil out. However as I’ve mentioned, it’s one of the best of the also-rans, so if the trade and governments and the IMAO for some head-scratching purpose pressure the sq. peg of inexperienced methanol into the spherical gap of marine energy, I’ll shrug and transfer on. No less than maritime delivery will likely be decarbonized, if unnecessarily costly.

However the 1,000 km common route of the 700-container ship that’s now plying the Yangtze with containerized batteries and its sibling inform me I’m extra probably proper.

Combined Different: Hydrogen Is Used For A Lot Of Stuff

One of the vital widespread metaphors for hydrogen is that it’s a Swiss Military knife. It may possibly do loads of issues, however it could possibly’t do most of them significantly effectively. When it’s low-cost and the ambiance can be utilized as an open sewer with out value, it’s incessantly the ‘greatest’ financial alternative for a bunch of issues. It’s cheaper than alternate options.

One of many fascinating use circumstances I discovered up to now couple of years is in massive electrical energy producing generators in dams, coal crops, and nuclear crops, the place it’s used as a result of its properties make it coolant that doesn’t add friction. Gigawatt-scale nuclear crops just like the 9 Mile Level reactors use a few hundred kilograms of the stuff a day. These massive generators aren’t growing in quantity, however lowering in quantity and utilization as coal goes away, in fact. And the world isn’t going to be constructing hundreds of recent nuclear crops when wind and photo voltaic are so low-cost, quick, low-risk, and dependable.

When the value of hydrogen to finish customers goes up considerably for all of those myriad incidental use circumstances, they’ll principally go searching and see if there are cheaper alternate options. And so they’ll discover them in lots of circumstances. Hydrogen isn’t magic or irreplaceable in loads of processes, it was simply the economically appropriate alternative at its black hydrogen value level.

Initially, I’d left this demand section alone, leaving it flat at 30 million tons a yr. However the identical financial stress to seek out replacements that influence fertilizer and methanol impacts this section. I now have it slowly declining to 25 million tons a yr.

Hydrogen Demand: Off A Third By 2100

The results of all these places and takes is a decrease demand ultimately than I’d initially projected in 2100. My authentic projection was round 90 million tons, and now it’s just below 80 million tons.

Am I proper? In fact not. It is a logical situation primarily based on empirical knowledge and main international developments. It’s defensible, but it surely’s going to be fallacious in a number of methods. The error bars are massive, and at 77 years, I’m projecting about 76 years previous what we are literally able to doing with any accuracy.

Am I much less fallacious than most projections? I believe so, however I’d, wouldn’t I. Time will inform.

However there are some rising knowledge factors that make it clear that the hype cycle for hydrogen for vitality is disappearing. One in every of them is Michael Liebreich’s ladder, the place use circumstances he had in play have dropped fully out of play, like off-road automobile vitality demand. One other one is a main BCG report that not too long ago dropped the place the illusory consensus of US$3.20 per kilogram of inexperienced hydrogen was discovered to be fallacious, and that US$5.30 inexperienced hydrogen was extra probably.

It’s not like lots of people haven’t been saying that for years, together with me. Hydrogen might be inexperienced, but it surely gained’t be low-cost. My projection is that hydrogen will are available in at $6-8 per kilogram to fabricate at level of consumption, and extra when delivered in fact. The consensus of $3.20 and even the fatuous $1 per kilogram was amongst STEM-illiterate monetary and coverage sorts and boosters of hydrogen for vitality who in lots of circumstances knew higher and had been mendacity deliberately.

And so, model no matter that is of my hydrogen demand situation via 2100 is now revealed. Please tear it aside and problem me. Inform me the place else I’m fallacious, or how these modifications are fallacious. I stay by post-publication skilled evaluate, with the entire slings and arrows of occasional humiliation that brings.

As has been attributed to Keynes and plenty of others, “When the details change, I modify my thoughts. What do you do, sir?”