Post Date: 17 October 2023

Electrolytic Hydrogen for Deep Decarbonization - Evaluating Costs, Emissions, and Infrastructure Needs in Transportation and Ammonia Industry

Abstract:

Climate change is a global threat that is rapidly intensifying. The summer of 2023 serves as a stark reminder of the urgency of the climate crisis, as it marked the warmest season since NASA's global climate tracking began in 1880. The average rate of temperature increase has more than doubled since 1981. The evidence overwhelmingly points to anthropogenic activities as a significant factor driving this phenomenon, underscoring the need for decisive action to mitigate its impacts.

In response, governments and institutions globally have committed to achieving net-zero emissions by 2050 as part of the Paris Agreement. However, while technological advancements and carbon-free electricity make net-zero emissions achievable for some sectors, this solution is not universally applicable. The transition to net-zero emissions is particularly challenging in the so-called 'hard-to-abate' sectors, such as the chemical, aviation, cement, steel, and agriculture industries. The difficulties stem from their energy-intensive operations and the limited availability of low-carbon technologies ready for large-scale deployment.

Hydrogen and its derivatives (e-fuels) are emerging as potential solutions for decarbonization in sectors where direct electrification is challenging. Recognizing this potential, several nations have integrated hydrogen into their climate action plans to meet their Paris Agreement commitments. Hydrogen's abundance, unique properties, and broad application scope make it a promising candidate for achieving net-zero targets. However, challenges exist in its storage, transportation, and production, particularly as most methods are energy-intensive and often rely on non-renewable sources. Several low-carbon production methods are under consideration, including retrofitting fossil-based plants with carbon capture technologies, using biomass, and water electrolysis powered by renewable energy. The latter, while promising, requires significant scaling of electrolyzer capacity and poses challenges of aligning intermittent energy supply with constant industrial demand. In evaluating technology options, policymakers and industry stakeholders need to consider multiple, potentially competing goals such as economic feasibility, environmental benefits, and technical viability of transitioning to hydrogen, particularly in resource-limited settings.

Thus, the primary objective of this dissertation is to investigate the potential role of hydrogen in a net-zero future, emphasizing the balance between reducing carbon emissions and managing associated costs, while also unpacking the infrastructure viability of a transition towards electrolytic hydrogen in a world of limited resources, including its constraints and bottlenecks. Specifically, we aim to shed light on how the design of emission targets for low-carbon hydrogen can influence the decarbonization of energy-intensive industries. Additionally, we provide guidance for choosing between hydrogen and its direct competitors, such as direct electrification, and to identify the factors that inform such decisions.

The narrative of this research begins with the Hong Kong taxi industry. A detailed cost and carbon emissions analysis of various vehicle technologies, particularly electric and hydrogen vehicles, is provided. The findings reveal that electric vehicles generally have low carbon abatement cost, although hydrogen fuel cell vehicles show potential under specific conditions. However, the cost-effectiveness of hydrogen in reducing emissions compared to other technologies is largely dependent on the production methods employed.

Building on this foundation, the research shifts focus to the chemical industry, specifically ammonia production. Currently, the industry contributes to more than 1% of global emissions due to its reliance on hydrogen sourced primarily from fossil fuels. This necessitates an exploration into the potential of transitioning to renewable-powered electrolytic hydrogen production. The research shows that electrolytic hydrogen can reduce emissions by up to 90% without enforcing any emission limit, suggesting a significant potential for decarbonization. Furthermore, an optimal emission cap of 1 kg CO2e/kg H2 achieves even deeper emissions reduction of 95% while maintaining cost-competitiveness with the current steam methane reforming (SMR) processes. A 100% emissions reduction target, however, dramatically increases costs and land area required for renewable installations, potentially hindering the transition to electrolytic hydrogen in most regions.

The research then delves deeper into the complexities of the transition process in the ammonia industry. It investigates the potential of flexible ammonia production, a concept that seeks to align the intermittent nature of renewable power inputs with the steady-state operation of the ammonia production process. The findings reveal the critical role of location and renewable resource potential in determining the feasibility and environmental impact of large-scale electrolytic ammonia production. Results show that regions rich in wind resources are good candidates to produce cost-competitive and low-carbon ammonia, while plants in solar-dominated regions present higher costs suggesting that abundant solar resources cannot offset sub-optimal wind resources. In terms of plant configuration, plants with a high degree of flexibility can reduce costs and emissions compared to their continuous counterparts, regardless of location-specific resource profiles.

In summary, this dissertation provides a cross-sectoral and multi-regional understanding of the role of low-carbon and electrolytic hydrogen in decarbonization efforts. It offers valuable insights and practical solutions for industry stakeholders and policymakers, elucidating complexities of the transition process. These include the challenges of aligning constant industrial energy demand with intermittent renewable supplies, the relationship between suboptimal renewable resources and large-scale infrastructure feasibility, the capital-intensive nature of large-scale plant decarbonization and the need for internationally agreed-upon emission targets for the carbon content of hydrogen.