BLUE H2 MADE FROM NAT GAS
Alberta government unveils road map with goal of becoming hydrogen export superpower

EDMONTON — The Alberta government has released its road map to reach a goal of becoming a world leader in hydrogen exports by the end of the decade.

© Provided by The Canadian Press

Premier Jason Kenney says Alberta is well-positioned with its existing energy infrastructure to become a global supplier of choice for hydrogen.

And he calls it a “game changer” in the climate change fight, given that hydrogen emits no greenhouse gases when burned.

He says the global hydrogen market is expected to become worth up to $2.5 trillion within the next 30 years.

The plan calls for catching up on clean hydrogen technologies in the short term before moving to growth and commercialization in the long term.

Alberta is already the largest hydrogen producer in Canada at 2.4 million tonnes per year.

Dale Nally, the associate minister for natural gas and electricity, compares the hydrogen revolution to the breakthrough energy boom brought on by the oilsands.

“Hydrogen can absolutely be a game changer for our province on many levels,” Nally told a news conference Friday.

“We have the natural advantages to make hydrogen that is both clean and affordable.”

Along with export potential, the report identifies four leading domestic markets for clean hydrogen, which is hydrogen produced with minimal greenhouse gas emissions.

They include home and business heating, power generation, transportation and hydrogen for industrial use.

Opposition NDP critic Kathleen Ganley says the United Conservative government's plan builds on proposals from the former NDP government but lacks concrete goals, objectives and details.

“This strategy lacks detail and thoughtfulness that would be required to actually attract investment,” she said.

“It sets targets, but it doesn’t actually provide a pathway to achieve those targets.

“It doesn’t even give a commitment to how much investment they are willing to contribute at the provincial level.”

The government said the plan will be revisited in 2025.

This report by The Canadian Press was first published Nov. 5, 2021.

Dean Bennett, The Canadian Press

 

Setting the table for hydrogen economy to grow

S&P PLATTS. Aug 05, 2021

From the raft of hydrogen projects unfolding in the Middle East and around the world, the importance of infrastructure readiness is becoming clear: setting the table for the hydrogen economy through development of ports, shipping lanes and storage will be critical in the months and years ahead.

The Middle East is rich in sunlight and has ample access to natural gas, which makes clean hydrogen and its derivatives such as ammonia potentially cost competitive compared with conventional fuels, in a decarbonization landscape. Opportunities exist to export either into Europe through the Suez Canal or into Asia.

Scaling up of both production and consumption of hydrogen is increasingly seen as a vital part of the achieving global decarbonization. Evidence of that scaling on the production side is seen in several key projects of Middle East origins, which are already looking at commercializing hydrogen, including the UAE’s recently announced $1 billion green ammonia facility in Khalifa Industrial Zone Abu Dhabi, or KIZAD. The project has access to Khalifa Port, the main export hub of Abu Dhabi, and will start production in the second quarter of 2024 with exports targeted mainly to Europe and the US.

A second $1 billion green ammonia project at KIZAD, a unit of state-owned Abu Dhabi Ports, would be powered by a 2 GW solar power plant. The plant would supply ships using ammonia as a bunker fuel and for export via gas carriers.

Partnerships, including offtake agreements, will power these developments, such as the cooperation agreement reached with German utility Uniper to secure green ammonia from Oman’s Hyport Duqm renewable hydrogen project. The project will be built in the Arabian seaport of Duqm in Oman, and will work well with the company’s global hydrogen strategy, Uniper said.

Other end-users, such as Japan’s largest refiner ENEOS, see the Middle East as a region with some of the world’s lowest levelized costs of electricity, which gives producers within the region an advantage and offers the operators of these new sites the potential to deliver cost-competitive hydrogen or its derivatives, such as green ammonia, to Europe and Asia.

As large projects are announced and developed, port developers will have to examine where they have the biggest bottlenecks to allow production of clean hydrogen from renewable sources or where they have the capacity to add carbon capture and storage.

Conversion of gas shipping lines for H2, ammonia

With production on the way, cooperation agreements are being drawn up with end-users. Companies such as Italy’s Eni aim to develop renewable and low-carbon hydrogen in Egypt using depleted gas fields to store CO2 produced from conventional hydrogen production. The agreement allows Eni to work with their suppliers to investigate potential local demand for hydrogen, as well as explore export opportunities.

Shipping from the Middle East to Europe and Asia takes advantage of existing supply lines for natural gas and LNG—via the Suez Canal into Europe and around to Asia.

From the customer’s perspective, deciding whether to buy domestic or imported hydrogen will largely depend on production and transportation costs, including terminal and other fees. Project developers must weigh the cost of producing decarbonized hydrogen or ammonia domestically against the cost of producing it with cheap electricity in the Middle East plus transportation costs.

In Japan, S&P Global Platts launched calculated cost of production assessments Feb. 3, 2020. The costs are based on fixed values such as capital costs and plant efficiency along with daily variable inputs, including gas and electricity.

The Platts cost of production prices show that the cost of producing hydrogen conventionally through a Steam Methane Reforming unit without carbon capture and sequestration averaged $2.61/kg since the assessments were launched.

In comparison, producing hydrogen through electrolysis averaged $7.24/kg. This difference between the two production routes is largely driven by a surge in electricity costs at times of peak consumption during winter, which drove up the cost of production via electrolysis.

On an MMBtu basis, hydrogen production costs are far more expensive than spot shipments of LNG delivered into the JKTC (Japan, Korea, Taiwan, China) region. Platts JKM LNG prices averaged $6.86/MMBtu since Feb. 3, 2020. Electrolytic hydrogen production costs minus transportation and storage averaged roughly eight times that amount over the same period and conventional hydrogen around three times higher than delivered LNG.

However, while shippers might be focused on costs, end-users could be focused on how many tons of CO2/kg H2 are saved. Pressure continues to mount on industry and governments to reduce carbon emissions amid rising challenges of climate change.

The World Energy Council’s Hydrogen on the Horizon: Ready, Almost Set, Go? report released July 27 also stresses the need to move beyond traditional supply-centric energy perspectives to focus more on the demand-side and the role of consumers, given their potential for disruptive innovation.

Better understanding of hydrogen demand has proved particularly challenging in the early stages of its development, the report said.

In the early stages of the development of the hydrogen market in the Middle East, this chicken-and-egg question around the costs of decarbonization will need to be resolved. It is likely that cooperation between industry and government will be an essential part of finding a solution to developing the necessary infrastructure. However, as investment decisions come under closer scrutiny, transparency around current and future hydrogen pricing will also become increasingly important.

A version of this article was first published on Zawya.com on Aug. 2, 2021