Conor here: More bad news for Europe — and especially Germany — which bet big on this boondoggle to supply energy for sectors where electrification is not an option, such as in parts of industrial manufacturing. The following piece touches briefly on that risky wager, but here’s more from Energy Connects:
Germany plans to build more than 20 power plants much bigger than the one in Leipzig, which it advertises as the continent’s first “hydrogen-ready” facility. They’ll be supplied by state-of-the-art liquefied natural gas terminals equipped to handle niche clean fuels such as ammonia, and a network of special pipes stretching roughly 6,000 miles (9,600 kilometers).
But there were always a lot of buts:
But there’s no official definition of what makes a plant hydrogen-ready, opening the door for greenwashing. For power plants, burning hydrogen hasn’t even been tested at scale.
…Then there’s the problem of moving hydrogen around. The Leipzig plant isn’t hooked up to the grid (and hasn’t yet set up its own electrolyzers), which means the highly combustible fuel will have to be trucked in until the second part of the government’s grand plan comes to fruition. It’s building a €1 billion liquefied natural gas terminal in Brunsbuettel, a town along the North Sea, that will initially import LNG but [could] be designed to also handle futuristic clean fuels.
Hydrogen can only be liquefied at -253C (-423F), well beyond the capabilities of today’s LNG ships. So Germany is planning to import hydrogen in the form of liquid ammonia, a combination of hydrogen and nitrogen that can more easily be turned into a liquid. But ammonia is toxic and handling requires better ventilation systems. Many components in the terminal, including control valves and fire and gas sensors as well as inline devices — most of which have not been tested with ammonia — will also need upgrades, according to Fraunhofer ISI, an energy think tank.
Germany doesn’t have an ammonia pipeline network and there are limitations to moving it via trucks on an industrial scale because it’s hazardous. That means ammonia will have to be converted back into hydrogen, yet there’s no economically viable technology currently available to do that. The terminal’s operator said it will discuss alternative strategies if none emerge by next year.
…The difference is that wind and solar produce clean electricity — a commodity the world already uses. Green hydrogen, on the other hand, will require building more solar and wind farms when, in many cases, it would be simpler to just use that clean energy directly. By the time hydrogen is made, stored and burned to make electricity again, there’s nearly 70% less energy than at the start — and the cost has tripled.
Green hydrogen will probably only be useful towards the end of the energy transition, once primary electricity demand is being comfortably met by renewables, according to Pierre Wunsch, Belgium’s top central banker.
By Tsvetana Paraskova, a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. Originally published at Oil Price.
- The initial excitement surrounding low-carbon hydrogen has faded due to high project costs, regulatory uncertainty, and weak demand.
- Only a small percentage of hydrogen projects in North America and Europe have reached final investment decisions.
- Major energy companies like Shell and Equinor have paused green hydrogen plans in Europe, citing poor project economics and unclear regulatory frameworks.
The low-carbon hydrogen hype has begun to fade in recent months as companies and investors realize that their ambitions face the reality of costly projects amid regulatory stumbling blocks and uncertain future demand.
The momentum behind green hydrogen from two years ago, generated by the U.S. Inflation Reduction Act (IRA), has slowed amid still high costs and macroeconomic headwinds. In addition, regulatory uncertainty and a lack of committed demand are undermining the 2030 production goals for low-carbon hydrogen, both in the United States and Europe.
As a result, investors are re-thinking funding, companies are re-drawing hydrogen production strategies, and share prices of major hydrogen players are crashing.
For example, Denmark’s Green Hydrogen Systems (CPH: GREENH), a provider of standardized, modular alkaline electrolyzers, has plunged by 65% year to date. U.S.-based Plug Power (NASDAQ: PLUG) has seen its stock tumble by 53% year to date, and Ballard Power Systems Inc (NASDAQ: BLDP) has crashed by 58%.
Other firms focused on green hydrogen and technologies have also seen their share prices battered amid signs that despite progress in project announcements, project commitments with final investment decisions (FID) are a fraction of the total pipeline of projects.
Just 18% of U.S. low-carbon or renewable hydrogen projects in North America, and only 5% of such projects in Europe that aim to begin operations by 2030 have reached FID so far, McKinsey & Company and the Hydrogen Council said in a report last month.
“A key sector-specific challenge for the hydrogen industry is uncertainty associated with a number of regulatory frameworks,” including the EU regulatory framework and the rulebook for the investment tax credit in the IRA. All of this “impedes project bankability,” the authors of the report wrote.
“Coupled with cost increases for renewable power and electrolysers, this has led to delays and cancellations of projects – in particular, renewable hydrogen projects,” they added.
In Europe, the European Commission has set unrealistic hydrogen production and import targets—the EU is not on track to achieve them, the European Court of Auditors, the supreme audit institution of the EU, said in a report this summer.
The Commission has been partially successful in creating the necessary conditions for the emerging hydrogen market and the hydrogen value chain in the EU, but it now needs “a reality check,” the European Court of Auditors said.
Even the International Energy Agency (IEA), the most vocal backer of all things renewable, has warned that policy and demand uncertainty are slowing down green hydrogen adoption globally.
According to the IEA, the main reasons for the slow uptake of low-carbon hydrogen “include unclear demand signals, financing hurdles, delays to incentives, regulatory uncertainties, licensing and permitting issues and operational challenges.”
A lack of visibility on demand and regulatory uncertainties have halted several major projects in Europe this year alone.
Spanish energy firms Repsol and Cepsa, for example, are pausing green hydrogen investments in Spain, as one of the most promising EU markets for renewable hydrogen is considering making the windfall tax on energy firms permanent.
The idea that a version of the tax could become permanent infuriates many major companies, including energy firms with plans to invest in green energy projects.
The Spanish firms halting projects are the latest European firms to pause or ditch green hydrogen plans due to either policy or demand concerns.
Most recently, Shell and Equinor have ditched plans for low-hydrogen production and transportation in north Europe due to a lack of demand.
Investors are not rushing to invest in backing green hydrogen projects, either, due to poor economics and potential returns.
“Green hydrogen is still not investable. It’s rubbish in terms of investment,” Mark Lacey, head of thematic equities at UK asset manager Schroders, told the Financial Times.
Damn, South Africa and Namibia were betting that we could get in on the scam. We’ll have to go back to fake diamonds and Ponzi schemes and accounting fraud again.
How can Germany be pro ammonium and anti nuclear, the disaster potential is bad from both. Producing hydrogen from water by solar is only about 10% efficient, conversion to Ammonium would be even worse. Its clear they have no intention of using solar and this will just be a way for oil companies to green-wash their product.
PowerPlug (mentioned in the article) had some good ideas for smaller projects such as Hydrogen fork lifts for warehouses. I still believe that Hydrogen for cars is a good idea, It would be ideal for me as I do less than 20 miles a day and with a basic solar hydrogen system covering my whole roof that is possible, but expensive.
I know many people on NC would point out that it is probably 3 times more expensive to run a car on hydrogen rather than just have an EV. However once renewable projects can satisfy current demands, cost wouldn’t matter as there will be excess energy available at certain months in the year (particularly for Europe in the summer), so maybe some subsidies for small scale local solar hydrogen production is needed to help technological innovation.
Ammonia, not ammonium..
I’m thinking that the people in government in Germany figured that this was a load of baloney. But their idea was that when Project Ukraine caused the Russia Federation to collapse, then Germany would have access to gas and oil at rock bottom prices at which point all this stuff about hydrogen could be quietly shelved and quickly forgotten. In other words it was all political theater. Sure it cost billions but when Germany got all that cheap energy from Russia again, it would pay for it all. And in fact, favoured investors would probably make money from this scam in any case. But then Russia did not collapse and all these hydrogen chickens are now coming home to roost.
Hydrogen is a very complex topic in energy systems, not least because its not just ‘hydrogen’ – its also ammonia and other synthetic liquid/gaseous additives, including methane.
Leaving to one side a few boosters, hydrogen is not a solution or even a major element or decarbonising energy systems. It is however a potentially very important component in decarbonising certain very specific industrial processes, at least until they can be electrified, and this can only be done over the capital lifetime cycle of these processes. For shorter term impacts, you have to go with the industrial infrastructure you already have.
The delays in Europe are mostly regulatory – which is inevitable when you have a process which overlaps so many different processes and encompasses many different products (the issues around ammonia, for example, are very different than for liquid hydrogen or for other synthetic hydrogen based fuels). But there are also serious bottlenecks in the production of electrolysers and other elements in the hydrogen chain.
Another key issue, overlooked by many, is that it is losing out simply because for many of its original purposes, its been overtaken by the very rapid drop in the price of batteries.
For a good non-technical overview, I’d recommend reading the Oxford Institute for Energy Studies EU’s 2004 State of the European Hydrogen Market Report and/or the current EU 2024 overview.
With regards to the regulatory issues, IMO, and at least for what i can see in Spain, these arise mainly because the companies involved want it all politically speaking. They want to keep increasing their already inflated benefits while most of the burden of the investments needed is put on the shoulders of the population. They do not play nice. This is IMO what makes these, and possibly any other industrial investment, increasingly difficult in Europe. It is a systemic failure when you need to change things but nobody here wants to sacrifice their gigantic bonuses and exert a lot of pressure to play it to their interests.
The big companies are indeed playing games to see how much subsidy they can squeeze out of the public purse.
IMO, the big regulatory problem is that nobody is quite sure what hydrogen in its very forms actually is (in legal terms). A fuel, a feedstock, a primary or secondary output? Its this ambiguity that makes lawyers rich and makes investors very reluctant to become an expensive legal test case. This problem has been recognised for some years at EU level, but it takes time for the system to work out how do deal with the many types of hydrogen process.
In practical terms, Hydrogen is an energy storage unit. Sort of a complex, unsafe and extremely expensive battery.
IMO regulation at lets say, EU level, will always be too complex given the many players involved, with their lawyers as you say, plus the different uses intended, plus the different primary sources and technologies involved. It should be always be considered a secondary output, whether you use carbon, NG, oil or power electricity. To make green hydrogen take off, IMO, we cannot depend on investors that want it all tied and tight before the start. We should go local and make it simple: this region has potential for green hydrogen? Forget about grey, blue, etc… and provide locally the incentives to try making it take off. In Spain and I guess in the rest of Europe, the green hydrogen projects are intended to work initially locally. For instance to make fertilizers in one place, or for a particular industry in other location. You need to isolate that activity from global markets and make regulation simple local and immune to global litigation and possibly keep it in public hands. That is how i believe it works in China and this might be why they are far ahead any Western country. Besides, if many of these projects hit a wall they won’t be able to benefit from the one that works because we cannot plan in a centralised way. We want to have too many players each one with its own innovation platform to have finally a winner that takes it all or see how all of them clash into a wall. This inevitably turns into a gigantic waste of time and money. The EU will almost certainly be a laggard in green hydrogen development because we do not have a strategy. We cannot have industrial policies. We only have targets which will be realised by the magic of neoliberalism.
Of course i might be totally mistaken and all we need is proper legislation which ensures free market competition following the will of the largest corporations and the deepest pockets and the magic will come real in due course. The system that supposedly guarantees we are in the hands of the most competent and cleverest. Forget about complexities.
I believe that Paraskova’s article, for what i see here in Spain is quite messy. She mentions Repsol and Cepsa companies which are indeed playing dangerous games, at least Repsol, to avoid the new tax being prepared for large scale utility providers but at the same time are the recipients of very large subsidies (link in Spanish) for their green hydrogen projects. These years these companies (large utilities) have been posting record benefits and yet they want subsidies to go green and there is a lot of sabre-rattling about the new tax which is nothing but the transposition of an EU Directive on taxes for large multinational corporations which in Spain affects mainly the largest banks and large utility companies. The law is still under discussion in the Parliament, and it is a perfect example on how the neoliberals fight tooth and nail against redistributive policies. The game involves also regional fights for particular benefits in the typical race to the bottom scheme that neoliberals are so happy to play. Part of the tax is waged as a carbon tax and Repsol is possibly, mind you, the largest emitter in Spain.
Relatively recently, interest in natural (geologic) hydrogen has made committing to wind or solar electrolysis to make hydrogen even more hard to justify investment into. If more natural hydrogen production wells than the current total of 1 worldwide come into being, and with the cost of these other green hydrogen sources being 5 times more, nobody will think these solar or wind projects are good deals without subsidy being the major part. And many will at least follow through on due diligence on geologic hydrogen.
Some of the problems are based on smarter solutions based money going into naturally produced, continuously generated hydrogen from basement rock with mainly existing tech from oil and gas and geothermal.(Bill Gates’s Koloma and others)
The biggest issue is distribution (not like other flavors of hydrogen don’t have this problem as well). Ammonia is probably what is the safer and more practical medium to transfer hydrogen around. Hydrogen needs special pipelines and leaks might be more common and harder to stop as well as less proven record. To me, it should be decentralized with a power plant near sources of natural hydrogen and electricity generated onsite with distribution on a local or regional scale.
These early green hydrogen folks were thrown a wildcard with geologic hydrogen. It really amazes me how the IRA act was written from the start without the belief that it even existed as an option. Mostly what we will see is the same old tricks. They will use natural gas to make hydrogen, which is inefficient and has significant carbon emissions , but is the cheapest (probably not cheaper than natural hydrogen). They have to do some kind carbon capture scheme of some sort and walla! Tax credits.
I think the solution that makes most sense on both environmental and economic levels from the start should what we subsidize if we want to move the carbon needle. Definitely not solutions that even the people selling are skeptical about and look at as continued staus quo.
Hydrogen has great uses. Is trying run power plants one of them, I don’t know.
It’s so much more energy dense and lighter than batteries it makes the most sense for things like trains and trucks. It probably makes less sense for cars, but Toyota still thinks hydrogen is the way to go.
Yes the overall efficiency is lower, but the practicality is much higher. Charging in minutes like with diesel, much lighter weight, no massive fires from batteries etc.
As to explosion from hydrogen, it’s actually pretty hard because the hydrogen floats up and away so fast. The hindenburg didn’t blow up, it burned. Hydrogen has a much narrower combustion window than gasoline, propane, NG, diesel etc.
Living in the west, all the gasoline and diesel and propane all comes via trucks and some trains. There are no pipelines. As I look at the whole cycle of trying to make large trucks low carbon, and trains, I wonder how are you going to put multi megawatt power lines to hundreds if not thousands of truck stops or trains. Right now they have fuel delivered via truck, and so you can do that with hydrogen too. Is it less efficient compared to electric, yes, but would it be easier and faster to implement.
Is it “the” solution no, is it “a” solution to certain problems, yes.
Trains, trucks … and aircrafts.
Airbus has already indicated that the future of commercial aircrafts is in hydrogen (see ZEROe).
I’m no expert in pipelines, but I know that a pipeline from the SF Bay Area refineries runs across the Sierras, through Reno and terminates at the Fallon Naval Air Station. It supplies gasoline, jet fuel, and maybe other products to northern Nevada. There must be other pipelines like this elsewhere in the US. Driving on Interstate 80 from the Bay Area to Reno, I see few fuel-carrying tanker trucks.