Clean hydrogen can be produced through the splitting of water using renewable electricity, called green hydrogen. It can also be produced through the gasification of coal or conversion of natural gas while capturing the carbon dioxide through carbon capture, called blue hydrogen. The idea of green hydrogen is very attractive and has captured the imagination of the world and India alike, where low-cost hydrogen can be produced based on limitless energy from the sun & wind, and water using water-splitting technologies called electrolyzers. Blue hydrogen, on the other hand, has drawn mixed reactions and ire of the green fundamentalists who blame that it is a disguised attempt to keep fossil fuels alive and a bane for sustainable technological progress.
Rather than being swayed by rhetoric and hyperbole, India must formulate its policy options for enabling the hydrogen economy based on science, economics, pragmatism, and energy security considerations, and try not to pick winners between green and blue hydrogen at this nascent stage of development of the market. Accelerated adoption of clean hydrogen requires that the economics of producing and distributing clean hydrogen be compelling, and that the opportunity for enabling commercial-scale operations be feasible in a reasonable time frame. At the same time, any subsidies that may need to be given need to be minimized.
As elegant and simplistic it may sound, green hydrogen today, and in the foreseeable future, has severe limitations on the economics and scale of operations. It costs anywhere between 4-7 $/kg to produce green hydrogen today depending upon the capital cost of the electrolyzers, the cost of continuously available clean electricity – not just intermittent renewable power, and the capacity factor of operations. World over, the average capacity utilization factor for green hydrogen has rarely exceeded 20% except for two proposed projects with a serendipitous confluence of natural factors – the Neom green hydrogen project in Saudi Arabia running at 57% and the AREH project in Australia running at 48%. Claims of renewable power being made available at 2c/kWh are specious to say the least, as the cost of continuously available clean power to run the electrolyzers at higher capacity factors is at least 3 to 5 times higher – and probably much more – rendering the economics infeasible.
On the other hand, blue hydrogen produced from coal and natural gas with carbon capture, is available today at a commercial scale at 1.3 to 1.8 $/kg. Apart from the fossil fuel aversion syndrome, green naysayers reject the viability of carbon capture for clean hydrogen production. Myths abound about the immaturity, safety, economics, and non-scalability of carbon capture, use, and sequestration. One must understand that there is nothing new in carbon capture technologies which has been used at a large scale by the oil, gas, and chemical industry for many decades. The United States has been injecting and sequestering carbon dioxide for recovering oil since the late 70s and routinely sequesters close to 70 million tons of carbon dioxide per year. There are over twenty carbon capture sites in the world sequestering over 40 million tons of carbon dioxide per year with zero incidences of undesired leakage. And carbon capture from coal gasification plants producing hydrogen costs less than 20$ per ton.
India has the unique opportunity to leapfrog the hydrogen trajectory with minimal subsidies to make the hydrogen ecosystem through blue hydrogen. India does not have gas, but consistent with our government’s vision of coal gasification of 100 mtpa of coal by 2030, India can leverage its vast coal endowments to jump-start the clean hydrogen economy through gasification and carbon capture. Needless to say, coal gasification-based clean hydrogen is the cheapest today and can be the forerunner to cheap blue hydrogen production with net-negative emissions by using biomass, municipal waste, and coal, along with enhanced carbon capture, conversion, and storage technologies.
That said, both blue and, eventually, green hydrogen is necessary to drive the virtuous cycle for expanding the hydrogen economy. Blue hydrogen projects today can create the hydrogen demand that enables the development of a competitive and commercial-scale green hydrogen production ecosystem for tomorrow. From a carbon reduction standpoint, today the best use of renewables is “greening the grid” for producing continuous clean electricity at progressively lower costs. Each MWh of renewable electricity replacing coal-based power on the grid reduces the carbon footprint by 1 million tons. Diverting the same MWh of renewable capacity for green hydrogen production can only reduce carbon footprint by about 0.3 Million tons through new uses of hydrogen, like heavy transport. As clean baseload power at low costs starts becoming available through grid greening, it can be used for running low-cost electrolyzers at high capacity factors, which are also expected to attain gigawatt-scale with significant capital cost drops over time. Eventually, in 15 years or so, green hydrogen costs and blue hydrogen costs are likely to converge to perhaps sub 1$/kg levels and a balanced and competitive market for clean hydrogen based on both blue and green will emerge in India.
[This piece was authored by Atanu Mukherjee, CEO of Dastur Energy and MN Dastur and Co.]