Industry Insights | Hydrogen Energy, the New Password to the Modern Energy System

As global carbon dioxide emissions continue to increase year by year, gasification changes and environmental pollution issues have gradually become widespread concerns of the international community. As an important measure to address climate change and accelerate energy transformation, more and more economies attach great importance to the development of the hydrogen energy industry, treating its development as an energy strategy. Hydrogen has become an important strategic choice for accelerating energy transformation and upgrading, as well as cultivating new economic growth points.

The European Union released the 'EU Hydrogen Energy Strategy' in July 2020, planning to increase the proportion of hydrogen energy in the European energy structure to 13-14% by 2050; the United States announced the 'Hydrogen Energy Earth Plan' in June 2021, proposing to reduce the cost of green hydrogen by 80% within 10 years, from the current $5 per kilogram to $1 per kilogram; China released its first 'Medium- and Long-Term Plan for the Development of Hydrogen Energy Industries (2021-2035)' in March 2022, clarifying the development orientation and goals of hydrogen energy industries and making arrangements. At the same time, it was for the first time made clear that hydrogen energy is an important part of the future national energy system.

Relying on its high energy density, good combustion performance, and almost zero pollution, hydrogen energy is gradually becoming one of the important carriers for global energy transformation and development. It has broad development prospects, and the global hydrogen energy industry is expected to reach a market scale of tens of billions of dollars by 2050.

Hydrogen can be produced from different energy sources, such as coal, natural gas, industrial by-products, and water. Currently, natural gas-based hydrogen production is the mainstream method of hydrogen generation in many overseas countries. Given China's coal-dominated energy consumption structure and its vast steel industry, the use of coal and its industrial by-products for hydrogen production has been widely applied in China.Looking ahead, China's energy structure will shift from being dominated by traditional fossil fuels to a diversified pattern with renewable energy as the main source. Renewable energy electrolysis for hydrogen production will become an effective hydrogen supply source, while coal-based hydrogen production combined with carbon capture and storage technology, as well as biomass and solar photocatalytic decomposition of water for hydrogen production, will serve as effective supplements.

According to the 'China Hydrogen and Fuel Industry White Paper', in 2020, fossil fuels (67%) were the main source of hydrogen, followed by industrial by-products (30%). It is expected that by 2030, the hydrogen production structure will shift towards fossil fuels (60%), industrial by-products (23%), and others (17%, including renewable energy electrolysis and biohydrogen production).

Hydrogen energy can be divided into three categories based on its production method and source: 'grey hydrogen', 'blue hydrogen', and 'green hydrogen'.

"Grey hydrogen" refers to the production of hydrogen using fossil fuels such as petroleum, natural gas, and coal. Although the cost of producing hydrogen is relatively low, greenhouse gases such as carbon dioxide are emitted during the process. "Blue hydrogen" refers to hydrogen production using fossil fuels along with Carbon Capture and Sequestration (CCS) technology. It has a relatively low carbon emission intensity but higher capture costs. "Green hydrogen" is produced by electrolyzing renewable energy sources such as wind power, hydropower, solar energy, and nuclear power. For example, the electrolysis of water using renewable energy power generation technology that is currently relatively mature produces hydrogen without any carbon emissions during the process, but it is more expensive.

Source: Frost & Sullivan

The current main methods for hydrogen storage include gaseous storage, liquid storage, and solid-state storage.

Firstly, hydrogen can be stored as gas through high-pressure compression, which is the main method of hydrogen storage at present. It has advantages such as fast hydrogen filling and discharging speed, simple container structure, and low cost.

Secondly, hydrogen can be stored in liquid form, which has advantages such as high hydrogen storage density. It can be divided into low-temperature liquid hydrogen storage and organic liquid hydrogen storage, but these methods have not been widely applied domestically.

Solid hydrogen storage uses metal hydrides, chemical oxides, or nanomaterials as hydrogen carriers. It achieves hydrogen storage through chemical and physical adsorption methods, offering advantages such as high hydrogen storage density, low hydrogen storage pressure, good safety, and high hydrogen release purity. Solid hydrogen storage is currently still in the early stages of research, and domestic solid hydrogen storage has been demonstrated in distributed power generation.

With the further development of hydrogen storage technology, methods such as multiphase hydrogen storage and high-pressure hydrogen storage will be increasingly applied in the future.

Comparison of main hydrogen storage methods

Source: Frost & Sullivan

Hydrogen can be transported in gaseous, liquid, and solid forms, depending mainly on its storage method.

Gaseous hydrogen transportation is carried out through long-distance distribution by tank trucks and pipelines, which is currently the main method of hydrogen transportation. Pipeline transportation can achieve large-scale and long-distance hydrogen transportation, with advantages such as large hydrogen transport capacity, low energy consumption, and low cost. However, the one-time investment in constructing pipelines is relatively high.

For liquid hydrogen transportation, hydrogen must be stored in insulated tanks and then transported by liquid hydrogen tank trucks. The use of liquid hydrogen storage and transportation can reduce the frequency of vehicle transportation, improve the supply capacity at hydrogen refueling stations, and the possibility of evaporation is the main issue with transferring liquid hydrogen.

Solid hydrogen should be stored in low-pressure, high-density solid hydrogen storage tanks made of lightweight hydrogen storage materials (such as magnesium-based materials), which are currently mainly in the pilot research phase.

Source: Frost & Sullivan

In the past few years, hydrogen production has been steadily increasing. In 2021, China's hydrogen production was about 33 million tons, with a compound annual growth rate of 14.5% from 2017 to 2021. Due to China's energy characteristics of 'rich coal, poor oil, and little gas,' most of China's hydrogen currently relies on fossil fuels and industrial by-products. The hydrogen produced is 'grey hydrogen' through technical methods such as gasification, PSA (pressure swing adsorption), and SMR (steam-methane reforming), of which only a small portion can be converted into 'blue hydrogen' through CCS (carbon capture and storage) technology.

China ranks first globally in renewable energy installed capacity and has great potential in providing clean and low-carbon hydrogen energy.The Medium- and Long-Term Plan for the Development of Hydrogen Energy Industry (2021-2035) proposes the goal of achieving 100,000-200,000 tons/year of renewable hydrogen production by 2025. In the future, with technological upgrades, improved energy utilization rates, and increased penetration of clean energy, hydrogen production methods will become more environmentally friendly.

Source: Frost & Sullivan

Hydrogen can be widely used in many industries such as industry, construction, and transportation. In the petrochemical industry, crude oil can be refined through desulfurization and hydrocracking hydrogenation. Hydrogen can prevent fat oxidation in products such as margarine, cooking oil, shampoo, lubricating oil, and household cleaners. Hydrogen can also be added to nitrogen to remove residual oxygen in manufacturing activities, such as glass manufacturing and electronic microchip production.In addition, the rapid development of the hydrogen fuel cell industry will bring tremendous impetus to the application of hydrogen energy in the transportation sector, which is currently the main application area of hydrogen fuel cells.

Between 2017 and 2021, China's hydrogen demand steadily increased, from 17.5 million tons to about 34 million tons. It is estimated that by 2025, 2030, and 2050, China's annual hydrogen demand will reach about 37 million tons, 40 million tons, and 100 million tons respectively.

Source: Frost & Sullivan

1) Under the backdrop of carbon neutrality, the hydrogen energy industry will become one of the mainstream choices for clean energy in the future.

The goals of 'zero emissions' and 'carbon peak, carbon neutrality' have driven the development of the hydrogen energy industry. In recent years, global carbon dioxide emissions have been increasing year by year. With the popularization of environmental protection concepts, climate change and environmental pollution have gradually become issues of widespread concern in the international community. In response, many countries have introduced a series of emission reduction policies and set targets such as 'zero emissions' and 'carbon peak, carbon neutrality', adopting measures to optimize the energy structure and utilization rate by limiting fossil fuel consumption and increasing the use of clean energy.

Driven by the strong push to address climate change and environmental pollution, hydrogen energy is expected to become one of the mainstream choices for clean energy in the future due to its high energy density, good combustion performance, and almost zero pollution. It has broad development prospects.

2) The application of hydrogen energy in fields such as transportation and industry will develop on a large scale and become commercialized.

Transportation has always been a major downstream application industry for hydrogen energy. The development of hydrogen fuel cell vehicles has provided important opportunities for the global and Chinese hydrogen energy industries. Hydrogen fuel cell vehicles are characterized by high energy density, fast charging, and almost zero emissions, and they are encouraged to develop towards larger-scale production and application.

In addition, industrial manufacturing, especially heavy industry, will become another major application area for hydrogen. Five heavy industry sectors—steel, ammonia, methanol, chemicals, and refining—will upgrade manufacturing technology to reduce emissions. Hydrogen energy can serve as an alternative raw material and become an important clean energy source in industrial applications. Therefore, the energy transformation of industry provides opportunities for further development of the global and Chinese hydrogen industries.

(3) Methanol reforming hydrogen production technology is expected to become an ideal hydrogen production method in China

Methanol-to-hydrogen production is one of the key directions in the research and development of hydrogen production technology routes in China in recent years. Compared to compressing hydrogen into high-pressure vehicle hydrogen storage tanks, methanol is an excellent liquid hydrogen storage and transportation carrier. Moreover, the hydrogen production capacity of one liter of methanol is twice that of one liter of liquid hydrogen. Using methanol as raw material, highly integrated small-scale methanol reforming hydrogen production equipment with fuel cells can produce and use hydrogen immediately, enabling instant hydrogen production and power generation.

At the same time, methanol is widely and reliably sourced. It can be produced using coal, as well as by electrolyzing 'waste wind' and 'waste light' water to produce hydrogen, which is then reacted with carbon dioxide to produce methanol; natural gas can also be converted into methanol. The methanol-to-hydrogen route can also make good use of existing infrastructure such as gas stations, and has a clear cost advantage compared to building hydrogen stations. Therefore, methanol-to-hydrogen has the characteristics of small process investment, low energy consumption, and convenient storage and transportation.

Based on China's rich coal resources and mature coal-to-methanol technology, the methanol reforming hydrogen production technology path has certain convenience and economic advantages in the context where the cost of renewable energy hydrogen production has not been fully resolved. In November 2021, the Ministry of Industry and Information Technology recently released the '14th Five-Year Plan' for industrial green development, incorporating 'promoting the promotion of alternative fuel vehicles such as methanol vehicles' into the 'Green Product and Energy-saving and Environmental Protection Equipment Supply Project'. Methanol reforming hydrogen production technology is expected to be widely applied in China.