Volume 4 fuel cells and hydrogen technology 4 03 – hydrogen economics and policy Volume 4 fuel cells and hydrogen technology 4 03 – hydrogen economics and policy Volume 4 fuel cells and hydrogen technology 4 03 – hydrogen economics and policy Volume 4 fuel cells and hydrogen technology 4 03 – hydrogen economics and policy Volume 4 fuel cells and hydrogen technology 4 03 – hydrogen economics and policy
4.03 Hydrogen Economics and Policy N Hughes and P Agnolucci, Imperial College London, London, UK © 2012 Elsevier Ltd All rights reserved 4.03.1 Introduction 4.03.2 The Hydrogen Energy Chain – Technological Characterizations and Economic Challenges 4.03.2.1 Production 4.03.2.1.1 Electrolysis 4.03.2.1.2 Steam methane reforming 4.03.2.1.3 Gasification 4.03.2.1.4 Biological production 4.03.2.1.5 Water splitting through high-temperature heat 4.03.2.1.6 Summary of hydrogen production processes 4.03.2.2 Infrastructure 4.03.2.2.1 Costs of hydrogen delivery infrastructure 4.03.2.2.2 Capacity factors and infrastructure design 4.03.2.2.3 Costs of hydrogen refueling stations 4.03.2.2.4 Introducing hydrogen infrastructure – Incremental or step-change approaches 4.03.2.3 Storage 4.03.2.3.1 Storage technologies and performance in relation to onboard vehicle requirements 4.03.2.3.2 Storage applications 4.03.2.4 End-Use Technologies and Applications 4.03.2.4.1 End-use technologies – ICEs 4.03.2.4.2 End-use technologies – FCs 4.03.2.4.3 Applications – Stationary power 4.03.2.4.4 Applications – Auxiliary power and ‘niche’ applications 4.03.2.4.5 Applications – Passenger transport 4.03.2.4.6 Hydrogen vehicles – The cost to consumers 4.03.2.4.7 Hydrogen vehicles – Early prototypes and costs 4.03.2.4.8 Wider market opportunities for FCVS, and other low-carbon vehicle drive trains, across the transport sector 4.03.2.5 Conclusions on Economics 4.03.3 Hydrogen within the Whole-Energy-System Context 4.03.3.1 Effects of Transport Decarbonization on Low-Carbon Energy Resources 4.03.3.2 Decarbonization of the Electricity Grid – Opportunities for Hydrogen 4.03.3.3 Summary on Whole System Interactions 4.03.4 Developing Policies to Support Hydrogen 4.03.4.1 Policies in the Transport Sector 4.03.4.2 Policies in the Electricity Sector 4.03.4.3 Policies Relating to Fundamental Scientific Research 4.03.5 Conclusion References Further Reading Relevant Websites Glossary Capacity factor The average consumption, output, or throughput over a period of time of a particular technology or piece of infrastructure divided by its consumption, output, or throughput if it had operated at full (rated) capacity over that time period Carbon capture and storage (CCS) The separation of carbon dioxide (CO2) from fossil fuels during or after electricity generation or other energy-related processes, for subsequent burial in geological strata, to avoid emissions to the atmosphere Comprehensive Renewable Energy, Volume 66 67 68 68 69 70 71 71 71 72 72 73 74 74 75 75 77 78 78 78 79 80 81 82 82 83 84 85 85 86 87 87 88 89 90 91 92 95 95 Electrolysis (of water) The decomposition of water into oxygen and hydrogen due to an electric current being passed through the water Forward commitment procurement A commitment given, usually by a public sector body, to purchase an as-yet unspecified technology, having stated performance characteristics, in a stated quantity, for a stated price, at a stated future point in time Fuel cells Electrochemical cells for the production of electricity from a fuel without combustion Higher heating value A measure of energy content of a fuel expressed as the energy released as heat when the fuel doi:10.1016/B978-0-08-087872-0.00417-0 65 66 Hydrogen Economics and Policy undergoes complete combustion, including the latent heat of vaporization of water in the combustion products Lower heating value A measure of energy content of a fuel expressed as the energy released as heat when the fuel undergoes complete combustion, excluding the latent heat of vaporization of water in the combustion products Market niche In economics, a subset of users with particular requirements that differentiate them from general consumers, thereby also differentiating the technologies that they require and will purchase Technological niche The demonstration, usually by a public sector body, of a technology that has no current market, on the basis of its hoped-for future benefits (also, ‘demonstration project’) 4.03.1 Introduction The use of molecular hydrogen to store and carry energy is a concept that has reappeared over many years within scenarios, blueprints, or other imaginings of future energy systems Hydrogen has been proposed as offering solutions to a range of energy system problems such as air and noise pollution, security of supply, and the potential exhaustion of fossil fuel resources, as well as the reduction of CO2 emissions associated with the use of such fossil resources Some authors have gone yet further, arguing that hydrogen could be the fuel that ‘democratizes’ the energy system, wresting the control of energy resources from the powerful few and literally bringing ‘power to the people’ [1] The potential future significance of hydrogen imagined by some commentators is often conveyed within the phrase ‘the Hydrogen Economy’, though precisely what is implied by that term is the subject of multiple contrasting interpretations [2] The earliest description of a Hydrogen Economy may well be that given by the character Cyrus Harding in Jules Verne’s novel of 1874, ‘The Mysterious Island’ Verne expresses through his characters the attraction of a future economy whose primary resource is water, “decomposed into its primitive elements…by electricity, which will then have become a powerful and manageable force… I believe that water will one day be employed as fuel, that hydrogen and oxygen which constitute it, used singly or together, will furnish an inexhaustible source of heat and light, of an intensity of which coal is not capable Some day the coalrooms of steamers and the tenders of locomotives will, instead of coal, be stored with these two condensed gases, which will burn in the furnaces with enormous calorific power… Water will be the coal of the future.” [3] Though Cyrus Harding’s depiction of a future energy system involves the use of hydrogen as a fuel, he is correct of course in identifying that hydrogen is not in fact the ‘primary’ energy resource of that future economy Harding’s monologue highlights a fact that is fundamental to understanding hydrogen’s potential role within the energy system Although it is often stated that hydrogen is the most abundant element in the universe, it is almost exclusively to be found bound up with other elements within chemical compounds Molecular hydrogen does not easily escape from these bonds, and so there are no natural reservoirs of hydrogen waiting to be tapped If hydrogen is to be used as a means of providing energy for a particular use, energy must first be deployed to separate it from the natural compounds of which it forms a component part It follows that, although this chapter appears within a volume reviewing various kinds of renewable energy, hydrogen cannot itself be described as a ‘source’ of renewable energy It is rather an ‘energy carrier’ – something in which energy is invested in order to take energy out again at a later stage Whether the energy hydrogen is carrying can be said to be renewable is entirely dependent on the process by which the hydrogen was liberated from its natural compound-confined state Yet more pertinently, the second law of thermodynamics states that the conversion of energy from one form to another inevitably results in a loss of energy to the second form, through entropy This means that in order to produce hydrogen, it must always be necessary to expend more energy than is available within the hydrogen for use at the end of the process This fundamental and inescapable fact is recurrently cited as a key objection to the practicality of the hydrogen vision [4, 5] and will be returned to later in this chapter However, despite the inevitable entropic losses, there are clearly instances where it is considered advantageous to convert energy from one form to another, because there is a desired benefit associated with the energy being in that particular form It is through appealing to such benefits that the argument for hydrogen is made – arguments against hydrogen must be made on the grounds that other energy conversion processes offer the same benefits with fewer thermodynamic losses The potential benefits of energy in the form of hydrogen are the following: • Hydrogen can be used as a fuel with very low or zero emissions at the point of use Of course, this may only mean that the polluting part of the energy conversion chain is being pushed away to a different location – the location at which the hydrogen is produced – rather than avoided altogether However, it may be that a more centralized production of an energy carrier such as hydrogen gives greater opportunity for that production to be low carbon, which would not be possible at the highly distributed locations where the energy is required – for example, it is not possible to fit every car with a wind turbine or a carbon capture and storage (CCS) plant • In many ways, a more obvious carrier of low-carbon energy is electricity – many countries already have extensive electricity infrastructures, and most low-carbon technologies (i.e., wind, wave, tidal, and solar power) produce electricity directly However, hydrogen has different properties compared with electricity It is a fuel that can be stored in large quantities and can be dispatched Hydrogen Economics and Policy 67 relatively quickly – electricity on the other hand must be stored in batteries that must be charged, a process that currently takes significantly longer per unit of energy than transferring hydrogen from one storage unit to another • As hydrogen is present in so many materials, this gives a range of sources and processes from which molecular hydrogen can be produced It can be released from water through electrolysis, using electrical energy from any power source; ‘reformed’ from hydrocarbons – fossil fuels or biomass; or generated biologically through the stimulation of algae or bacteria The extent to which these characteristics of hydrogen are sufficiently advantageous compared with other means of carrying energy to give hydrogen a valuable role in a future energy system will be discussed in the following pages In what follows, some broad assumptions about the key drivers for hydrogen will be made Important environmental priorities are considered to be air quality and the mitigation of climate change through reducing greenhouse gas emissions A number of nations have introduced legislation to drive reduction of greenhouse gas emissions, notably the United Kingdom with its Climate Act of 2008, which sets an 80% reduction target below 1990 levels by 2050, with a requirement for interim carbon budgets [6] At the EU level, there is a target of reducing greenhouse gas emissions across the EU by 20% compared with 1990 levels by 2020 [7] The Ambient Air Quality Directive in 2008 set legally binding limits for concentrations in outdoor air of pollutants that affect public health [8] Hydrogen could contribute to these objectives by replacing the use of fossil fuels in transport and other applications Another important driver is considered by many to be security of supply and reducing the dependence on resource-constrained fossil fuels Such a desire, however, need not necessarily be equivalent to a desire to reduce dependence on all fossil fuels In some particular areas of the world, availability of certain fossil fuels, such as coal, may be high, even as supplies of others, such as oil, become constrained, which could conceivably present a rationale for producing a fuel such as hydrogen, in a carbon-intensive manner from a primary fossil fuel such as coal However, in this chapter, and especially given the context of this volume, it is assumed that the environmental driver of reducing carbon emissions would be the most compelling motivation for hydrogen, as it would for many other ‘clean’ technologies This chapter will therefore not consider in detail carbon-intensive means of producing hydrogen – although these may be considerably less expensive and therefore have, in a narrow sense, better economic prospects Thus, it is worth noting at the outset that the key drivers for hydrogen, as with most low-carbon technologies, are ‘public goods’ – benefits which are felt by society as a whole, not by the individual recipient of the energy service Whether hydrogen can deliver ‘private goods’ can vary between applications and will be explored in the sections that follow 4.03.2 The Hydrogen Energy Chain – Technological Characterizations and Economic Challenges This section outlines the basic technological components that would be necessary to constitute a hydrogen energy system, describing key technical limitations and barriers as well as challenges from an economic perspective Figure is a simplified schematic of the hydrogen energy chain It shows that hydrogen must be produced from other resources or energy carriers; it must be transported and distributed to the point of use, where it must be stored and can be used to provide energy services for a number of different applications, using a number of different conversion technologies Each stage in the hydrogen energy chain involves additional costs as well as energy losses For this reason, distributed production of hydrogen at a smaller scale, close to the point of demand, can be attractive as it avoids the costs and energy losses of the distribution stage However, smaller scale production often has higher costs than large-scale production due to lack of economies of scale The following sections review estimates of performance and cost data found in the literature, drawing on a range of sources (As with any such review, it is important to emphasize that the performance and economics of hydrogen technologies is an evolving field It is highly possible that any figures quoted in this section will become outdated rapidly Moreover, because several of the processes reviewed here are not currently deployed at a large scale, some of the costs that are given in the literature are projections rather than being based on experience Hence, this section does not intend to offer definitive data, but the results of a review of available sources at a particular point in time Cost data are presented as given in the sources, that is, they have not been adjusted to a base year currency Given the uncertainties associated with these figures in any case, such adjustments were considered to be overly precise Nonetheless, dates of published sources are given to allow the reader to account for the possibilities of such discrepancies; however, in general, these figures should be viewed as indicative, rather than precise.) Production Electrolysis Steam methane reforming Gasification Biological production Figure The hydrogen energy chain Distributed production Distribution Pipelines LH2 tankers Tube trailers Storage Compressed gas Liquid hydrogen Chemical hydrides Metal hydrides Nanoporous solids End use Vehicles Power and heat services Portable power devices 68 Hydrogen Economics and Policy 4.03.2.1 Production Hydrogen production processes are by no means unknown – although the use of hydrogen for applications such as transport is currently insignificant, the International Energy Agency (IEA) reports current hydrogen production of exajoules (EJ) or 100 million tons of oil equivalent (Mtoe), with the vast majority of this used as a feedstock in chemical processes or refineries [9] (By comparison, the total primary energy supply (TPES) is 11.7 billion toe [10], meaning that current global hydrogen production is equivalent to just under 1% of TPES) Ninety-six percent of this hydrogen was produced directly from fossil fuels, with the remaining 4% from electrolysis [9] The various methods of hydrogen production are discussed below As these methods are discussed in greater technical detail in other chapters in this volume, the focus of this discussion will be on the parameters that most influence the overall economics of hydrogen use – the cost of the materials and the efficiency with which hydrogen can be produced from an input energy source Broadly, current production methods could deliver hydrogen within a cost range of 2–9 $ kg−1 [11] The US Department of Energy (DOE) has set cost reduction targets for hydrogen production, designed to reduce the cost of hydrogen delivered at the pump to $2.00–3.00 per gallon of gasoline equivalent (gge) (One kilogram of hydrogen is approximately equal to gge.) [12] This target reflects the long-run expected retail price of gasoline in the United States However, the situation is of course different depending on the country in question In the United Kingdom, for example, due to higher fuel taxes, the current retail price of petrol is around £1 litre−1, which is roughly $6 gallon−1 In such a context, hydrogen might seem more competitive as a transport fuel earlier – however, this would of course depend on assumptions about how fuel taxes were being applied to hydrogen Levels of fuel taxation vary significantly among different countries, as shown in Figure Currently, the United States and several European countries offer tax exemptions or rebates for ‘renewable’ fuels, aimed at making them cost-competitive with gasoline and diesel – these policies are focused on stimulating biofuel production in the near term but in theory could be extended to ‘renewable’ hydrogen [14, 15] However, if in the future such renewable fuels came to account for a substantial percentage of total transport fuel demand, the lost tax earnings of such exemption or rebate policies may encourage their revision 4.03.2.1.1 Electrolysis Hydrogen can be produced from the decomposition of water in an electrolysis cell with the addition of an electrical charge An electrolysis cell requires two electrodes, the anode and the cathode In the reaction, oxygen (O2) is produced at the anode (positively charged electrode) and hydrogen (H2) at the cathode (negatively charged electrode) An electrolyte and catalyst are also required to achieve a workable efficiency in electrolysis cells There are two principal electrolyzer technologies Alkaline electrolyzers use a liquid electrolyte, commonly potassium hydroxide (KOH) solution, whereas proton exchange membrane (or polymer electrolyte membrane) (PEM) electrolyzers operate with a solid polymer electrolyte membrane [16] PEM electrolyzers in particular are capable of being operated at small scale with no major loss of efficiency [11] This could provide an attractive option for delivering hydrogen to points of use without the need for a dedicated hydrogen infrastructure – relying instead on the already existing electricity grid for the transmission of energy At present, state-of the-art electrolyzer efficiencies are around 67% [17], although future efficiencies of 75% are thought possible [11] Table compares some recent estimates of costs and efficiencies of hydrogen electrolyzers The US DOE cost and performance targets are also shown for comparison USD 2.5 USD 2.0 USD 1.5 USD 1.0 Tax Ex Tax Price USD 0.5 U SA a an ad C U K Ja pa n n ly Sp Ita an y er m G Fr an ce USD 0.0 Figure Fuel prices and taxes, September 2011 Source: IEA (2011) End-Use Petroleum Product Prices and Average Crude Oil Import Costs, September 2011 [Online] http://www.iea.org/stats/surveys/mps.pdf [13] Hydrogen Economics and Policy Table 69 Comparison of cost estimates for hydrogen production from electrolysis Sources Scale (kg day−1) Electrolyzer capital cost ($ kW−1) Efficiency (%) Gate cost of hydrogen ($ gge−1) NRC (2004) [11] NREL (2009) [17] NREL (2009) [17] 480 Forecourt – 1500 Central – 50 000 1000 380 460 63.5 67 67 6.56 5.2 125 109 74 74