The head of the world’s second largest natural gas pipeline network doesn’t just see a future where hydrogen replaces natural gas, he’s pushing for it.
The question of whether or not hydrogen will develop has already past, the only question now is how big it will be, Marco Alvera, Chief Executive Officer of Italian Snam said on a podcast with Everything About Hydrogen.
The clean burning fuel may occupy anywhere between 10 percent to 30 percent of the future energy mix, as the costs become more competitive and the world makes a transition away from carbon-based energy, he said.
This is certainly not the first time the idea of hydrogen’s importance as a business opportunity and as a clean burning energy source has been communicated. Yet coming from the head of Europe’s largest natural gas transporter it bears extra notice.
Alvera is a long-time veteran of the oil and gas and utilities industries, holding senior positions at utility company Enel and oil and gas producer Eni previously. These aren’t the words of green lobbyists or environmental groups. This is the heart of the energy industry. This is how the executives that run corporates that organize our energy consumption are planning. Snam has, likewise, has put its money where its mouth is, and invested in ITM Power and DeNora, companies which manufacture the electrolysers that produce hydrogen.
The energy transition has put a lot of attention on electric vehicles and general electrification as wind and solar get more involved. Yet there is a ceiling on how far electricity can go in the transition. Electricity, which occupies about 20% of the energy mix, can theoretically move up to take about a 60% share, according to Alvera.
The remainder of energy demand, however, would be “incredibly, even ridiculously expensive to electrify,” Alvera said. Difficult sectors would include long-range aviation, ships, steel making, cement, glass, and anything where a lot of heat is needed, according to Alvera. Even heating homes, as a system.
In the past couple of years, the thinking has moved past whether or not hydrogen will play a role in these industries and energy as a whole. The thinking is: how much will it be able to take? 15 percent? 25 percent? 30 percent?
An initial mover in hydrogen usage will likely be trains because it is already “in the money” to convert trains from diesel to hydrogen, he said. The other initial mover is likely to be steel and driven by Germany, which needs to get out of coal and nuclear and diesel, Alvera said. There is no other way you can make steel beyond other than using natural gas or hydrogen, with hydrogen replacing natural gas further down the road.
Whether Germany takes Russian natural gas and makes hydrogen or simply gets hydrogen from Russia may depend on availability and appetite for CO2 storage in Germany. Carbon does classify as a hazardous material as it is basically odorless or colorless and if a person bumps into it, that person will suffocate. It needs to be handled carefully.
One of the major lures of hydrogen is that it can be transfer energy either without emissions, passing along generation from renewables, or, if from natural gas, with centralized emissions making it possible to capture and store carbon in mass.
Hydrogen is currently in initial growth stages – where supply and demand are still in the “what comes first chicken or egg?” debate. Suppliers need greater demand to scale up production and cut costs. However, industries don’t switch fuels without having them available and reliable.
The route to initial demand growth, as a means to support additional supply, could be blending hydrogen into current natural gas deliveries, according to Alvera.
It’s possible to blend hydrogen into natural gas at up to 10 percent of volumes without changing anything in end-user applications. So if there is a 2-percent blend or a 5-percent blend or a 7-percent blend, there is no need to change anything, Alvera said.
“That will get the supply side going,” he said. “Then as supply costs lower, then you have have other sectors kinda jump on board.”
With this in mind governments should initially be liberal about what kind of hydrogen – green, blue with carbon capture, pink etc. – gets produced, albeit with certifications of origin. The idea is to stimulate the shift. The obvious emphasis is to get green hydrogen, or hydrogen produced using energy from renewable resources like wind or solar.
Green hydrogen can be produced today at $4 a kilo. Oil parity is at $2 a kilo and coal parity is $1 a kilo, according to Alvera. The opportunity ahead will be to get from $4 to $2 in five years’ time and then from $2 to $1 in another 5 to 7 years’ time.
Some of that reduction may come from lower costs for renewables input, although the rate of renewable energy price drops cannot be expected to continue at such a rapid pace as previously. There is large room for gain larger scale in electrolyers, which make hydrogen, manufacture and making them more productive.
Achieving that growth will require some policy nudges from governing bodies, Alvera said.
“But I’m not too worried because, hopefully, there’s so much going on with the recovery funds with the green deal,” Alvera said. “The system cost of getting hydrogen in the system is a lot lower than all the other stuff we’ve already done in other alternatives.”
