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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Big Oil Unjustly Under Fire For ‘Dirty’ Hydrogen

Everyone’s talking about hydrogen, the magical clean energy that will propel us into a future beyond oil and gas. But is this all just big oil spinning a tale to appease international agencies and activists as pressure to make the shift to renewables mounts? Is the current hydrogen boom really all it's set out to be or is it another case of greenwashing?  Several countries from around the world have put hydrogen at the top of their energy strategies for the next decade, as they strike the balance between continued oil and gas production and the introduction of alternative energy forms. From Europe and Russia to Asia and the Middle East, everyone’s looking at how to produce and promote hydrogen.

In addition to several countries introducing hydrogen strategies, big oil has also made hydrogen a top priority. BP, Royal Dutch Shell, and TotalEnergies have all announced plans for multimillion-dollar hydrogen projects. This is not surprising as BP forecasts that hydrogen production could account for as much as 16 percent of global energy consumption by 2050.

However, not all hydrogen is equal, and some forms of hydrogen production are much greener than others. 

Grey hydrogen, the most common form currently, accounting for 95 percent of all production, comes from reforming natural gas. It is bonded with carbon and then separated via steam reforming. But this generates significant levels of CO2 emissions, with 1kg of hydrogen production generating as much as 9.3kg of CO2, higher than the quantity of carbon produced from burning gasoline. 

Related: Analysts See Oil Trading Closer To $70 Through Year-End Blue hydrogen, in contrast, uses carbon capture and storage (CCS) technologies to ensure that these emissions are captured rather than released into the atmosphere, making the production greener. However, this process still relies on the waste created in fossil fuel production. 

Finally, green hydrogen is made through electrolysis from renewable sources, such as wind and solar power. But this process is the most costly, meaning it accounts for only 1 percent of global hydrogen production at present.  

Despite the prevalence of grey hydrogen, companies are slowly understanding the importance of introducing longer-term renewable energy projects if they want to keep the support of governments and international agencies, as well as creating a more sustainable business model for the future.  

Several companies are now investing heavily in CCS technologies as a means of reducing their carbon emissions in line with international expectations, in an effort to produce blue hydrogen. This presents a significant advance on their previous grey hydrogen production but still relies on the ongoing production of natural gas as the source for hydrogen production. 

While big oil has made notable progression in hydrogen production, companies such as BP do not expect to develop their green hydrogen business until the 2030s due to high costs and the lack of commercial public demand. 

Related: Shell Reports $5.5 Billion Net Profit And Hikes Dividends

By the end of June 2021, 244 large-scare green hydrogen projects had been planned, up 50 percent from January, with tens of billions of dollars invested in the sector. But few of these are expected to emerge before the end of the decade with grey and blue hydrogen continuing to dominate the market. 

One of the main obstacles is the limited use of hydrogen energy at present, used mainly for fertilizer and chemicals as well as in some industries. But Louise Jacobsen Plutt, BP’s senior vice president of hydrogen and carbon capture and storage explains, “Today, hydrogen is used as a feedstock primarily…the growth of the hydrogen market is all about it becoming an energy source.”

As shown through its use in the Japan Olympics, hydrogen can be used to fuel buses and other vehicles. It could also be key for use across several manufacturing industries, as well as being used for household heating. Yet, with little public knowledge of the energy form, the demand is simply not there at present. 

Until countries can drum up hydrogen demand beyond its current use, across industries such as cement and steel manufacturing, it is unlikely that big oil will see green hydrogen as a viable form of energy production due to its high costs. Most companies will likely continue to overstate the significance of their CCS projects and blue hydrogen production as the world waits for a global clean energy transition. To call it greenwashing, however, is to misunderstand how technology develops. If green hydrogen proves to be a major energy source in the future, the oil industry is likely to play a large role in its development.

By Felicity Bradstock for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on August 05 2021 said:
    The global economy runs on oil and natural gas and will continue to do exactly that well into
    the future. Therefore, Big Oil doesn’t need to produce hydrogen to justify producing natural gas.

    The ultimate argument against hydrogen whether it is green, blue or grey is that needs far more energy to produce than it will eventually provide. Therefore, it isn’t cost-effective as an energy source.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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