Look to ports for the nascent green hydrogen economy
Hydrogen, produced without carbon emissions, will find use in many sectors of a future ‘hydrogen economy.’ Its high energy intensity can make it the basis of fuels that reduce carbon emissions in the ‘hard to abate’ transportation and industrial sectors. Its unmatched capacity to store energy long term and seasonally should make it an indispensable energy carrier in power systems reliant on intermittent sources of renewable energy. The economies of scale to sustain markets for the lightest element are not in place. Yet a growing consensus among experts is that these will arise in clusters where heavy industry, transport and pipelines converge. Industrial ports will likely be places where the carbon-free hydrogen economy first comes together in a complete system.
A recent policy brief from the Atlantic Council Global Energy Center puts focus on existing clusters of hydrogen production in the US. It suggests the Port of Los Angeles, and the region along the Texas Gulf coast, as advantageous locales for the initial rise of low-carbon hydrogen.
Likewise, the International Renewable Energy Agency (IRENA) in a recent report ‘Green Hydrogen Cost Reduction, Scaling Up Electrolysers,’ asserts that industrial clusters will be key places for green hydrogen production to achieve the economies of scale required for broad deployment.
Hydrogen rising in Rotterdam
Among the leaders is the Port of Rotterdam in the Netherlands. Emboldened by the European Union’s new Hydrogen Strategy, the port is taking significant fist steps to becoming Europe’s ‘hydrogen hub’ and one of the most advanced centers of green hydrogen production in the world.
Rotterdam is already a major energy import and production hub. The port has over 100 industrial companies with a large refining and petrochemicals cluster. Its energy business includes petroleum, coal, natural gas, biomass, steam and heat. It also hosts significant wind energy and solar energy resources. The port is the main energy transfer point to the rest of Northwest Europe, especially to Germany by ship and pipeline.
This rich center of energy flows should offer an excellent environment to create a complete hydrogen value chain with carbon-free and low carbon hydrogen. It was a main topic of conversation at the 2nd World Hydrogen Summit, held on-line earlier this month with numerous industry sponsors. The summit was organized by the London-based Sustainable Energy Council in partnership with the Port and the City of Rotterdam.
“Hydrogen is our next step, the new game changer,” said Ahmed Aboutaleb, Mayor of the City of Rotterdam, speaking at the Summit.
He was referring to the production of ‘blue’ hydrogen, noting the port’s investment in CO2 storage infrastructure in depleted offshore gas fields. But he was also referring to green hydrogen produced with power from renewable sources, including imported renewable power, which will eventually replace the blue at Rotterdam.
“We are on the way to a sustainable, circular city economy,” he said.
Allard Castelein, President & CEO, Port of Rotterdam Authority, speaking at the same conference, said the port’s energy and fuel system will be completely overhauled in the next 30 years. A ‘hydrogen backbone’ will be built through the port area to realize a circular system.
The work will require new infrastructure for new value chains. Current planning encompasses production (blue and green), pipeline infrastructure, import, storage, transit, and a trading platform. Multiple users are foreseen industry, road transport and inland navigation.
“In this way, we aim to get a vast green production of hydrogen by the end of this decade,” he said.
The Port is working with government on regulations and subsidies and with coalitions of companies in all parts of the system. It seeks public-private partnerships.
It is developing a business park for electrolysers, with centrally organized power connections and water, to be operational by 2024. Companies involved include Shell and BP. Meanwhile it is conducting a feasibility study with Uniper for electrolyser development. It anticipates more than 500MW of electrolyser capacity by 2025, and at least 2GW by 2030.
The nearby North Sea will be a major asset for green and blue hydrogen production. Electrolysers will be directly linked to North Sea wind farms, with plans for more offshore wind power in the works. Blue hydrogen will come from refinery gasses and from natural gas with carbon capture and storage under the North Sea seabed.
Castelein explained that green and blue hydrogen will work together, with blue intended to reduce cost initially in chemicals and steel manufacturing. Eventually, by 2050, the Port wants blue entirely replaced with green hydrogen. It foresees 20 million metric tons of hydrogen produced and deployed in 2050, with one-third to remain in The Netherlands, the rest for export to Germany and elsewhere. Much will go to chemical and steel industries in Northwest Europe.
New and innovative transport infrastructure is being planned to move all of this. The Port is close to taking final investment decision on an ‘open access’ pipeline through the port area that will link producers, import terminals, and users. It is working on setting up a trading platform, a ‘hydrogen exchange’ for import and transport of hydrogen to Germany. There are projects to deploy hydrogen directly in transport, such as for fuel for inland navigation on the Rhine, and for trucks, with Air Liquid to have 1000 hydrogen-powered trucks by 2025.
This robust hydrogen economy will require much more green hydrogen than what can be produced from local renewable sources. Clearly the import of energy will be necessary.
“The North Sea is simply not big enough to provide us with enough wind to fully serve the market,” said Castelein.
He anticipates substantial hydrogen import from 2030 onwards. The Port is in communication with countries with lots of renewable energy potential and good sea access, places as far afield as Portugal, Morocco, Iceland, Oman, Uruguay, and Australia.
These new energy flows will require new infrastructure, and they’re looking at pipelines for shorter distances, such as to Germany. But Castelein believes that, like oil and gas for long distance journeys, cross-ocean shipping will be the solution for hydrogen.
“Shipping costs are not a show stopper, even when the shipping industry shifts to more sustainable fuels,” he says.
He says that other factors will be much more important than shipping cost for hydrogen, as shipping cost is 5-10% of total cost including renewable electricity production, electrolysis, electrofaction, storage, shipping and retrieval. Within Europe, he says, shipping cost could be less than 5%. He notes that research shows that ammonia is a potential solution for long-distance shipping of hydrogen.
Rotterdam provides a full picture of what it now means to attempt to create a future ‘circular economy’ of hydrogen, with multiple initiatives that seek to be mutually reinforcing. Its wide ranging initiatives include production (green and blue), infrastructure, the development of imports, setting up of import terminals, setting up a hydrogen exchange, and current work on applications in multiple sectors.
“I find this to be an inspiring time,” says Castelein.
Energy flows through the Port of Rotterdam now account for some 13% of the EU’s total energy needs, mostly in the form of crude oil for fuels and petrochemicals. This energy flow will change significantly according to Martijn Coopman, Program Manager for the Port of Rotterdam, who was also speaking at the Summit in a session hosted by the Embassy of the Kingdom of the Netherlands in GCC.
Currently the Port’s industries have nearly a half million metric tons (Mt) of demand for hydrogen annually, with this expected to expand to 1.2 Mt by 2030, and a rapid increase expected after that. Blue hydrogen will be produced locally, but the Port has committed to deploy blue hydrogen only as a transition fuel, phasing it out in favor of green hydrogen by 2050.
As demand for green hydrogen increases in Germany, Holland, Belgium and elsewhere in the EU, the flow of hydrogen through the Port could increase to 20 million Mt by 2050. To produce it by renewable energy will require, according to the Port’s calculations, 200GW of installed wind capacity. To put this in context, currently The Netherlands receives 1GW of wind energy from its part of the North Sea, and this may rise to 60GW by 2050. So most of the flow of green hydrogen through Rotterdam will need to come from imports.
The Port is now entering MOUs and joint partnerships with potential exporters. One interesting partnership, according to Coopman, is with the Port of Sohar in Oman. The port on the Omani coast, in development since 2004, is actually a joint venture between the Port of Rotterdam Authority and the Sultanate of Oman.
A recently announced project will create hydrogen from solar power by electrolysis, with on-site storage for use by the Port of Sohar’s industries. While it’s a modest first project, the Port has an ambitious plan for solar PV development on-site for further development of hydrogen production. Oman is widely seen to have potential to become a net exporter of green hydrogen fuel.
Robin Mills, CEO of Qamar Energy, speaking at the same session, presented data showing nearly 3GW of wind and solar PV in construction, bid or study phases in Oman with intended completion by 2024. He noted that the best combined solar and wind resources in the region are in northwest Saudi Arabia and in southern Oman.
It is no coincidence, Mills said, that the region’s two largest green hydrogen projects now under development are in these areas of coincidence of intense solar and wind power, at NEOM in northwest Saudi Arabia and at Duqm in Oman. The Hyport Duqm project will produce up to 500MW electrolyser capacity on-site, for production of green hydrogen for local industries as well as eventual export to Europe.
Alan Mammoser for Oilprice.com
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