Economic Potential of DACCS and Global CCS Progress
5.3 HYDROGEN
Hydrogen produced with very low life cycle greenhouse gas emissions (clean
hydrogen) has broad application in supporting the achievement of net-zero emissions.
For example, clean hydrogen can be combined with carbon to create synthetic fuels to
replace conventional fossil fuels. It can be used in fuel cells to generate electricity and
may be used as a feedstock for many chemical processes. Projections of future clean
hydrogen demand exceed 500 Mtpa by 2050 compared to total hydrogen production
today of approximately 120 Mtpa, including clean hydrogen production of only around
1 Mtpa¹ (1).
Potential suppliers of blue hydrogen, produced with fossil fuels and CCS, have responded
by investing in new projects. As of September 2022, there were 40 hydrogen facilities
with CCS in varying stages of development including 7 in operation. The production
capacity of each of these facilities ranges from tens of thousands² to hundreds of
thousands of tonnes of hydrogen per year.
A large investment in hydrogen transport infrastructure will be required to deliver
hydrogen to demand centres. The expected international trade in clean hydrogen will
require a fleet of purpose-built ships together with loading and offloading terminals
at ports. The Hydrogen Energy Supply Chain (HESC) pilot project has demonstrated
the transport of liquid hydrogen from Victoria in Australia to Kobe in Japan. Port
infrastructure was constructed at the Port of Hastings in Victoria and in Kobe, and a
purpose-built ship, the Suiso Frontier, successfully unloaded the liquid hydrogen on 25
February 2022 (2).
Hydrogen has an extremely low boiling temperature of -253°C, which adds to the cost
of cooling and transporting hydrogen by ship. Consequently, other options, such as
the transport of hydrogen as ammonia (NH3), are also being pursued. There is already
significant international shipping of ammonia across a network of 120 ports with
appropriate facilities and using 120 ships that are capable of carrying semi-refrigerated
ammonia as cargo (3).
Blue hydrogen project developers are predominantly from the petroleum and industrial
chemical industries who currently produce hydrogen using conventional emissions-
intense methods such as reformation of natural gas or gasification of coal without CCS.
For these companies, moving from conventional hydrogen production to blue hydrogen
production is evolutionary, not revolutionary, from a business perspective. Hydrogen
production and the management of gases are their core competencies. Oil and gas
producers also understand the behaviour of fluids (such as dense phase CO2) in the
subsurface, and operating injection and production wells, and implementing subsurface
monitoring programs are routine operations for them. Further, these industries have a
strong strategic driver to shift their businesses to support the achievement of net-zero
emissions. Production of blue hydrogen allows them to apply their existing knowledge
and expertise to a new business opportunity, and in some cases, to use infrastructure
and resources (for example, pipelines and platforms) that would otherwise become
redundant. These industries are very well positioned to win a large share of any future
clean hydrogen market due to the cost competitiveness of blue hydrogen compared to
green hydrogen; the scale of their operations; existing competencies and resources,
including financial resources; and strong strategic motivation.
Over time, newer technologies, such as Shell's Gas Partial Oxidation process, will replace
older technologies such as steam methane reformation. The current fleet of operating
hydrogen production facilities with CCS - the oldest being 40 years old - are retrofits of
CCS to existing hydrogen production facilities. They were not designed to achieve very
high CO2 capture rates because there was no requirement or financial incentive to do
so. Consequently, they only capture around 60 per cent of their scope one emissions.
The next generation of blue hydrogen facilities is being designed from the ground up
to achieve very high capture rates. Ninety-five per cent capture is becoming the default
capture rate, with some facilities expected to approach 100 per cent capture. Ultimately,
the market will demand hydrogen with very low life cycle emission intensity. Clean
hydrogen production facilities will need to demonstrate they meet this high standard to
access this market, and new facilities are being designed on that basis.
1 The model for the Institute's analysis runs to the year 2065. The CDR results for 2065 were assumed to repeat for years 2061-2100 to arrive at an approximate value for the 21st century for comparison with the IPCC results.
2 Includes hydrogen produced in synthesis gas
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GLOBAL CCS
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