Blue Hydrogen As an Enabler of Green Hydrogen: the Case of Germany
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Blue hydrogen as an enabler of green hydrogen: the case of Germany OIES Paper: NG 159 Ralf Dickel, Senior Visiting Research Fellow, OIES i The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2020 Oxford Institute for Energy Studies (Registered Charity, No. 286084) This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies. ISBN 978-1-78467-159-4 DOI: https://doi.org/10.26889/9781784671594 i Preface As Europe starts to emerge from the COVID-19 crisis and the question of how to re-start ailing economies becomes more urgent, one solution that has been proposed has been investment in technology to encourage the energy transition. Within this context the gas industry faces an existential issue, as it needs to find a role within an energy economy that is set to decarbonise rapidly in order for the EU to meet its net zero emissions target by 2050. One solution that has been proposed both at an EU-level and also, as this paper describes, within some countries is the development of hydrogen as an alternative method for supplying gas. However, this concept begs a further question – hydrogen generated from what? In an ideal world the answer would be from surplus electricity generated from renewable sources and used to electrolyse water to create hydrogen and oxygen with zero emissions. This “green” hydrogen could provide energy for industrial processes, for power generation (largely as a back-up to renewables when the wind is not blowing or the sun not shining) and even for residential and commercial use. Unfortunately, although this outcome would be perfect in theory, the practical reality is that it is highly unlikely to provide sufficient energy by 2050 to be a viable solution on its own. This is the key argument discussed by Ralf Dickel in this paper on Germany’s hydrogen strategy, which he uses as an excellent case study of the potential future role of hydrogen more broadly. He argues that although the production and consumption of green hydrogen should certainly be a long-term goal, there must be a role for “blue” hydrogen (produced by the reforming of methane into hydrogen plus CO2) as an enabler of a future hydrogen economy. The technology is already available, CO2 storage is becoming more viable and the gradual expansion of hydrogen use can allow new infrastructure to be built that can ultimately be used to enable the development of a green hydrogen business. However, without this interim step the aspirations for hydrogen could falter due to unrealistic expectations based on political, rather than commercial and technical, reality. Ralf Dickel explores the logic behind this debate in a clear and logical fashion in this paper, and we would recommend it to policy-makers, energy companies and interested observers of the European energy market as a thorough and well-argued analysis of the key issues which need to be addressed if hydrogen is to play a major role in the decarbonisation of the European energy economy. James Henderson Director, Natural Gas Programme Oxford institute for Energy Studies ii Acknowledgements I am deeply grateful to James Henderson and Martin Lambert for their encouragement and for their support with this paper, which was always constructive and useful. The paper greatly benefited from the insightful feedback from Prof. Hans Georg Fasold (Technical University of Aachen), Harald Hecking (Uniper), Klaus von Sengbusch (50hz), Jens Völler (Team Consult), Petter Nore (Nord University of Bodø) and Heiko Lohmann (Energate), who were and are all competent discussion partners on the covered topics. Olga Sorokina did a great job transforming my draft into appropriate English. My thanks to John Elkins for the careful editing of the manuscript and to Kate Teasdale for professional formatting. Last but not least, I want to express my gratitude to Bernhard Witschen, who sadly died in April 2020, for many engaged discussions on the subject of hydrogen. I miss him as a colleague and a friend. The contents of this paper do not necessarily represent the views of the OIES or of its sponsors. Despite the contributions of so many people, responsibility for the views expressed and any errors is solely mine. Ralf Dickel, May 2020 iii Contents Preface ................................................................................................................................................... ii Acknowledgements ............................................................................................................................. iii Contents ................................................................................................................................................ iv Graphs .................................................................................................................................................... v Tables ..................................................................................................................................................... v Executive summary .............................................................................................................................. 1 Chapter 1: Germany’s decarbonisation policy and discussion on hydrogen so far ..................... 3 1.1 Implications of the Paris Agreement for Germany as a member of the EU .............................. 3 1.2 De facto development ............................................................................................................... 3 1.3 Phasing out lignite and hard coal power generation (Kohleausstiegsgesetz) .......................... 4 1.4 Discussion on a national hydrogen strategy ............................................................................. 4 Chapter 2: Renewable electricity is best used to replace thermal power until the power sector is decarbonised ..................................................................................................................................... 5 2.1 Any kWh of renewable power is best used in the power market as long as there is any fossil-powered generation remaining ....................................................................................... 5 2.1.1 The German grid is designed to absorb all electric renewables, leaving little surplus for green hydrogen ................................................................................................................ 6 2.1.2 Phasing out nuclear, lignite and hard coal-fired power generation in Germany ............. 7 2.2 How to decarbonise the load-following power generation? .................................................... 12 2.3 Ways to decarbonise the non-electric sector using renewable electricity ............................... 14 2.3.1 Decarbonisation of the power sector by renewables was a success story .................. 14 2.3.2 Decarbonising the non-electric sector proved to be more difficult ................................ 14 2.3.3 Sector coupling ............................................................................................................. 14 2.4 Comparing the electric and non-electric sectors ..................................................................... 15 Chapter 3: Availability of technology for converting natural gas to hydrogen and for CO2 transportation and sequestration ...................................................................................................... 17 3.1 Two approaches to produce hydrogen from natural gas: steam reforming vs pyrolysis......... 17 3.1.1 Steam methane reforming or auto-thermal reforming .................................................. 17 3.1.2 Pyrolysis ....................................................................................................................... 17 3.2 CO2 transportation ................................................................................................................... 18 3.2.1 CO2 transportation by pipeline ...................................................................................... 18 3.2.2 CO2 transportation by ship............................................................................................ 18 3.3 CO2 sequestration ................................................................................................................... 19 3.3.1 Enhanced oil recovery .................................................................................................. 19 3.2.2 CO2 storage in geological structures ............................................................................ 20 3.4 Germany .................................................................................................................................. 21 Chapter 4: Development of demand, infrastructure and best place for conversion.................... 23 4.1 Demand ................................................................................................................................... 23 4.1.1 What sequence? ........................................................................................................... 23 4.1.2 At what speed? ............................................................................................................