Development of Early, Clean Hydrogen Production in Scotland August 2021 2-Development of Early, Clean Hydrogen Production in Scotland
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Development of early, clean hydrogen production in Scotland August 2021 2-Development of early, clean hydrogen production in Scotland Disclaimer This report was jointly paid for by Scottish Enterprise, the Offshore Renewable Energy Catapult and the Net Zero Technology Centre. Whilst the information contained in this report has been prepared and collated in good faith by the Energy Transition Alliance (ETA), a collaboration between the Offshore Renewable Energy (ORE) Catapult and the Net Zero Technology Centre, it makes no representation or warranty (express or implied) as to the accuracy or completeness of the information contained herein nor shall we be liable for any loss or damage resultant from reliance on same. Acknowledgements This report was written in July 2021 by Gail Barnes, Engineer, Lorna Bennet, Project Engineer and Callum Maxwell, Funding Proposal Specialist, at the Offshore Renewable Energy (ORE) Catapult. ORE Catapult would like to thank the following partners for their help and expertise in compiling the report: • Craig Hodge and Emma Swiergon of the Net Zero Technology Centre • Caragh McWhirr and Yumi Stow of Xodus Group • Niall Rafferty and Matthew Cook of Wood 3-Development of early, clean hydrogen production in Scotland Contents 1. Executive Summary ................................................................4 2. Introduction .............................................................................12 3. Literature Review ....................................................................15 4. Hydrogen Demand ..................................................................22 5. Future Clean Hydrogen Importers ..........................................36 6. Competitor Analysis ................................................................55 7. Cooperation Opportunities and Stakeholder Engagement ....76 8. Technology Review ..................................................................90 9. Scalability & Cost Reduction Opportunities ...........................127 10. Clean Hydrogen Production Site Assessment ......................146 11. Conclusions and Recommendations ....................................153 12. References ............................................................................158 13. Glossary ................................................................................167 14. Contact ..................................................................................169 4-Development of early, clean hydrogen production in Scotland 1. Executive Summary Clean Hydrogen in Scotland Clean hydrogen is recognised as a key enabler of decarbonisation across numerous sectors including power generation, heating, transport, refining and manufacturing. Currently global hydrogen demand is predominantly met by the manufacture of grey hydrogen which in 2019, contributed approximately 630 million tonnes of carbon dioxide (CO2) emissions. Global hydrogen demand in 2020 was approximately 70 million tonnes. The Hydrogen Council estimates that demand could be as high as 558 million tonnes (22 PWh) by 2050 [1]. Clean hydrogen is considered to be either green hydrogen, produced by electrolysis of water powered by renewable electricity, or blue hydrogen, produced by steam methane reforming (SMR) or autothermal reforming (ATR) with carbon capture, utilisation, and storage (CCUS). By producing clean hydrogen which can replace high carbon fossil fuels in the aforementioned sectors, the potential to reduce emissions is significant. Scotland, due to its location, renewable energy potential, established oil and gas industry, geological features, technical expertise, existing infrastructure and commitment to net zero by 2045, has the resources to become a global leader in the emerging clean hydrogen market. The potential exists for Scotland to become a major producer and exporter of clean hydrogen in the next decade. Of the various studies that have been conducted into Scotland’s clean hydrogen potential, the most ambitious is The Scottish Hydrogen Assessment, which estimates that 126 TWh of clean hydrogen could be produced in Scotland, with 94 TWh exported to the European market annually by 2045 [2]. The Scottish Governments Offshore Wind Policy [3] sees the potential for 11 GW installed offshore wind capacity off the coast of Scotland by 2030. The Scottish Wind to Green Hydrogen report by Xodus Group sees potential for an installed offshore wind capacity of 60 GW for Scotland by 2045, all of which could be utilised for the production of green hydrogen [4]. The OREC report Offshore Wind and Hydrogen Solving the Integration Challenge estimates that up to 240GW of offshore wind could be harnessed for green hydrogen production across the UK by 2050, to supply European hydrogen demand [5]. Markets for Scottish Clean Hydrogen Key countries that have been identified as potential export markets for Scottish clean hydrogen include Germany, The Netherlands, Belgium and Japan. These countries have developed national hydrogen strategies that reference the expectation to import clean hydrogen to meet their future demand. North West Europe, with its centres of industry, extensive gas pipeline network and commitment to clean hydrogen as outlined in various country’s hydrogen strategies, along with the regions proximity to Scotland, present a clear market opportunity to capitalise on over the next decade. Dentons report, Scaling up Green Hydrogen in Europe, presents the case that even with storage and transport costs, green hydrogen can potentially be produced and supplied at a lower cost from regions of abundant and low-cost renewable energy, than can be produced domestically in countries in North West Europe [6]. The demand for hydrogen could rise to between 200 and 700TWh in North West Europe by 2050 [7]. The German Energy Agency is already in discussions with other countries that it is 5-Development of early, clean hydrogen production in Scotland considering developing a clean hydrogen production and supply chain with to meet some of the country’s 110 TWh estimated hydrogen demand in 2030. The Netherlands is estimated to have a hydrogen demand of 100 TWh by 2030 [8]. Belgium’s hydrogen demand is expected to be 56 TWh BY 2030. The Belgian government are developing a long-term strategy for importing hydrogen, starting as early as 2025. Chile and The Middle East are potential suppliers of clean hydrogen to Belgium in the future. Japan will be an importer of hydrogen and has been engaging with other countries to establish hydrogen procurement strategies. By 2050, industries in Japan could consume up to 58 million tonnes of hydrogen per year. Competition for Scotland’s Clean Hydrogen Export Scotland is not the only country seeking to position itself as a clean hydrogen exporter. Future competitors have been identified as those countries and regions with an abundance of renewable energy resources and the ability to produce low-cost renewable electricity on a large scale or with a good supply of natural gas, coupled with storage capabilities for CO2, as those with the highest potential to become clean hydrogen producers and exporters. Those identified include Norway, Spain, Portugal, Australia, North Africa, Saudi Arabia, Australia, Chile, and Canada. Norway is the third largest exporter of natural gas globally and is at the forefront of CCUS technologies. This coupled with ample potential CO2 storage on the continental shelf puts Norway in a very favourable position to develop a clean hydrogen market and become an exporter in the future. Portugal has the lowest global bid for large scale PV (photovoltaic) projects at €0.0114/kWh. The International Energy Agency (IEA) projects that clean hydrogen will be significantly cheaper to produce in North Africa than in Europe. Green hydrogen will be approximately 40% lower cost to produce in North Africa, and blue hydrogen 35% lower cost than in Europe, making nations such as Saudi Arabia and Morocco key competitors in the export of clean hydrogen. Chile has desert regions with more than 3,000 sun hours annually making it one of the best solar resource in the world. Coupled with the strong, consistent winds in the south, Chile has the potential to power green hydrogen production with a LCOH of £1.0/kg by 2030, making green hydrogen produced in Chile the cheapest globally [9]. Five of the biggest clean hydrogen projects globally are based in Australia. The report Opportunities for Australia from Hydrogen Exports, estimates that the global demand for hydrogen could be worth up to £1.2 billion ($2.2 billion AUD) by 2030, and £5.5 billion ($10 billion AUD) to the Australian economy by 2040. The Renewable Hydrogen Strategy plans to approve a project to export renewable hydrogen by 2022. Australia plans to meet at least 3.5% of global hydrogen demand by 2030 and beyond, and sees the potential market for Australian clean hydrogen being approximately 1 million tonnes annually by 2030 [10]. In the lead up to 2030, both blue and green hydrogen will play an important role in the decarbonisation of the energy sector and production of ‘clean’ hydrogen. To be successful within a ten-year timeframe, the future hydrogen economy must quickly follow a transition from grey, through blue, to green hydrogen. The development of clean hydrogen technologies and large- scale deployment will be paramount to the success of Scotland’s target of net-zero by 2045. 6-Development of early, clean hydrogen production in Scotland Technology Review This study analyses the current and future positions of