Why blue hydrogen provides a de-risked decarbonisation lever
A deep-dive into blue hydrogens important role in achieving net zero by 2050.
Shell Catalysts & Technologies
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The imperative for lower-carbon energy systems is highly perceptible now, as an increasingly large group of countries announce their intention to become carbon neutral by 2050. Globally, the pool of countries with aspirational targets that are set out in climate law, or as statements of intent or submissions to the UN, accounts for about 80% of the worlds population. As we approach 2050, the world population is projected to increase from its present 8 billion to 9.8 billion and energy demand will increase by about one-third; yet, simultaneously, net global carbon dioxide (CO2) emissions rates will need to be halved.
With more and more countries setting out their zero-carbon ambitions, momentum for blue and green hydrogen production is growing. The first half of 2021 saw a surge of activity in hydrogen project investments. By mid-2021, the Hydrogen Council reported a 60% increase in announced clean hydrogen production capacity, through to 2030, compared with a similar projection made in 2020. Furthermore, this was a 450% rise compared with the figure at the end of 2019. By early 2022, more than 500 major initiatives around the world have been reported, with $160 billion of industrial investment and $70 billion of pledged public support.
Shell believes that both green and blue hydrogen are needed to meet the demands of the future hydrogen economy and help develop its infrastructure. Green hydrogen is the ideal long-term goal, but most green hydrogen projects currently come with a high cost. Further, the technology would require significant scaling for green hydrogen to satisfy the majority of the projected hydrogen growth in the coming decades. Although there is great uncertainty on the relative growth of each, it is clear that an extended hydrogen economy and infrastructure is coming. Blue hydrogen has a strong role to play in the energy transition by helping to build a hydrogen market while continuing to lower emissions.
The demand for hydrogen is accelerating, driven by stronger national-level government commitments to decarbonise the energy sector and by businesses with net-zero objectives and ambitious sustainability targets. Today, the International Energy Agency (IEA) estimates that the demand for hydrogen is about 90 mtpa, almost all of which is used for ammonia production and refining. This figure is forecast to reach about 200 mtpa by 2030 and more than 500 mtpa by 2050. Other forecasts assess hydrogen demand to vary between 150 mtpa and 500 mtpa by 2050. The wide range seen here is linked to the varying degrees of ambition required to achieve temperature targets within the various global warming scenarios. For example, some analysts suggest that striving to meet a Paris Agreement-aligned global warming target of below 1.8°C, similar to Shells Sky scenario, could result in a hydrogen demand of 220-600 mtpa by 2050.
Meeting this demand will require an unparalleled transformation in how hydrogen is produced. Currently, most hydrogen is grey and produced by converting natural gas into hydrogen and unabated CO2, using mostly the steam methane reforming (SMR) process. However, this process is carbon intensive and is, according to the IEA, responsible for as much as 900 mtpa of CO2 emissions. The energy industry cannot, therefore, just expand current grey hydrogen production if it is serious about achieving deep decarbonisation. Instead, it must rapidly transition to cleaner methods of hydrogen production, such as green and blue hydrogen.
A global investment of $500 billion has already been committed to low-carbon (blue and green) hydrogen projects through to 2030; this figure is set to rise as demand for cleaner hydrogen grows. And, although Europe accounts for 80% of new projects, China is a rapidly emerging market with more than 50 announced projects. With these investments, green and blue hydrogen production capacity is set to exceed 10 mtpa by 2030. This is, however, far below the demand forecast for 2030, which leaves a considerable need for further projects and investments.
Why blue hydrogen has an important role
Blue hydrogen is similar to grey hydrogen except that the CO2 is captured and either utilised or stored underground. Though the amount of CO2 captured varies according to the project, blue hydrogen is widely regarded as low carbon. Green hydrogen is mostly carbon free and is seen as the ideal solution to satisfy future hydrogen demand. So, why do we need blue hydrogen?
The reality is that the current economics of green hydrogen are challenging when compared to blue hydrogen. Even by 2030, it is likely that green hydrogen will be double the cost of blue hydrogen (see Figure 1), though cost parity may be achieved by 2045. This will not be the case everywhere. In some regions, particularly those with a high level of grid-connected renewable energy, green hydrogen may already have the advantage. Where this is not the case, blue hydrogen has a vital role to play in the energy transition. Essentially, while green hydrogen may be the better economic option in some locations, blue has an advantage in others and therefore both are needed in the short and medium term.
Which type of blue hydrogen technology?
Blue hydrogen can be produced in different ways, according to the technology used. Until recently, project developers usually had the choice of two established blue hydrogen technologies: SMR or autothermal reforming (ATR). Now, there is a third option; one with the potential to provide superior cost and CO2-capture performance.
The Shell Blue Hydrogen Process (SBHP) is a new way to produce blue hydrogen from natural gas, or other hydrocarbon gases (refinery off-gases), by integrating proven technologies that can be deployed rapidly (see Figure 2). The process is an oxygen-based, non-catalytic system, whereby Shells proven Shell Gas POx technology is utilised to manufacture syngas. After the water-gas shift reaction, CO2 is removed with Shell ADIP ULTRA technology to leave a hydrogen stream for further purification. Shell Gas POx utilises Shell’s proven Shell Gasification Process (SGP) technology, based on gas partial oxidation, which is a mature, cost-efficient, and de-risked technology with a 70-year track record.
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