Feb-2025

Future focus: CO2 management and hydrogen decarbonisation

Five years ago, the trajectory of hydrogen decarbonisation and CO2 management was uncertain. There is still some time to act and plenty of good reasons to refocus.

Stephen B Harrison
sbh4 Consulting

Article Summary

A fresh vision for fossil fuels. European and US debt is at an all-time high. Developing nations are struggling to feed their people and bring them basic healthcare provisions. The costs of war and plans for rising defence expenditure are eating into national budgets.

The notion that governments will be borrowing huge additional sums of money to pay for a net-zero future is unrealistic. We must accelerate progress with limited budgets, which means we should focus on achieving the best bang for our buck with hydrogen decarbonisation.

We must rethink the decarbonisation paradigm. ‘Green’ ideology and regulations suited for 2050, rather than 2025, have held back progress towards net zero for too long. It is not the ‘greenest’ projects that will proceed and receive infrastructure-scale investment; only the ‘best’ projects will be bankable. What does ‘best’ mean? To the bank, it means a clear business case with an acceptably low level of risk.

As we review carbon dioxide (CO₂) management and hydrogen decarbonisation mid-decade, it is abundantly clear that responsible use of fossil fuels is a reality that we must work with, not against, for many years to come. The use of fossil fuels with appropriate greenhouse gas (GHG) emissions mitigation is compatible with a net-zero vision. Fossil CO₂ and methane emissions to the atmosphere are the issue, not the use of fossil fuels per se. Let us attack the issues with razor-sharp precision, not get distracted by peripheral noise.

Sequester CO₂ that is already captured
When ammonia is made from steam methane reforming of natural gas, CO₂ leaving the reformer must be removed to enable the catalytic Haber-Bosch ammonia synthesis reaction to take place (see Figure 1). Every natural gas-fed ammonia plant already has a CO₂ capture facility. The Capex is spent, and the energy costs for CO₂ capture are committed. This CO₂ must be sequestered to reduce the CO₂ intensity of this ammonia. Large-scale projects for green hydrogen for ammonia production should not be prioritised until we have decarbonised existing natural gas-fed ammonia plants massively.

Coal-to-chemicals is another area of low-hanging fruit. Immediately after coal gasification, the raw syngas is fed to a Rectisol unit, where CO₂ and sulphurous gases are removed. At present, this CO₂ is blown to atmosphere, just like the CO₂ from ammonia production is vented on most ammonia plants today.

This captured CO₂ must be a priority for sequestration since the capital and operating costs of the Rectisol plant are absorbed into the overall costs of the coal-to-chemicals production. To reduce the CO₂ intensity of coal-to-chemicals, the only incremental costs are CO₂ transmission and sequestration.

In Hong Kong, Town Gas production already involves CO₂ capture to control the heating value of the product (see Figure 2). This CO₂ is vented to atmosphere. It should be sequestered.

Production of ethylene oxide on many petrochemical plants also requires CO₂ removal within the process to purge CO₂ (a byproduct of ethylene oxidation) from the process recycle. Also, natural gas processing removes CO₂ in midstream operations to ensure dry, acid-free gas enters the pipeline transmission infrastructure. These are tier 1 priorities for sequestration of captured CO₂.

Decarbonising refinery hydrogen
In many oil refineries, grey hydrogen produced from natural gas on steam methane reformers (SMRs) is used to produce marketable liquid fuels. The CO₂ from these SMRs is not captured at present. However, 60 to 70% of the CO₂ produced on the SMR is available at a very high partial pressure prior to the reformate gas mixture entering the hydrogen separation pressure swing adsorption (PSA) unit. The unit cost of CO₂ capture in this location is low.

New equipment and new energy would be required. But the incremental costs of capturing this CO₂ would be less than the incremental cost of implementing carbon capture and storage (CCS) to processes with more dilute CO₂ streams, such as power generation, cement, or steel making (see Figure 3).
Despite the ideal process conditions, there is not an overwhelming wave of SMR CO₂ capture projects being implemented because the business case is not strong enough. The costs of CO₂ emissions do not cover the costs of new equipment and the energy penalty.

CCS of CO₂ from SMRs would be ‘good value for money’ and help with the rapid decarbonisation of hydrogen production and refinery operations. Policymakers must recognise the benefits of hydrogen with any degree of reduced CO₂ intensity. The current criteria for ‘blue’ hydrogen are tight, and if a decarbonisation initiative does not get the ‘blue’ badge, the case is weak.

CO₂ intensity must be a sliding scale
The ‘blue’ hydrogen benchmark is relevant for new-build projects based on autothermal reformers (ATRs) or gas heated reformers (GHRs) with built-in CCS, but 2,000 SMRs operating today can be decarbonised with CO₂ capture equipment retrofits. This is 2025, and in many parts of the world, there has been significantly less progress towards declared net-zero targets than has been promised. ‘More of the same’ will not help us achieve 1.5°C and is unlikely to cap climate change at 2 or 3°C. We need high-impact action now – ideas that can rapidly and cost-effectively be deployed.

The costs and scalability of green, blue, or hydrogen of any degree of CO₂ intensity must be seen in the context of alternative industrial decarbonisation measures. The idea of a hydrogen project going for ‘green, blue, or broke’ has resulted in failed business cases and inhibited meaningful progress. CO₂ intensity is what matters. Every reduction in GHG emissions is beneficial.

Making a rapid impact means there is no room for the perfect to be the enemy of the good. We must accept that the next 30 years will be about rapid decarbonisation of existing infrastructure in addition to progressive development and deployment of ultra-clean technology. There must be support for GHG emissions reduction in all forms rather than CO₂ intensity thresholds, which indirectly promote some technologies above others.

A fair assessment of CCS, EOR, and EGR
Despite some failures, disappointments, and poor reporting in certain carbon capture and geological storage (CCS) projects, there have also been many successes. The way to get better is to do more and learn faster. Enhanced oil recovery (EOR) and enhanced gas recovery (EGR) should also be seen as meaningful ways to store CO₂  in suitable geological formations.

Dismissal of EOR and EGR as valid CCS mechanisms due to concerns that they may increase fossil fuel production is not valid on a global scale. There is an abundance of crude oil and natural gas reserves in the Middle East and Russia; these nations will produce according to demand.