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Picture of Christopher A. Hopkins, CFA

Christopher A. Hopkins, CFA

Burning water to make steel: green hydrogen closer to reality

The Paris Agreement on climate change, to which the US is a signatory, sets an ambitious goal of limiting the increase in global average temperature to 1.5 degrees Celsius above pre-industrial levels. We are about 1.1 degrees higher already, and the world has fallen behind schedule in reducing the production of greenhouse gases sufficiently to attain this goal. Success will require a radical reduction in the burning of fossil fuels and the eventual achievement of net zero carbon emissions by 2050. That’s a tall order.

But thanks to advancing technology, that goal is increasingly attainable. What was once science fiction is now on the visible horizon: commercially viable “green” hydrogen extracted from water as an abundant, clean energy source that leaves essentially no carbon footprint. Investment incentives from many nations including the Inflation Reduction Act in the US are accelerating the development of viable applications and attracting the private capital required for hydrogen to supply a quarter of the world’s energy needs by mid-century.

Hydrogen is the first and simplest element in the periodic table (symbol H), as well as the first to form in the moments following the Big Bang. The name is Greek for “water forming” since it partners with oxygen to form H2O. Hydrogen also has tremendous energy potential and is a constituent of virtually anything that burns, but is typically paired with carbon and releases greenhouse gases like carbon dioxide upon combustion that contribute to climate change. It is commonly used to remove sulfur during oil refining or in producing ammonia and is usually extracted from other hydrocarbons like methane (natural gas) via a process called steam reformation, dispersing carbon into the atmosphere.

But hydrogen can also be extracted by a process called electrolysis that uses electricity to separate the hydrogen and oxygen atoms from ordinary water and renders no carbon gases. Electrolysis is an old technology that has been commercially unviable due to the large amount of electricity required, most of which is produced by burning hydrocarbons. That is changing with the advancement of more abundant renewable sources of electricity.

Scientists classify hydrogen by “colors” according to the source of production. “Grey” hydrogen is the traditional stuff culled from fossil fuels (natural gas, oil, or coal). “Blue” hydrogen is the moniker attached to production from fossil fuels but utilizing some form of carbon capture technology to reduce the footprint by injecting sequestered greenhouse gases into caverns or solidifying and burying the carbon byproducts.

“Green” hydrogen is truly carbon neutral, produced from water using renewable sources of electricity and therefore releasing no greenhouse gases. This is the area engendering the most enthusiasm and enjoying the greatest technological advances.

Hydrogen fuel cells that produce electricity are already in limited use for light transportation applications like cars, city buses, and commuter rail service. The development of green hydrogen is likely to accelerate fuel cell transportation applications but will also likely encounter competition from battery-electric vehicles. The truly fecund field for green hydrogen is in energy-intensive industries that are notoriously difficult to decarbonize, like steelmaking.

The first step in making steel is a process called reduction in which contaminating oxygen is removed from iron ore, leaving pig iron. This process usually occurs in a blast furnace fueled by coke (a purified form of coal) that produces iron plus carbon dioxide gas. An alternative process called direct reduction can replace coke with green hydrogen, refining the iron ore into pig iron plus water vapor (look Mom, no carbon). While the process is not yet economical, German steelmaker ThyssenKrupp has commissioned the first full-scale carbon-free direct reduction facility and expects to begin production in 2026. The plant will spit out 2.5 million metric tons of iron per year while avoiding 3.5 million metric tons of CO2 emission.

Another promising application is heavy over-the-road trucking utilizing hydrogen-powered internal combustion engines or fuel cell-powered electric motors, and prototype hydrogen-burning trucks from Daimler and Volvo are in testing. Electricity generation may also be a fertile area of interest using surplus renewable electricity during periods of slack demand to electrolyze water into hydrogen to then use for power production during peak demand, effectively storing up energy for later.

Another fascinating application attracting interest is marine transportation where battery power is impractical. Marine engineers are focused on creating cargo ships that run on ammonia, a molecule consisting of hydrogen and nitrogen. Modified internal combustion engines burning ammonia date to World War II, but the potential to produce “green” carbon-neutral ammonia from hydrogen is promising and the first commercial vessel is due to launch in 2024.

In addition to the existing cost hurdles, widespread hydrogen usage will require a substantial investment in infrastructure to safely transport and store the volatile gas and provide convenient refueling options in addition to scaling up production. For example, there are 1,600 miles of hydrogen pipelines in the US, but over 3 million miles of natural gas pipelines, some of which could be retrofitted to transport hydrogen. Most of the major oil companies including Shell, Exxon, Chevron, and BP are aggressively engaged in research and deployment of commercial-scale green hydrogen production and transportation capabilities.

Unlocking the enormous energy of the smallest atom has been technically possible for a century, but practical application on a large scale has proven elusive. The next two decades may see the promise fulfilled.

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