Assem Bakytzhan-Augustin, Project Manager of Green Energy GmbH in Kazakhstan and Poland

As part of the 2015 Paris Agreement, 195 countries committed to limit global warming. This means that the world must drastically reduce its greenhouse gas emissions. According to the MCC evaluation report, our carbon budget is 400 Gt CO2 if the warming limit is < 1.5 °C and about 1000 Gt CO2 if our goal is < 2 °C. Limiting global warming to 2°C is the most widely recognized goal. This goal should lead to a deep decarbonization of all industries.

Decarbonization does not mean simply switching from fossil fuels to renewable energy sources. Decarbonization is the organization of our economy in such a way that it releases minimal or no CO2 into the atmosphere. The role of renewable energy in this process is, of course, huge, but this is not the only universal solution. There are many industrial processes and sectors that are difficult or impossible to electrify today. We need a fuel alternative to oil, coal and natural gas.

Hydrogen may become such an alternative. It is not an innovation in our economy. The current demand for hydrogen worldwide is estimated at 80 million tons per year. It is mainly used as a raw material or reagent. 31 million tons are used for the production of ammonia, which is mainly used in the production of fertilizers. 36 million tons of hydrogen are used in petrochemistry. 12 million tons - in the production of methanol, 4 million tons - in metallurgy and 0.01 million tons - in the transport sector (IEA-2018 report). For our ambitious climate goals, it is interesting because it can potentially be used almost everywhere as a clean or relatively clean energy carrier, as well as serve as an energy storage medium. The I EA agency predicts the growth of the global hydrogen market to 62 million tons by 2040 and its further growth in various segments.

Many countries and group companies have declared their carbon neutrality by 2050 and 2060. In their plans and strategies for decarbonization, they assign a huge role to green hydrogen. Great hopes are pinned on hydrogen. In order for pure hydrogen to actually help humanity achieve its goals, it must be technologically efficient, safe, and affordable in the required quantity, quality, and price. This article opens a series of papers on hydrogen. We will try to cover such topics as the potential of hydrogen for the economy of Kazakhstan, the influence of hydrogen on the reformation of the global economy and politics, infrastructure issues, the use of hydrogen in various industrial sectors, etc. This article is an introductory, a kind of attempt to look at the chain "production -storage and transport - use of green hydrogen", as well as analyze some of the difficulties (or obstacles) associated with this.

So, what is hydrogen?

Hydrogen is the simplest and most widely occurring chemical element in the universe. It consists of one proton and one electron. It has no color, no smell, no taste and is not poisonous to us. However, it is very flammable. In order to use the hydrogen, it must first be produced. That is, hydrogen is not an energy source, but it is an energy carrier. There are different processes for its production. Depending on these processes and the environmental friendliness of the final product, there is a certain code for labeling hydrogen by color.

Let's consider some of them.

“Gray” hydrogen is produced from natural gas by steam reforming. This process involves mixing natural gas with steam and in the process of this reaction, we get hydrogen and CO2. The complexity of this method lies in the fact that, firstly, in this process, about 10 kg of CO2 is emitted into the atmosphere for every 1 kg of hydrogen. And secondly, 20-25% of energy is lost, in fact, it is easier to use natural gas directly.

The process of producing "blue" hydrogen is the same as in gray, but this method minimize CO2 emissions by capturing and pumping CO2 into underground storage or further potential industrial consumption. In this case, about 1 kg of CO2 per 1 kg of hydrogen is released into the atmosphere. However, there are also difficulties. For example, it is not possible to organize such storage facilities everywhere, since there are certain geological, hydrodynamic and seismic risks. In addition, it is necessary to monitor constantly such storage for its integrity in order to avoid any leaks. The actual high cost of CCUS technology will surely decrease as it spreads and develops.

"Turquoise" hydrogen is the pyrolysis of methane, which decomposes into hydrogen and solid carbon. If electricity from renewable energy sources is used as an energy source, then we can talk about pure hydrogen, since there are no direct emissions of CO2. The remaining carbon can be used further in industry.

"Green" hydrogen is produced by electrolysis using electricity from renewable energy sources. Water is divided into its component parts: hydrogen and oxygen. This process is the most energy-intensive. It needs to provide a very large amount of "green" electricity and a sufficient amount of water.

It takes about 9 liters of purified water to produce lkg of H2. This can become a problem in areas with water scarcity. Rystard Energy believes that almost 85% of the 206 GW green hydrogen production projects announced by 2040 should be built in regions with water scarcity, such as Spain, Chile and Australia. Therefore, desalination of seawater or brackish groundwater may be required - an energy-intensive process that requires additional renewable energy sources to ensure the environmental friendliness of hydrogen, which increases costs. According to the Advisian analytical company, the cost of desalination is US$0.70- 3.20 per cubic meter of purified water depending on the size and location of the plant.

"Green" hydrogen is considered pure hydrogen, since it has no direct emissions of CO2 (just like "turquoise"). Greenhouse gases emitted during the production, supply and construction of components and materials for renewable energy sources and electrolyzers are not taken into account.

In addition to those described above, there are also such "colors" as brown - coal gasification. "Yellow" ("orange") hydrogen - produced by electrolysis, but based on atomic electricity. There are no direct CO2 emissions in the latter, but its environmental safety and correspondence to the idea of sustainable development causes a lot of discussion.

Challenge 1 – price

Comparing the prices of hydrogen within the framework of the described technologies, it should be mentioned that their price always varies based on location of production. This means a good location in relation to an energy source, whether it is fossil raw materials or renewable energy. In general, we can say the following: the cost of gray hydrogen is now slightly below 2 euros per kilogram. "Blue" hydrogen is slightly more expensive, about 2.5 euros/kg. "Green" hydrogen is now the most expensive: depending on the country, on average its price varies from 4 to 6 euros/kg. Its price depends not only on the volatility of electricity prices from renewable energy sources and the increase in prices for CO2 emissions, but also on the costs and efficiency of the electrolyzer.

Alkaline electrolysis is the most mature technology of electrolysis, which was mainly used for the production of ammonia. This technology uses a liquid electrolyte that is mixed with potassium hydroxide for better conductivity. There are options for atmospheric alkaline electrolysis. However, there are also pressure systems in which the output pressure of hydrogen is <40 bar. Many applications require pressurized hydrogen, and a higher output pressure saves costs and energy compared to using compressors. Pressurized hydrogen also responds better to changes in power consumption (e.g. from renewable energy sources). However, despite these advantages, it has slightly lower efficiency and more complex design and maintenance (DNV Energy Technologies Report 2021).

Proton exchange membrane (PEM) is characterized by a solid electrolyte (membrane) and a fast time reaction and is usually under pressure. It is about 30% more expensive than alkaline electrolysis, but the efficiency is the same. It is also expected that the service life of the stack will soon reach a level similar to alkaline electrolysis (70-80 thousand hours), and the systems are approaching 60 thousand hours. The proton exchange membrane is already being used on a MW scale with the largest installation in Canada with a capacity of 20 MW and is operated by Air Liquide (DNV Energy Technologies Report 2021).

Solid Oxide Electrolysis (SOE) - the technology is mainly known for its high operating temperature (500-900 °C), high efficiency and the use of steam instead of liquid water. The technology is commercially available, but still lags far behind the previous two in terms of scale and maturity. The service life is still limited to 20 thousand hours. The cost of this electrolysis is still not able to compete with the first two. In addition, the stack power is only a few kW. The unique advantage of this electrolysis is its ability to directly form syngas using the combined electrolysis of steam and CO2, as well as 02 to produce a mixture of hydrogen and nitrogen using the combined electrolysis of steam and air. The latter option is advantageous to combine with ammonia production, which saves the cost of air separation plants for nitrogen production and uses waste heat for steam production (DNV Energy Technologies Report 2021).

Anion exchange membrane (AEM) is the least developed technology, which is still at the research and development stage. The system is commercially available, but its power is only 2.4 kW. The technology looks promising because it has a simple design, like a proton exchange membrane. But it does not require critical raw materials. (In a PEM electrolyzer, a proton (H+) is transferred across the membrane in a highly acid environment. Therefore, the PEM electrolyzer requires platinum group metals (PGM) as catalysts and expensive titanium bipolar plates to survive in a highly corrosive acid environment, while catalysts without PGM and steel bipolar plates are sufficient for efficient hydrogen production in the AEM electrolyzer.) The main problems are instability and limited service life. So far, the tests exceed only 2 thousand hours and show a high degree of degradation. Some improvements may lead to a service life of 5 thousand hours, but this will reduce its efficiency.

As confirmed by the DNV analysis, the main factors affecting the LCOH of green hydrogen are electricity consumption, investment costs and stack degradation.

If we consider the history of RE prices globally, then the downward trend is clearly visible, which, of course, is good news. The price of electrolyzers also shows a downward trend. In 2015-2019, their cost fell by 40%. Together with the reduction in the price of electricity, the price of green hydrogen decreased by 50% in the same period (Dentons report, December 2020). Experts continue to work on improving technologies to increase efficiency and reduce capital costs.

It may take years to develop large-scale production of "green" hydrogen, since in many countries energy from fossil sources is the lowest, since it is already produced at amortized power plants and/or is directly or indirectly subsidized by the government. Consequently, hydrogen produced from fossil fuels will play an important role in the formation of hydrogen as a significant energy carrier. It is clear that the world is not able to switch to expensive green hydrogen overnight, but at the same time, the declared decarbonization obligations must be fulfilled now. This implies a serious interest in blue hydrogen with current price more attractive compared to the price of "green" H2. Carbon dioxide capture technology (CCUS) and the costs of gas disposal are also not cheap. Therefore, there is a competition between blue and green hydrogens.

Analysts of the Aurora agency, who specialize in forecasting energy prices, tried to determine when green hydrogen will become competitive with blue. The condition was to achieve the green LCOH level of 2.5 euros/kg. In their model, they laid down four types of electricity supply to the electrolyzer: the so-called inflexible (or rigid) – electricity is only from the grid and operates at a load factor of 95%. Flexible - also electricity, only from the grid with the possibility of selecting consumption hours to minimize LCOH. Island - electrolyzer connected only to RES without a grid. And an electrolyzer powered by renewable energy source, but with an additional connection to the grid. At the same time, it should be noted that the analysis includes European markets with their climatic, technical and market conditions.

The simulation result showed that electrolyzers will become cost-competitive compared to blue hydrogen only by the end of the 2030s. However, if electrolyzers become cheaper and more efficient, and renewable energy assets reach lower LCOE5, this period may be significantly shifted to the early 2030s. After 2025, hydrogen produced in island mode will be cheaper than electrolyzers connected to the grid. Electrolyzers connected only to the grid (with flexible and inflexible control) had the highest LCOH. This was due to high average electricity prices, high network costs and environmental charges. At the same time, depending on the country and its energy mix, there is in fact always a risk of direct CO2 emissions.

The EY-Parthenon analysis also determines the parity point for 2030 and associates it with maturity of electrolysis technologies and a good location to a source of electricity from renewable energy sources.

CHALLENGE 2 - storage and transportation

The next important factor for the emerging new pure hydrogen industry is safe, economically and technically efficient storage and transportation. Basically, hydrogen can be transported in the same form in which it is stored: in the form of gas (GH2), liquid (LH2) or in solid and liquid carriers. For this purpose, both automobile, sea and railway tracks can be used, as well as gas pipeline systems. When deciding on the most efficient form and transport for hydrogen, it is fundamentally important to take into account its special properties.

The hydrogen atom is small in size and it is very light, so it is more prone to leakage compared to methane. Hydrogen is also particularly prone to self-ignition in places of leaks and atmospheric vents. Therefore, flanged connections should not be used in hydrogen pipelines, and it should be stored in specially sealed containers. In addition, many metal materials, including steel, become brittle in the gaseous environment of hydrogen, so it can cause structural damage to the pipeline.

Hydrogen has a gravimetric energy density three times higher than gasoline. This means that 1 kg of hydrogen contains about three times more energy than 1 kg of gasoline. But at the same time, it has a very low volumetric energy density under normal conditions. This means that to obtain the same amount of energy as, for example, from natural gas, hydrogen requires d three times the volume¹.

To get around this problem to some extent, hydrogen can be liquefied at very low temperatures. However, the liquefaction process is very energy-intensive: it consumes 25-45% of the energy of liquefied hydrogen. The cost of electricity is 10-14 kWh per 1 kg H2 and higher. In addition, constant cooling, effective insulation and high cold resistance of the material of the container in which the liquefied hydrogen is stored are necessary. Despite all this, there are always evaporation losses, which is also unsafe)².

Storage of hydrogen in hydrides has a number of advantages compared to storage under pressure or in liquefied form, namely: energy costs are reduced, transportation is simplified, storage safety is increased. Hydrides increase the bulk density, as in the case of liquefied hydrogen, but do not require maintaining a low temperature. However, there are thermodynamic and kinetic limitations of the application. For example, when using magnesium hydride MgH2, hydrogen absorption does not occur at temperatures below 473 °K, and desorption occurs at high temperatures above 673 °K. Activation is required for the required rate of sorption and desorption².

The above types of storage and the resulting conditions mean the need to re-equip and/or restructure the existing infrastructure, as well as the construction of more quantity of new transport resources. In addition, it is necessary to develop new quality certificates, norms, standards and rules for the transportation and construction of pipelines, tanks of large ships and trucks, as well as during their operation. And if we are talking about international export-import relations, then these are changes in international treaties.

Challenge 3 – Industrial use

In order for pure hydrogen to become a driver of deep decarbonization of the economy, industry must switch to its widespread use in its production processes. We are talking, first of all, about those industrial sectors with processes which are impossible or difficult to fully electrify on the basis of renewable energy sources. Such a sector is, for example, the steel industry. If it were a country, its carbon dioxide emissions would rank third in the world. According to the World Steel Manufacturers Association, last year steelmakers produced more than 3 billion tons of CO2, which is 7-9% of greenhouse gas emissions generated by humans. At the same time, in physical terms, steel is the dominant material, and global demand for steel is estimated to increase to 2.5 billion tons per year by 2050. This means that the environmental burden may increase if we leave everything as it is³.

The most carbon-intensive process in this industry is the processing of iron ore into cast iron - the main ingredient of all types of steel. This is where hydrogen can be useful. This is due to the fact that it has the potential to be used as a primary raw material (replacing carbon in the form of coke as a reducing agent in the process of extraction of iron from iron oxide) and as an energy source (replacing fossil fuels at various heat-intensive stages of the iron and steelmaking process). Hydrogen-based steel production is, in fact, a low-carbon modification of the direct iron reduction (DRI) method, in which "sponge iron" is produced in a shaft furnace as a result of the reaction of hydrogen and iron ore. The DRI must then be melted in an electric arc furnace (EAF). The first steel produced using HYBRID technology, that is, using 100% fossil-free hydrogen instead of coal and coke, is already being delivered to the first customer-Volvo Group⁴.

Despite the first positive experiments, the process of large-scale introduction of hydrogen-based steel production will not be so fast. This requires not only a number of political instruments, but, above all, huge investments on the production sites themselves. After all, we are talking about adapting or completely replacing the existing production process with a new hydrogen-based process. Such processes, investments, modernization do not happen in one day. Ernst &Young Parthenon experts estimated that DRI + green hydrogen technology will require 60-90% of additional costs, and the commercial stage can be reached only in 10-20 years. Some pioneers, like the Swedish HYBRIT, are preparing their demonstration plants by 2025-2030. However, a fully operational hydrogen steel plant on an industrial scale is expected no earlier than the mid-2030s.

Such investments are very costly, and even the manufacturing giants say that they need the help from the government. And this assistance is not only in the form of certain preferences and qualitatively developed long-term concepts fora low carbon-free hydrogen economy, but also in the form of direct "initial investments". ThyssenKru pp recently estimated costs of about 10 billion euros with a green steel production plan of 10 million tons per year. Salzgitter assumes 3 billion euros for the production of 7 million tons per year.

When switching to hydrogen-based steel production, the UK will need up to 25 TWh of hydrogen for the recovery process, plus another 3-4 TWh for rolling and indirect heating for the entire sector (source: TATA Steel webinar). This is more than the current hydrogen production in the UK, amounting to 27 TWh (including green and gray hydrogen). In other words, there is an urgent need to produce "green" electricity in much larger quantities only for the production of hydrogen and only for the "greening" of steel.

The founder of Bloomberg NEF (BNEF), Michael Liebreich, estimated that to replace the current annual global demand for gray hydrogen with green, all wind and solar energy currently installed around the world will be required. He also found that in order to meet the lEA's forecasts for hydrogen demand (the "net-zero" scenario for 2050), all wind and solar power plants that BNEF forecasts will be installed worldwide will need to be installed solely at the expense of green hydrogen (see the graph below).

In addition, the availability of green hydrogen remains an important issue. Any production needs to understand in advance what volumes of supplies, when, at what price it can count the volumes of that raw material or product on which the industrial/production process somehow depends. In what ways, in what form will it be most safe, as well as economically and technically efficient to deliver it to the point of consumption?

No one has answers regarding hydrogen to these questions. And yet, despite the above difficulties, and those that will be revealed along the way, one thing is clear: we are witnessing the formation of a global hydrogen economy.

Heated discussions of experts and politicians are being held, national strategies are being written and adopted, analysts are making forecasts of future production and consumption volumes, "hydrogen valleys" are being created on the basis of cross-sectoral cooperation between producers, consumers and suppliers. We must not miss this opportunity. This is a chance for Kazakhstan not only to decarbonize the economy, but also to develop its own production of necessary equipment, components and services along the entire chain of "production - storage/transportation - use of hydrogen".

To do this, it is necessary to conduct a deep and comprehensive analysis of the development potential of the hydrogen economy. It should include an analysis of the potentials of both pure and low-carbon hydrogen, both exports, taking into account the plans and intentions of neighboring and distant countries, and the domestic market, taking into account the problems of energy supply, the development of auto, rail and air transport, the needs and risks of high-emission sectors of industry and the possibilities of the scientific base.