South Korea: its hydrogen roadmap based on R&D and innovation
Feb 16, 2023
Innovative
In his book ‘Hydrogen: the new oil’, Thierry Lepercq speaks of hydrogen as “squaring the circle, the simple and obvious answer to the expectations of all consumers: an almost infinite, clean, decarbonised, waste-free energy, available at all times, that can be produced anywhere there is sun and/or wind and water, that does not depend on the cycles of raw materials or geopolitical risks and that, very soon, will be at an unbeatable price”.
We talked to him to understand how he came to this conclusion:
The history of energy consists of successive phases. New energy sources have emerged most of the time in addition to previous ones, offering greater comparative advantage (abundance, versatility, ease of transportation and storage, competitiveness, etc.).
The situation we are experiencing today is different: it is no longer a question of finding sources in addition to existing energies, but of replacing fossil energies – which represent 84% of the world’s energy mix – as soon as possible, without waiting for resources to run out.
This is a huge challenge, and the only solution that can be developed quickly, on a large scale and competitively, is so-called “green” hydrogen, which is produced by electrolysis of water using solar and wind energy. The key to making the change as simple as possible is to make the most of existing infrastructure, for example, gas pipelines and underground gas storage facilities and oil, gas and coal turbines that generate electricity and heat.
If consensus is reached on the fact that fossil fuels are superabundant – especially in the case of shale gas and oil – and that they should give way as soon as possible, the economic model, power and stability of the producing and exporting regions and countries will be called into question. These include Russia, which leads the way, the Middle East, some African countries and the United States, which has recovered its position as the world’s leading oil and gas power. Europe, where fossil resources are very limited, is paradoxically in a better position.
How can we stay in the world of fossil fuels if we have a decarbonised alternative that is practical and competitive?
The key to the massive development of hydrogen is not the sun or wind as a resource – as they are almost infinite and well distributed throughout the world – nor the technology – electrolysis is a simple process – it is the existence of transmission and storage infrastructures and the capacity to procure energy supply for long periods with entities or entrepreneur.
It is essential to conceive of energy as a system – and not just electricity, which accounts for only 20% of the energy basket – while ensuring security of supply, competitiveness and decarbonisation.
This is a delicate situation, because the players in the energy sector, with the support of the regulators, the public authorities and the territories, must once again take responsibility for the “public service” that is energy.
It is therefore necessary to move as quickly as possible from the stable system that existed two decades ago to a new stable and totally decarbonised system, minimising the risk of a chaotic transition. Such a transformation can only be achieved by the rapid implementation of a new upstream, together with the transformation of the existing transmission, storage (midstream) and energy supply (downstream) infrastructures.
In 2019, oil, gas and coal represented more than 12 billion tonnes of oil equivalent. If solar capacity continues to grow at the rate of the last five years (+25% per year), complete replacement of fossil fuels will be possible in 2040.
Of course, the solar electron cannot lead us to that goal by itself: it is variable, it is more readily available in some regions than in others, its storage and transport is complex, and it is poorly adapted to certain uses.
The challenge is to turn this electron into a decarbonised molecule that can completely replace fossil fuels, with the same versatility, long-distance transmission ease and mass storage and security of supply at all times. That molecule is hydrogen.
What is fear for some – i.e. those concerned about the future of the planet – others look forward to. There are two attitudes in life: we can hope or fear that things will finally happen, or we can take the initiative. The competitiveness of hydrogen is a cost-volume race, following the chicken and egg logic. The level that solar and wind energy have already reached in some countries (around $15/MWh) marks a milestone.
If the capacity of electrolysers is increased very rapidly, the threshold of $200/kW for such equipment can be reached. From that point, it is possible to forecast hydrogen production at $1/kg (or $25/MWh), a level comparable to the long-term equilibrium price of LNG (liquefied natural gas) imported into Europe, which means a barrel of oil at $43.
The good news is that hydrogen can literally “sneak” into existing gas transmission and storage infrastructure and power and heat generation turbines, with relatively low investment.
As soon as the first green hydrogen projects are contracted at this level, we can expect a strong market shock, with a rapid change in energy demand and in financial markets: how can we stay in the world of fossil fuels if we have a decarbonised alternative that is practical and competitive?
None of this will be possible without existing midstream and downstream infrastructure, for one simple reason: we do not have the time or the means to invest the billions of dollars needed to rebuild everything. The good news is that hydrogen can literally “sneak” into existing gas transmission and storage infrastructure and power and heat generation turbines, with relatively low investment.
This is excellent news for gas transmission operators and producers of energy from gas and coal. While some announce their disappearance as “obsolete assets”, in this model they are key pieces on the game board. With hydrogen, their assets and equipment have a promising future ahead: to provide consumers with a universal product, a practically infinite resource, competitive, good for the planet, one which consolidates the power of consumers and territories.
These companies are going to be very popular, especially among investors around the world who are constantly looking for clean and sustainable investment opportunities.
Europe has a chance: it is devoid of fossil resources and does not have the digital giants that lead some in Silicon Valley and China to believe that climate change can be solved by electrification and digitalisation. The European Union is the only major entity in the world to have set itself the goal of carbon neutrality by 2050 and adopted a very ambitious “Green Pact”.
The European Union is the only major entity in the world to have set itself the goal of carbon neutrality by 2050 and adopted a very ambitious “Green Pact”
In Spain and Portugal in particular, we are witnessing an exceptional boom in solar projects at ultra-competitive levels, with the world leaders in electrolysis, Thyssenkrupp (Germany) and Nel (Norway), not to mention numerous highly innovative companies throughout the hydrogen value chain.
We have agile and creative infrastructure operators, particularly in Spain and Italy, who are paving the way for the accelerated transformation of their assets. We also have consumers and geographical areas that, everywhere, demand decarbonised energy supplies. Finally, we have investors and banks that have understood that their salvation depends on the accelerated decarbonisation of their portfolios.
Almost 60 years ago, President Kennedy, faced with the existential threat of Soviet competition in space and elsewhere, launched his famous “Moonshot” appeal, urging the United States to mobilise to send a man to the moon, which was achieved in less than ten years thanks to a major national effort. We are in the same situation, in Europe and across the world, with the much more important challenge of a new “Moonshot”: climate change and the replacement of fossil fuels.
The difference here is that not everything depends on a single organisation as it did at the time with NASA. The solution now lies in the concerted initiative of public and private actors from different countries throughout the value chain. We must now chart the course: the actors who will implement the first projects will demonstrate that it is possible to produce, transport, supply and finance green hydrogen in high quantities and at a cost comparable to fossil fuels. They will be the new Armstrong and Aldrin – hopefully there will be many more!