Hydrogen Delivery Options

Published December 2021

Hydrogen is one of the most important chemical products manufactured and used globally. It is produced in large quantities as an on-purpose product, mostly from natural resources such as biomass, coal, natural gas, and refinery products (e.g., naphtha). Small amounts of hydrogen are also produced by electrolysis of water. It is also generated as a by-product in number of chemical processes. Most of this on-purpose hydrogen is used as a captive product in different applications.

The primary demand for hydrogen today is in petroleum refining, ammonia production, and methanol production. Nevertheless, hydrogen is used across multiple sectors in other chemical and industrial processes as well as in the role of a reducing or hydrogenating reagent. Another unique point is that hydrogen can be used as a clean fuel—for example, when consumed in a fuel cell, it produces electric energy and water only—hence, it can be used in integrated clean energy systems and auto transportation. Furthermore, hydrogen can also be used as an energy carrier and it can be stored, moved, and delivered from one place to another as a chemical or energy source, primarily because of its high energy density per weight. These qualities make it an attractive fuel option for transportation and electricity-generation applications.

However, hydrogen’s biggest drawback is its low mass density, which makes its transportation and storage (T&S) in a gaseous state cumbersome. Therefore, for T&S, the gas has to be either pressurized or liquefied. Both processes add up to the cost of hydrogen for the consumer. In addition, the cost of shipping hydrogen is also high. All of these make the overall delivery cost of hydrogen rather exorbitant, especially for far-off consumers. So, various options or alternatives for hydrogen delivery to far-off users are being proposed and have been implemented in some parts of the world on small or demonstration scales. Notable options and rationale for those options are

• Production and liquefaction of hydrogen in a region, where raw materials and renewable energy resources such as solar or wind are abundantly and economically available to use. Examples of raw materials include natural gas, coal, biomass, water, and etc. Shipping of pressurized or liquefied hydrogen to another country or region where resources to make hydrogen are unavailable or economically unavailable.
• Production and liquefaction of hydrogen in a region where raw material resources and renewable energy resources such as solar or wind are economically available. Examples of raw materials include natural gas, coal, biomass, water, and etc. Conversion of hydrogen to ammonia at the same location. Shipping of ammonia to another country or region where resources to make hydrogen or ammonia are unavailable or economically unavailable. Reconversion of that ammonia to hydrogen in the destination country or region. This option is proposed because of the high costs of hydrogen liquefaction, shipping, and hazards in handling.
• Production and liquefaction of hydrogen in one region where resources such as natural gas, coal, biomass, water, and renewable energy from solar or wind are economically available to use. Conversion of hydrogen to methanol at the same location. Shipping of methanol to another country or region where resources to make hydrogen or methanol are unavailable or economically unavailable. Reconversion of that methanol to hydrogen in the destination country or region. This option is proposed because of the high costs of hydrogen liquefaction, shipping, and hazards in handling.

Scope of report

Based and focused on the above notions/proposals, this PEP report analyses/evaluates technologies and economics of individual and chain processes for the abovementioned delivery options below:

• The production, liquefaction, and storage of green hydrogen at a loading terminal are based on a renewable electric power source in Australia. Shipping and subsequent storage of liquefied hydrogen in Japan as the final step of the delivery process. The internal distribution of the hydrogen in Japan is assumed to be the responsibility of the gas importer.
• The production and conversion of green hydrogen to green ammonia are based on a renewable electric power source in Australia. Storage of ammonia at a loading terminal in Australia. Shipping and subsequent storage of liquid ammonia in Japan. Finally, reconversion of ammonia to hydrogen as the final step of the delivery process in Japan. The internal distribution of the hydrogen in Japan is assumed to be the responsibility of the gas importer.
• The production of blue hydrogen is integrated with an on-site carbon dioxide (CO₂) capturing process, followed by hydrogen liquefaction and storage at a loading terminal in Australia. Shipping and subsequent storage of liquefied hydrogen in Japan as the final step of the delivery process. The internal distribution of the hydrogen in Japan is assumed to be the responsibility of the gas importer.

For the sake of comparison, the cost of delivering green hydrogen from Australia to Japan through a green methanol supply and reconversion chain process is also presented. However, for this option, this report does not present any detailed technoeconomic analysis of the individual stages or entire supply chain. A detailed analysis is kept out mainly because of the length of report, and that we wanted to exclude or avoid methanol, which is a carbon-containing compound and generates CO₂ during conversion to hydrogen.

Our analysis of the hydrogen delivery costs for the four abovementioned options is based on scenarios involving almost zero or minimal carbon emissions to atmosphere. The costs for the green methanol option are worked out in a scenario in which sources for CO₂ are atmospheric air and recycled CO₂ generated from combustion of natural gas. S&P Global did not analyze any scenarios/options that result in large-scale carbon dioxide emission.

Once the hydrogen is delivered or reproduced, from ammonia or methanol, in the client country, which is Japan, the internal distribution of hydrogen within the country is assumed to be the client’s responsibility.

For technologies analyses and economic details, readers are advised to read internal sections of this report.