Going Big for Blue Hydrogen

As economies across North America and Europe weigh various future energy market scenarios required to meet the Paris Climate Agreement's long-term temperature goals, blue hydrogen is emerging as one of the most viable off ramps from fossil fuels in a deep de-carbonization regime.

Hydrogen could comprise up to 15% of the global energy mix over the next three decades, but it is expected to serve more of a complementary role in meeting climate goals, panelists said in an April 26 webinar.

"Of course, it's not a silver bullet -- it's one part of what we need to decarbonize," said David Bryson, Uniper's chief operating officer.

Questions around hydrogen's efficiency, cost of production, and scale are still at the forefront of the debate around hydrogen but should not be limiting factors preventing the market from getting off the ground, Bryson said at the Financial Times' Hydrogen Summit.

"There are inefficiencies, but those are removed over time and improved," Bryson said. "They should not allow us to stop from moving forward."

The UAE plans to focus its efforts on blue hydrogen as OPEC's third-largest producer pushes ahead with its clean energy program, and taps into its oil and gas sector to help create a new industry that is likely to take shape before green hydrogen, an energy ministry official told S&P Global Platts.

"Realistically, blue hydrogen is cheaper than green hydrogen and as an oil and gas producer we are very well positioned to be very competitive when it comes to blue hydrogen and it's coming in the next few years, while green hydrogen still needs more time," Yousif al-Ali, the ministry's assistant undersecretary for electricity, water and future energy affairs, said in a May 16 interview.

Green hydrogen is produced from renewable energy, while blue hydrogen is derived from fossil fuels with carbon capture, utilization and storage. The energy ministry, Abu Dhabi National Oil Co, the country's biggest energy producer, and two sovereign wealth funds ADQ and Mubadala Investment Co. have formed a hydrogen alliance to promote the production and use of the fuel in the UAE, and ultimately for exports.

"Renewable energy, solar and wind, have a limitation, especially when it comes to storage, especially when it comes to baseload generation. It will be expensive," said Ali.

Abu Dhabi National Oil Co. plans to build a blue ammonia production plant as the UAE's biggest energy producer seeks to become a leader in clean energy products, including hydrogen.

The facility, to be built in the industrial hub of Ruwais in the emirate of Abu Dhabi, will have the capacity to produce 1 million mt/year of blue ammonia, ADNOC said in a May 24 statement.

The facility, part of the TA'ZIZ industrial park in Ruwais, is envisaged to start production in 2025. ADNOC didn't disclose the cost of the project. Blue ammonia is made from nitrogen and blue hydrogen, which is produced from fossil fuels, with the CO2 by-product from hydrogen production captured and stored.

It is one of the biggest use cases for hydrogen and could be a boon for renewable energy demand. But greening ammonia, the chemical primarily used to make fertilizer, will take a lot of heavy lifting.

Ammonia plays an essential role in the agriculture industry as a key plant food, as well as being used in manufacturing and for other purposes. It is produced by combining nitrogen and hydrogen — mostly "gray" hydrogen derived from natural gas — and is responsible for around 2% of all fossil fuel use globally.

But given the European Commission's ambitious strategy to produce "green" hydrogen, made with renewable power using electrolysis, the resulting green ammonia could become a major offtake market for utilities and renewables developers.

Industry group Fertilizers Europe said ammonia production could match the annual power demand of Poland — 166 TWh — if it makes a complete green switch.