“The Hydrogen Bust Is Here Nine H2 projects in Europe & US have gone up in smoke since August.” By ROBERT BRYCE
“ Harvard analysis savages Bill Gates’ claim that "cheap, green hydrogen" will be the Swiss army knife of decarbonization.”
The Hydrogen Bust Is Here
Nine H2 projects in Europe & US have gone up in smoke since August. Harvard analysis savages Bill Gates’ claim that "cheap, green hydrogen" will be the Swiss army knife of decarbonization.
OCT 15, 2024
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In April, two New York Times reporters, Stanley Reed and Melissa Eddy, traveled to the German city of Duisburg to visit a factory owned by steel maker ThyssenKrupp that makes electrolyzers, which produce hydrogen from water. Reed and Eddy declared, “If adopted widely, the devices could help clean up heavy industry such as steel-making, in Germany and elsewhere.” Reed and Eddy also claimed that the “concept of hydrogen as a renewable energy source has been around for years.”
That article might — repeat, might — mark the apogee of the hydrogen hype. As I noted in “The H Stands For Hype,” hydrogen is not a “source” of energy. It’s an energy carrier. (I also pointed out that calling hydrogen an energy source is akin to calling Stormy Daniels an actress.)
I’m recalling Reed and Eddy’s article because at least nine hydrogen projects have been canceled or delayed over the past two months. Last week, Reuters reported that ThyssenKrupp, the same company that Reed and Eddy gushed about six months ago, is now “reviewing its plans for the production of green steel, casting doubt over its ambitions to use hydrogen in its push to decarbonize what is one of the most polluting industrial processes.” The article continued, noting that the company may halt its $3.3 billion hydrogen plans and that the review highlights “the challenges German industry faces in meeting emissions targets while staying competitive in a sector that suffers from high energy costs and cheaper products from Asian rivals.” (Hat tip here to David Blackmon, who reported on this last week.)
But ThyssenKrupp’s “review” is only one part of the hydrogen conflagration. Add in a new Harvard study that puts paid to Bill Gates’ claim that “cheap, green hydrogen” could be the Swiss army knife of decarbonization, and it becomes clear that the hype over what energy analyst Steve Brick rightly calls a “thermodynamic obscenity,” is colliding with the hard realities of cost and physics. Let’s take a look.
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The list of hydrogen projects that are getting binned is long and getting longer:
In August, Ørsted, the Danish offshore wind energy company, scrapped a hydrogen-to-methanol project in Sweden and blamed a “sluggish European green fuels market for the decision.” The move came just two years after the company made a final investment decision on the project.
Last month, Shell scrapped a “blue” hydrogen project in Norway because the market for the fuel had not materialized.
That announcement came just a few days after Norway’s state-owned oil company, Equinor, binned plans to export “blue” hydrogen to Germany because, as Reuters reported, “it is too expensive and there is insufficient demand.”
On October 4, H2-View, an industry publication, reported that McPhy Energy, a French company, has canceled plans to develop a 24-megawatt green hydrogen project due to “an unexpected last-minute withdrawal of the off-taker.”
Last week, Uniper and Sasol canceled a planned 200-megawatt hydrogen project in Sweden that aimed to produce “sustainable” aviation fuel. According to one report, the companies scrapped the deal due to “slow market development, insufficient regulations, and cost increases.” Uniper, based in Germany, said the project was “no longer commercially viable.” It cited Russia’s invasion of Ukraine and inflation as critical factors.
Also last week, Ørsted announced it was quitting the Green Fuels for Denmark consortium, which aimed to build 1.3 gigawatts of electrolyzer capacity at a power plant in Copenhagen to make methanol and aviation fuel. Shortly after the announcement, Denmark’s energy minister said the company would have to repay the funds the state gave the company for the project.
Also last week, the Globe & Mail reported, “Canada’s efforts to establish a green hydrogen supply chain with European countries are being delayed by a supply-demand mismatch and the largest wave of global inflation in decades.” The headline for the piece: “‘Hype’ meets reality as Canada’s plans to export hydrogen to Germany stalls.”
Earlier this month, in the US, Hy Stor Energy, a Mississippi-based startup, canceled its agreement to purchase 1 gigawatt of electrolyzer capacity from the Norwegian firm, Nel. Hy Stor had planned to use the electrolyzer at its Mississippi Clean Hydrogen Hub. Hy Stor did not explain the cancellation, and the company has not issued a press release or mentioned it on its website.
Hy Stor’s cancellation comes just seven months after Julian Spector, a reporter at Canary Media, published an article that claimed “clean” hydrogen was going to drive the “next Gulf Coast energy boom.” Canary Media is an offshoot of alt-energy cheerleader Rocky Mountain Institute, with annual revenue of some $139 million. Spector raved, “In just the first phase, Hy Stor will add around 2.7 gigawatts of electrolyzers, powered by twice that capacity of onshore wind, solar and geothermal.”
Except it looks like Hy Stor won’t do anything of the sort.
Lavish subsidies have been driving the hydrogen hype in Europe and the US. As I reported in August, the federal subsidies available under the Inflation Reduction Act for “green” hydrogen producers are as much as $25 billion per exajoule of energy produced. As seen above, that stunning amount of cash amounts to 1,900 times more than what’s given to nuclear, 1,800 times what’s given to hydrocarbons, 47 times what’s given to wind, and 9 times what’s given to solar.
But those subsidies can’t defeat physics. Harvard’s ruthless takedown of “green” hydrogen, published on October 8, found, “Even if production costs decrease in line with predictions, storage and distribution costs will prevent hydrogen from being cost competitive in many sectors.” That’s the money quote from Roxana Shafiee, a postdoctoral fellow at Harvard University’s Center for the Environment, who led the study. Shafiee continued, saying, “Our results challenge a growing idea that hydrogen will be the ‘Swiss army knife of decarbonization’ and suggest that the opportunities for hydrogen may be narrower than previously thought.”
The punchline of the report is stunning, “At current delivered prices, green hydrogen is a prohibitively expensive abatement strategy, with carbon abatement costs of $500–1,250 per ton of CO2 across sectors.” Recall that the Biden Administration has pegged the social cost of carbon at about $51 per ton. (Economist Jonathan Lesser is America’s sharpest critic of the social cost of carbon, which he has dubbed “the thumb on the scale that can justify virtually any policy aimed at eliminating fossil fuels.”)
The Harvard study’s importance is obvious: it found that even the cheapest “green” hydrogen project will deliver energy that’s 10 times more costly than what the Biden Administration claims is the damage done by every additional ton of carbon emissions.
To be sure, the hype over hydrogen won’t end soon, nor will the subsidies. But these cancellations and delays are good news for consumers and taxpayers. Among those who are likely cheering the demise of these projects are the ranchers of West Texas, including people like Ray, Sandra, and Jake Pfeuffer (pictured above) and their neighbors in Schleicher County, Texas, who are fighting the hydrogen projects that are proposed for their region.
For more on that battle, see my August piece, “Invasion Of The Water Snatchers.”
Nature created Humans but Humans create pollution. I’d say Hydrogen is not going to fix that.
To quote another energy company, "Hydrogen is just too expensive."