Decarbonisation Technology - November 2022

Why blue hydrogen provides a de-risked decarbonisation lever A deep-dive into blue hydrogen’s important role in achieving net zero by 2050

Mario Graca Shell Catalysts & Technologies

T he imperative for lower-carbon energy systems is highly perceptible now, as an increasingly large group of countries announce their intention to become carbon neutral by 2050. Globally, the pool of countries with aspirational targets that are set out in climate law, or as statements of intent or submissions to the UN, accounts for about 80% of the world’s population. As we approach 2050, the world population is projected to increase from its present 8 billion to 9.8 billion and energy demand will increase by about one-third; yet, simultaneously, net global carbon dioxide (CO₂) emissions rates will need to be halved. With more and more countries setting out their zero-carbon ambitions, momentum for blue and green hydrogen production is growing. The first half of 2021 saw a surge of activity in hydrogen project investments. By mid-2021, the Hydrogen Council reported a 60% increase in announced clean hydrogen production capacity, through to 2030, compared with a similar projection made in 2020. Furthermore, this was a 450% rise compared with the figure at the end of 2019. By early 2022, more than 500 major initiatives around the world have been reported, with $160 billion of industrial investment and $70 billion of pledged public support. Shell believes that both green and blue hydrogen are needed to meet the demands of the future hydrogen economy and help develop its infrastructure. Green hydrogen is the ideal long-term goal, but most green hydrogen projects currently come with a high cost. Further, the technology would require significant scaling for green hydrogen to satisfy

the majority of the projected hydrogen growth in the coming decades. Although there is great uncertainty on the relative growth of each, it is clear that an extended hydrogen economy and infrastructure is coming. Blue hydrogen has a strong role to play in the energy transition by helping to build a hydrogen market while continuing to lower emissions. Hydrogen projections The demand for hydrogen is accelerating, driven by stronger national-level government commitments to decarbonise the energy sector and by businesses with net-zero objectives and ambitious sustainability targets. Today, the International Energy Agency (IEA) estimates that the demand for hydrogen is about 90 mtpa, almost all of which is used for ammonia production and refining. This figure is forecast to reach about 200 mtpa by 2030 and more than 500 mtpa by 2050. Other forecasts assess hydrogen demand to vary between 150 mtpa and 500 mtpa by 2050. The wide range seen here is linked to the varying degrees of ambition required to achieve temperature targets within the various global warming scenarios. For example, some analysts suggest that striving to meet a Paris Agreement-aligned global warming target of below 1.8°C, similar to Shell’s Sky scenario, could result in a hydrogen demand of 220-600 mtpa by 2050. Meeting this demand will require an unparalleled transformation in how hydrogen is produced. Currently, most hydrogen is ‘grey’ and produced by converting natural gas into hydrogen and unabated CO 2 , using mostly the steam methane reforming (SMR) process. However, this process is carbon intensive