Decarbonisation Technology August 2022 issue

Importance of blue hydrogen In the short term, the use of blue hydrogen is also set to grow and provide an important stepping stone between grey and green hydrogen. Grey hydrogen is produced from natural gas, often in a steam methane reformer or a gasification unit from residue. The large volumes of CO₂ generated are neither captured nor reused. Blue hydrogen is cleaner because the CO₂ emissions are captured and stored or reused. The aspiration is to move to green hydrogen, which is generated using renewable energy sources that do not produce CO₂ emissions in the first place. However, analysts suggest green hydrogen may not achieve cost parity with blue hydrogen until about 2045. In the meantime, the use of blue hydrogen will encourage infrastructure and demand growth. Then, by the time green hydrogen projects become commercially viable, they will have a ready-made market in which to sell. Blue hydrogen technology is already commercialised: gas partial oxidation technology followed by amine-based CO₂ capture. The challenge, in the short term at least, is what to do with the captured CO₂. Sequestration is possible but only adds cost to an asset. Some forms of utilisation, such as redirecting CO₂ from industrial sites to accelerate crop growth, are well established, but the longer-term goal is to convert the CO₂ into high-value liquid and gas

products. These are technologically viable but not yet economic at scale. PART 2: Technology trends in the medium term In this period, the energy transition accelerates. Government policies are well developed and understood, and the associated rewards for investing are clearer. Solar and wind power are well established at scale, and sales of diesel and petrol cars have stopped in some countries and are in significant decline in others. Biofuels are gaining a significant market share in transport and beginning to expand in aviation, marine, and heavy-duty transport. The significant blue hydrogen capacity established during the earlier phase begins a slow transition to green hydrogen, though green may remain commercially unviable in many locations. Rise of industrial clusters A key development in the medium term could be the proliferation of industrial clusters, or hubs: groups of relatively local organisations that collaborate because they share a common goal of reducing their carbon intensity while making a margin. This is already an emerging trend: Shell Catalysts & Technologies has been involved in major projects, including one in Europe, that have seen companies from hard- to-abate sectors such as power, steel, cement,

Possible technology pathway

Some ‘non-fossil’ products

Ethanol Methanol Dimethyl ether Fischer-Tropsch diesel and lubricants (BtL) Hydrogen Renewable diesel Renewable jet/biojet fuel Renewable naphtha Distillers’ corn oil, high - quality protein feed Ethanol Renewable diesel Renewable jet/biojet fuel Renewable naphtha

Hydrocarbon-based feedstocks and/or dicult-to-treat process streams

Gasification Shell Gasification Process

Plant-based oils and animal fats

Hydrotreatment Shell Renewable Refining Process

Pretreatment, hydrolysis and fermentation Shell Fib er Conversion Technology

Lignocellulosic biomass Woody biomass, agricultural residue, algae and sorted municipal waste

Gasification Shell Gasification P rocess

Figure 1 Four key synthesis pathways for converting bio-based feedstock into renewable liquid fuels or chemicals