Hydrogen Fuel and Its Financial Implications

Authored by: Jeff Brown via Bleeding Edge

I’m often asked about hydrogen as the next great source of clean energy to fuel transportation. It’s such an exciting topic.

The thought of powering our cars, trucks, trains, and even planes with the most abundant element in the universe sounds like the solution to significantly reducing global carbon emissions. After all, its only byproduct is water when used.

And hydrogen, indeed, seems perfect on the surface. It stores three times as much energy per unit of mass as gasoline. When combined with air, the released energy can power a vehicle. And it combines with oxygen to produce water. - We can’t do much better than that.

Well, that’s not the whole story…

The Bigger Picture

We must understand how hydrogen is made to see the whole picture.

Hydrogen is produced from water. About 70 million tons of hydrogen are produced each year. This is primarily used for ammonia fertilizer. And 96% of hydrogen production is made by a process known as steam-methane reformation.

Here’s the problem. This process uses energy created by natural gas, coal, and oil to produce that hydrogen. The industry produces 830 million metric tons of carbon dioxide annually to produce this “clean” hydrogen fuel - Not so clean after all.

I would argue, what’s the point?

If we have to burn massive amounts of carbon-based fuel to put hydrogen in our cars, we aren’t helping the environment. We are only displacing where the carbon emissions take place, not whether they happen in the first place.

It is no different than fueling our electric vehicles with electricity produced from coal, natural gas, or oil. It could be more thoughtful to think that we are helping the environment by doing this.

The remaining 4% of hydrogen production is produced using electrolysis. This process uses electricity to split the hydrogen out of the water.

And on the surface, this sounds better than steam-methane reformation.

But where does the electricity come from? Again, the answer is almost entirely from fossil fuel or nuclear fission power plants (radioactive waste). So where does this leave us?

The True Cost of Hydrogen

We can use carbon capture technology to capture the carbon dioxide emitted when we produce hydrogen. That works, but it could be better.

At least 10–20% of emissions are not captured in this process. It’s better than 100%. But that’s still not clean energy production.

We can make up for the difference by using carbon offsets. For example, we can plant more trees halfway around the world.

But the fact remains that we’d still be burning fossil fuels in hydrogen production.

It’s worth noting that using carbon capture technology will also result in about twice as expensive hydrogen as that produced using steam-methane reformation. And if we can leap into producing hydrogen with 100% renewable energy, the costs will still be four times higher than steam-methane reformation.

Why is this important?

Well, hydrogen is fuel. Consumers and businesses have to pay for it. We can think of a gallon of gas as having about the same amount of energy as a kilogram of hydrogen.

But a hydrogen fuel-cell system is twice as efficient as a gasoline system. We can expect about 70 miles per kilogram of hydrogen fuel for a small hydrogen fuel-cell car. That’s the equivalent of 70 miles per gallon.

To put things in perspective, producing a single kilogram of hydrogen fuel takes about 50–55 kilowatt hours of electricity. That’s almost two days of electricity consumption for an average home in America.

We should think about that.

Almost two days of an entire household’s energy consumption to produce one kilogram that provides enough fuel to travel 70 miles. Does that make any sense?

A Problem of Volume

Hydrogen is truly problematic in its volume. It takes up a lot of space, so we can only carry about 5 to 6 kilograms of hydrogen in a single tank. The other tricky nuance is that hydrogen molecules are so tiny they easily leak out most containers.

The average price of hydrogen fuel in California, which has the highest number of hydrogen cars, is about $16 per kilogram. That equals approximately $5 or $6 a gallon of gasoline. And we must remember that almost all hydrogen is produced by burning fossil fuels.

Without billions of dollars in subsidies, hydrogen doesn’t make economic sense. And because of where the energy comes from – mainly fossil fuels and other “dirty” energy sources – it doesn’t even make environmental sense.

The world must address how it produces baseload power for hydrogen fuel cells to be environmentally sustainable and economical.

This is the power required to manufacture the 70 million tons of hydrogen produced yearly. Until we address the underlying costs of producing this so-called “clean” energy, hydrogen will remain unsustainable for the foreseeable future.

Carbon-free emissions with no radioactive waste could inform a sustainable energy production strategy. And it’s one that we would all benefit from. It’s something very tangible that the industry can work toward.

The most promising technology to achieve this is a kind of nuclear fusion (not fission) technology that produces no radioactive waste. And I’m on record saying that this technology has the potential to make clean, cheap, and nearly limitless energy for the entire world.

This article was printed from TradingSig.com

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