This month’s edition of the Pipeline Technology Podcast sponsored by Pipeline & Gas Journal features freelance journalist Andreas Walstad discussing Germany’s recent emphasis on the development of hydrogen to help meet their country’s climate targets.
In this episode, you will learn about current hydrogen production in Germany and across Europe to meet government goals, how this push affects oil and gas pipeline companies, the different types of hydrogen (e.g. blue, green, and gray), and the challenges and opportunities related to the new global push for hydrogen.
Hydrogen Economy: Show Notes, Links, and Insider Terms
- Andreas Walstad is an international freelance journalist with over 15 years of experience reporting on the energy industry. Connect with Andreas on LinkedIn.
- Pipeline & Gas Journal is the essential resource for technology, industry information, and analytical trends in the midstream oil and gas industry. For more information on how to become a subscriber, visit pgjonline.com/subscribe.
- Green hydrogen is hydrogen generated entirely by renewable energy or from zero-carbon power. Unlike grey hydrogen, which is produced by steam reforming of natural gas and which makes up the bulk of the market, green hydrogen does not emit CO2 emissions. Green hydrogen produced by the electrolysis of water is less than 0.1% of total hydrogen production.
- Blue hydrogen is hydrogen produced from natural gas with a process of steam methane reforming, where natural gas is mixed with very hot steam and a catalyst. A chemical reaction occurs creating hydrogen and carbon monoxide.
- Gray hydrogen is derived from natural gas and produced from fossil fuels, making it the least renewable form of hydrogen. Most of the hydrogen produced today is gray hydrogen. It is relatively inexpensive and commonly used in the chemical industry to make fertilizer and for refining oil. It is produced by reforming natural gas, a processing technique used to rearrange the molecular structure of hydrocarbons.
- An electrolyzer is a system that uses electricity to break water into hydrogen and oxygen in a process called electrolysis. Through electrolysis, the electrolyzer system creates hydrogen gas. The oxygen that remains is released into the atmosphere or can be captured or stored to supply other industrial processes or even medical gases in some cases.
- Nord Stream 2 is a Baltic Sea pipeline that is scheduled to deliver gas from the world’s largest gas reserves in Russia to meet the growing demands of consumers in Europe.
- thyssenkrupp is an international group of companies comprising largely independent industrial and technology businesses and employing more than 100,000 people. Its business activities are bundled into six segments: Materials Services, Industrial Components, Automotive Technology, Steel Europe, Marine Systems, and Multi Tracks.
- American Gas Association (AGA) represents companies delivering natural gas safely, reliably, and in an environmentally responsible way to help improve the quality of life for their customers every day. AGA’s mission is to provide clear value to its membership and serve as the indispensable, leading voice and facilitator on its behalf in promoting the safe, reliable, and efficient delivery of natural gas to homes and businesses across the nation.
- The annual AGA Operations Conference is the natural gas industry’s largest gathering of natural gas utility and transmission company operations management from across North America and the world. During the conference, participants share technical knowledge, ideas, and practices to promote the safe, reliable, and cost-effective delivery of natural gas to the end-user.
- BP is a U.K. and U.S. registered company that is vertically integrated to find, extract, and supply oil, natural gas, and petroleum.
- TotalEnergies SE is a multinational integrated oil and gas company founded in 1924 and one of the seven “supermajor” oil companies.
- Eni is an Italian multinational oil and gas company headquartered in Rome. It is also considered one of the seven “supermajor” oil companies in the world.
- Shell Oil Company operates as an energy and petrochemicals company. The company produces natural gas, gasoline, oil, and other chemical products.
- Scope 3 emissions are the result of activities from assets not owned or controlled by an organization, but which activities the organization indirectly impacts in its value chain. Scope 3 emissions include all sources not within an organization’s scope 1 and 2 boundaries. The Scope 3 emissions for one organization are the Scope 1 and 2 emissions of another organization.
Hydrogen Economy: Full Episode Transcript
Announcer: The Pipeline Technology Podcast brought to you by Pipeline & Gas Journal, the decision-making resource for pipeline and midstream professionals. Now your host, Russel Treat.
Russel Treat: Welcome to the Pipeline Technology Podcast, episode 18. On this episode, our guest is Andreas Walstad, a freelance journalist. We’re going to talk to Andreas about his February 2022 article in Pipeline & Gas Journal titled, “Germany Ups Ambition on Hydrogen to Meet Climate Targets.” Andreas, welcome to the Pipeline Technology Podcast.
Andreas Walstad: Thank you, Russel. Thank you for having me.
Russel: Well, it’s great. I think I’m going to enjoy this conversation. For the listeners, Andreas and I have had a couple of conversations before we got on the mic here. It’s been interesting already. Andreas, if you would, why don’t you tell us a little bit about yourself, and your background, and how you got into writing on energy policy?
Andreas: Thank you, Russel. I’m a journalist now with 15 years experience covering energy and climate. I work freelance. I previously worked for a number of different outlets including Interfax and Platts. I’ve contributed to a number of journals, including the Pipeline & Gas Journal. I’m based in London, but I also spend a lot of time in Brussels, where I follow EU energy politics.
Russel: You’ve got an article coming out. The Pipeline & Gas Journal is going to talk about hydrogen and what’s going on in Europe. I’ll just ask a general question to tee this up. What is actually going on in Europe around hydrogen? What is the nature of the conversation, and where are we in the development process for hydrogen in Europe?
Andreas: It’s certainly interesting times, Russel. There’s plenty of momentum and optimism concerning hydrogen, both green and blue hydrogen, which we will talk about later.
I think Germany is a good example. Germany has a new government, a new three-party coalition government. The Green Party is part of that coalition government. In terms of energy policy, one of the first things that the new government did when it came to power was to revise the target for green hydrogen.
They scaled up the electrolyzer target for 2030 from 5 gigawatts to 10 gigawatts. The previous government also lends support to hydrogen, but it seems like the new government will go even further.
Russel: If I could, I want to interrupt to use the term electrolyzer and I don’t think a lot of people in the audience here will necessarily know what that term means. Can you define what an electrolyzer is, or how does that relate to hydrogen?
Andreas: I’m not from an engineering background, as you know, but in a nutshell, I can say that green hydrogen is derived from electricity produced by renewables, that’s usually wind power or solar power. Then electrolyzer plants are then used to split the water and electrify the water and split it into oxygen and hydrogen. That means the end product is clean hydrogen. It is a product that does not emit any direct CO2 emissions in the process.
It does not emit CO2 when used either it can be used for as the fuel for transport for road transport, maritime transport. They can be used for power generation and also for as a feedstock for industrial operations, for example.
Russel: The electrolyzer basically is the facility that is splitting the water into hydrogen and oxygen.
Andreas: That’s right.
Russel: They’re powered by electricity, and hence the electrical targets for how much electrolyzing are we doing. In my space, I think it’d be similar to saying, “Well, these are gas productions targets, or these are all production targets, those kinds of things trying to build up facilities.”
If you’re talking about power plants, that’s how many megawatts of power generation are we going to have at a certain time for kind of an equivalent policy thing?
Andreas: That’s right. The idea is to produce several million tons of hydrogen of green hydrogen. In order to do that, you need an electrolysis gigawatt scale.
Russel: What is the state of electrolyzers for hydrogen production? I know in my space, or at least in my community, if you will, the conversations I’m having, hydrogen seems notional. I think Europe is probably further along than where we are in the U.S. What is the state of development? You’re talking about they need electrolyzers, a gigawatt scale. Where are they now in terms of what’s available?
Andreas: There’s hardly any green hydrogen production today. Most of the pilot projects typically have electrolyzers of, say, 20 or 30 megawatts. These pilot projects, most of them are still only on the drawing board as well.
What needs to happen in the coming years is after the pilot projects are up and running, it needs to be scaled up to electrolyzer capacity of hundreds of megawatts and even gigawatts. In order to do that, you need massive amounts of electricity from renewables.
Even though the scale of wind and solar power in many European countries has been quite impressive, you need much, much more wind power and solar power in order to facilitate the green hydrogen economy. This is a real challenge.
One example is that the new government in Germany has proposed a target whereby two percent of the landmass will be used for onshore wind. That sounds good on paper, but one will expect a fair amount of resistance from different states and regions.
There is growing opposition to onshore wind. There’s the “not in my backyard” principle to consider as people might be, generally speaking, positive to onshore wind, but they don’t want to live near wind turbine or big wind farm, for instance. Expect the debate to get louder as the renewables expansion continues.
Russel: Andreas, are you able to speak to how much of the landmass in Germany is currently being used for wind versus how much ultimately will…How does it relate to a two percent target? What are they doing now? What does a two percent target look like?
Andreas: That’s a very good question. The exact definition of what exactly two percent of landmass means has not really been clarified in the draft proposal, either.
We should take it as a sign that although there’s plenty of onshore wind in Germany at the moment, there will have to be a lot more in order to really get green hydrogen production scaled up to a meaningful level where it makes a meaningful contribution to the energy transition and reducing CO2 emissions further.
To try to answer your question, Germany has set a renewables target of 65 percent of electricity generation by 2030 (the new government has set a target of 80%). That is an increase on the current level between 20 and 30 percent. The expansion has already taken place and there is less and less land available for onshore wind.
Solar has a lot of potential. Of course, the drawback in solar is that it produces plenty of electricity during the day when the sun is out. Not so much in the evening. Wind and solar is intermittent supply, of course. The supporters of hydrogen will say that’s also an advantage because then, when it’s windy and sunny, you can use the excess electricity to produce hydrogen, which is a storable product.
Russel: That’s one of the things that, in our previous conversation, was eye-opening for me, a takeaway, because there’s been a lot of conversation that I’m aware of about storage related to renewables, for the reasons you mentioned.
With wind, what do you do when the wind’s not blowing? For solar, what do you do when the sun’s not shining? There’s also the issue of what happens when you’re able to overproduce. You got all these things you got to do to turn that generation capacity off.
The idea of using that generation capacity to drive a process that creates a storable fuel and a fuel that can be used for other things than just powering the grid, that has some compelling possibilities. It’s a way I’ve not thought about renewables and hydrogen, and how they work together. That was eye-opening for me from our conversation.
You talked about blue and green hydrogen. We had an interesting conversation before we got on this about the color scale, if you will, related to hydrogen. Can you give us a definition of green hydrogen and blue hydrogen for people that hadn’t heard that before, so they can start to understand what that means?
Andreas: The main difference between green and blue hydrogen is that green hydrogen is derived from electricity produced by renewables, whereas blue hydrogen is derived from natural gas using steam methane reforming. The CO2 is removed in that process and permanently stored using carbon capture and storage techniques.
The end product is what they call low carbon hydrogen, because some CO2 is emitted in the process, but very little compared with the gray hydrogen. Almost all the hydrogen that is used today and has been used for decades is gray hydrogen.
It’s usually derived from natural gas also using steam methane reforming, but without removing CO2 or capturing CO2 in that process. That means gray hydrogen is not a solution in terms of the energy transition and the move towards net-zero emissions.
Russel: It’s also important to understand that what you’re calling gray hydrogen has been around for a long time. The process we make industrial hydrogen is what people would call gray hydrogen.
What you’re talking about moving from gray to blue is you take that same proven industrial process, scale it up potentially, and capture the CO2 emissions and inject them into the ground. They are sequestered. They don’t go into the atmosphere. That whole conversation about blue, gray, green, it’s eye-opening to me.
I find the idea of green hydrogen, where I’m using renewables to generate and store, there’s also some other value to that. This is me talking like an engineer. If I have to build enough wind power to meet the surge, meet high demand, that’s different than what I would have to build if I can store wind power, when I can generate at max capacity and there’s not high demand.
I could potentially lower the quantity of renewables infrastructure by having the ability to capture and store the energy that I’m generating in the form of hydrogen. Interesting, actually.
Andreas: I think so. One thing that should be pointed out here is that currently, neither blue or green hydrogen are cheap technologies. That probably doesn’t come as a surprise. Blue hydrogen is still considered a cheaper technology than green hydrogen. That may well change in the coming years. That depends, of course, from gas prices as well, which have been rocketing here in Europe.
Blue hydrogen selling points are that, to some extent, the infrastructure is already there. The big question is actually the storage of the CO2, which often takes place in depleted oil and gas fields. That means probably that blue hydrogen might be more suitable for countries that already have an offshore infrastructure. I’m thinking of The Netherlands, for instance.
In terms of Germany, which has very limited offshore oil infrastructure, they may be looking to import blue hydrogen instead of producing it themselves. I’ve spoken to very knowledgeable people in Germany who say that even if the country meets this 10-gigawatt electrolyzer target we talked about earlier by 2030, the 10 gigawatts, demand for hydrogen is likely to be three times that.
It will need to import hydrogen as well to meet demand. This could be done, for instance, from The Netherlands. There’s even been talk about importing blue hydrogen from Russia via the Nord Stream 2 pipelines. There are a lot of ideas floating around. A lot of good ideas and a lot of not-so-good ideas maybe. We are at very, very early stages.
One of the main reasons why hydrogen is being talked about is that European nations have set very, very ambitious CO2 reduction targets and long-term net-zero targets. All the nations in the EU target at least 55 percent CO2 reductions by 2030 compared with the 1990 levels. Some countries have gone further than that.
The United Kingdom targets 68 percent greenhouse gas emission reductions by 2030, and Germany targets 65 percent CO2 reductions. That means it will not be enough just to bring down emissions in the power generation sector, phasing out coal and replacing coal with a combination of gas and renewables. That will not be enough to meet those targets and certainly not the net-zero target by 2050. It means that one has to start decarbonizing the hard to abate sectors, steel and aluminum production, or steel and aluminum plants.
For instance, aviation, road transport. In terms of heavy industry, electrification, for instance, has limitations, to say the least. That means hydrogen is the key role to fill in the gaps where your electrification is simply not going to work.
Russel: If you were to ask my opinion about that, Andreas, what you’re going to see is the oil and gas producers, and for that matter, the coal producers are going to be looking at other methods of carbon reduction. I know that there have been some pilot projects done in the U.S. where they took coal plants, captured the CO2, and sequestered it.
You could make an argument that carbon sequestration behind a coal plant is equivalent to blue hydrogen. You could make that argument. There will be a continuing mix. Hydrogen’s certainly got a place. Man, we’ve been talking about hydrogen fuel since I was in high school. I’m an older guy, so this stuff isn’t new.
One of the questions I’d like to talk a little bit about. You mentioned some of the places where hydrogen is going to have a challenge replacing classical fuels like what I would call burner tip applications.
Anything where I’ve got steel or aluminum or any other metal foundry, any place where I’m making brick, anywhere where part of the process is firing a material to create a final product, I find it hard to see how hydrogen would work in that niche.
Certainly, you can get hydrogen to burn but I know nothing about how that actually works with thermodynamics and how that compares to other forms of energy. Are you aware of anybody doing any work in those domains in terms of any pilot projects or experimentation in those other harder to address domains?
Andreas: Certainly. There are a lot of ideas on the drawing board. In Germany, a big company called thyssenkrupp has a green hydrogen project at one of its steel production plants in Duisburg, which is the industrial belt of Germany. It’s at a pilot stage, but the plan is to scale up to an electrolyzer capacity of 500 megawatts.
The same company has a project at one of its refineries in Northern Germany, refinery Heide. It’s currently a 30 megawatt pilot project, which is on the drawing board. If everything goes to plan, the plan is to scale up to 700 megawatts by 2030 and then replace natural gas as feedstock for the refinery operations there. What is obvious here is even if these companies get the technology to work, there’s certainly a funding gap. Investing in these technologies is very, very expensive.
I’d like to go back a few years. Back in 2009, I wrote my first article about offshore wind. I remember it was almost impossible to get hold of anyone who believed in offshore wind at the time because it was seen as too expensive. Very few people believed that it would take off at large scale anytime soon.
Now, if you fast forward 10 years and offshore wind is really happening, as we speak. There was a bidding round in Scotland recently that attracted plenty of bids, also from oil companies. I think about 25 gigawatts of projects were awarded seabed licenses.
The reason I mentioned this, there are two things the fact that the cost of renewable technologies are going down means that they will also be cheaper to produce hydrogen, but it also means that once the first hurdles of the embryonic stage have been passed, then costs will come down, but in the early stages, there has to be government support.
The reason why we have so much renewable wind and solar generation in Europe today is because the national government guaranteed producers that they would get a minimum price for the electricity they produce regardless of what happens to market prices. Then it got a lot easier to do a cost estimate for the project.
The same has to happen with hydrogen. At least in the initial phase, there has to be government backing and EU backing guarantees, which safeguards investors from losses, I would say.
Russel: Certainly lots of large-scale technology, if there is now broadly accepted, that wouldn’t even be available if it weren’t for government funding, R&D projects and such. There’s certainly precedent for that.
You’re talking here to a pipelining audience. What would you tell the pipeliners about the future of hydrogen and what that might mean for us as an industry?
Andreas: I think they’re going to be enormous opportunities. A number of options are on the table. Let’s talk about blending hydrogen with natural gas.
As an interim solution, there is talk about repurposing a gas network to carry hydrogen instead of natural gas. There is talk about building complete new pipelines for hydrogen. We actually start from scratch. You can see pipeline companies and the shippers as well are beginning to think quite hard about the options.
If we take Italy as an example, Snam, which is the grid operator in Italy. And Eni, the big Italian oil company, has explicitly said that they are looking at ways of importing hydrogen instead of gas via existing pipelines from Algeria to Italy. And, Algeria, Morocco, of course, have enormous potential for solar power.
If solar power plants have scaled up, which is already happening, then some of that electricity can be converted to hydrogen and then shipped to Europe using existing pipelines that have been repurposed. I think the sky’s the limits.
Again, an investment framework is needed for how grid companies are going to recoup the investment through tariffs and so on and so on who will get access to the hydrogen pipelines or the repurposed pipelines. Not all hydrogen producers will have access. Not all hydrogen producers will own pipelines, so they will need access to them.
Here in Europe, the gas market was liberalized later than in the United States, but it is liberalized. That means there’s third-party access to gas pipelines. The industry is really calling for hydrogen networks so that there should be a level playing field, so that access is granted to producers through bidding in auctions and so on.
Russel: I certainly would concur with that. It’s very interesting. Even two, three years ago, nobody, at least in my world, was talking about hydrogen. I went to the American Gas Association (AGA) conference in late September last year. There was a ton of conversation about hydrogen and what is it going to take to get hydrogen into the pipeline networks.
Just a whole lot of engineers starting to really chew on it. I had a couple of people tell me, “Hydrogen is real. It’s coming. Put on your big boy pants. It’s time to get ready.” It’s what the conversation was around, around all that.
I will tell you, Andreas, that after talking with you and getting a little bit different perspective on what hydrogen is, how it’s going to come to market, and what some of the opportunities are, I can see where there’s some real commercial viability in some niches.
That’s what happens a lot with a new technology coming to market, that there’s a few small niches where it adds real value. It adds value there, it scales, prices come down, and then it begins to proliferate out into other areas.
The project you’re mentioning in Germany where they were doing on-site hydrogen creation for their feedstock, that’s interesting. That has a lot of compelling opportunity for various kinds of applications where I could actually generate my fuel on-site. That’s compelling, frankly.
Andreas: I think so. Another thing I’d like to mention is that in the European Union’s hydrogen strategy that came out one or two years ago, the main focus appeared to be on green hydrogen. The strategy sets out a 40 gigawatt target for electrolyzer capacity by 2030. Also, a 40 gigawatt target in what we call as the European Union’s neighborhood. That includes North Africa, Ukraine, and so on and so on.
Already by 2024, according to the strategy, there should be at least six gigawatts of electrolyzer capacity in Europe. The strategy gave less attention to blue hydrogen, but it’s fair to say that when it comes to carbon capture and blue hydrogen, the EU is getting more onboard. In order to get the volumes needed, green hydrogen may not be enough. Most likely need both blue and green hydrogen.
To give you an example, there’s a project in Rotterdam, The Netherlands, which I believe is Europe’s biggest port. It’s not a hydrogen project, but it is a carbon capture project. The plan is to capture CO2 from the refineries from the industry and then store it in the depleted gas field.
One of the reasons why I mentioned this project is that the EU has granted about $100 million to this problem. It’s around $110 million to this project, which is between 20 and 25 percent of the estimated investment cost. This is not a loan, this is a grant.
Even in the energy industry grants of $100 million or more would be seen as considerable. There is support also for carbon capture and blue hydrogen, I would say.
Russel: Interesting. There have been some carbon capture projects done in the U.S. primarily related to capturing off of coal plants, but nothing at the dollars that you’re talking about, at least not that I’m aware of.
Andreas: Another point, which is worth mentioning, is that a lot of European oil majors, these oil companies have set net-zero targets for 2050. That includes BP, Total, Eni, and Shell.
In fact, Shell lost a recent court case, which means it is under pressure to cut emissions by 45 percent by 2030 compared with 2019 levels. It is appealing the case. Nevertheless, they have set voluntary net-zero targets. They are also coming under increasing pressure to reduce emissions much faster in the medium term.
There is no other way, I believe, for an oil company to address CO2 emissions, especially Scope 3 emissions, which is end-user emissions. Just setting up wind farms and solar farms will not be enough. These companies will have to invest in hydrogen as well in order to hit the targets. That is beginning to happen, it’s fair to say.
Russel: Andreas, I appreciate your time. It’s been great talking to you. I have certainly learned a thing or two. That’s always a good thing. Thank you very much. I enjoyed the conversation.
Andreas: Thank you very much, Russel. Thank you so much for having me.
Russel: I hope you enjoyed this month’s episode of the Pipeline Technology Podcast in our conversation with Andreas. If you’d like to support the podcast, the best way to do that is to leave us a review on Apple Podcast, Google Play, or on your smart device podcast app. You could find instructions at pipelinepodcastnetwork.com.
If there is a Pipeline & Gas Journal article where you’d like to hear from the author, please let me know either on the Contact Us page of pipelinepodcastnetwork.com or reach out to me on LinkedIn. Thanks for listening. I’ll talk to you next month.
Transcription by CastingWords