Does unprecedented policy support inherently de-risk new technology? This 10-page note is a case study. The Synthetic Fuels Corporation was created by the US Government in 1980. It was promised $88bn. But it missed its target to unleash 2Mbpd of next-generation fuels by 1992. There were four challenges. Are they worth remembering in new energies today?
What are the costs of hydrogen from coal gasification? This model breaks down the economics, line-by-line, across different plant configurations, backed up with data from half-a-dozen technical papers. We think black hydrogen costs $1-2/kg, but CO2 intensity is very high, as much as 25 tons/ton. It can possibly be decarbonized resulting in semi-clean hydrogen costing c$2.5/kg.
SynGas is a mixture of hydrogen, carbon monoxide and CO2 that is produced by heating coal to around 1,400ºC in an oxygen-limited reactor. The process goes back to 1792, where it was used to produce ‘town gas’. Today, there are over 500 coal gasifiers operating in the world, largely in China and South Africa.
In our base case model, we think that a typical syngas plant must charge around $500/ton, in order to generate a 10% IRR. The syngas can then be used in making chemicals (c50% of the syngas market, e.g., ammonia, methanol), for fuels (c30%), or combusted in a power plant (c20%).
However, CO2 intensity is very high, as much as 0.6 kg/kWh-th, 3x more than natural gas CO2, 1.5x more than average coal grades. Making syngas is only c70-80% efficient at harvesting the energy from coal, which is why the CO2 intensity of syngas is higher than coal itself. Moreover, the product is already partly oxidized (it contains CO), so it releases less energy when it is combusted.
Pure hydrogen can also be separated out from the syngas, by promoting the water-gas-shift reaction, then removing all of the impurities and acid gases. This is referred to as ‘black hydrogen’. We think a 10% IRR requires a hydrogen price of $1-2/kg. But again, CO2 intensity can be astronomically high, as much as 25 tons of CO2 per ton of hydrogen (i.e., 25 tons/ton). This is 3x more than generating hydrogen from steam methane reforming of natural gas (grey hydrogen). Please see our overview of hydrogen technologies.
As part of the energy transition, preserving a future for clean coal, it is feasible to purify and dispose of >90% of this CO2 from producing black-brown hydrogen. The result is a low-carbon hydrogen resource, maybe around 0.06kg/kWh-th. It is possible. But there is a lot of CO2 to dispose of, amplifying costs. The process could be economical at around $2.5/kg hydrogen, we estimate ($22/mcf-equivalent). Details are in the model. But we still prefer blue hydrogen and turquoise hydrogen as leading options.
The costs of syngas and the costs of hydrogen from coal gasification depend on input variables. Capex costs are usually around $1,000/kWth of syngas. Other inputs are coal prices, efficiency factors, chemicals costs, labor costs and other variables. These can be stress-tested in different tabs of the data-file. Data from technical papers are tabulated in half-a-dozen back-up tabs.
What degradation rate is expected for a green hydrogen electrolyser, if it is powered by volatile wind and solar inputs? This 15-page note reviews past projects and technical papers. 5-10% pa degradation rates would raise green hydrogen costs by $1/kg. Avoiding degradation justifies higher capex, especially on power-electronics and even batteries?
This data-file aggregates technical data into the Global Warming Potential (GWP) of hydrogen, in order to draw conclusions for decision-makers in the energy transition. So what is hydrogen GWP versus methane?
(1) Hydrogen is not a direct GWP, as H-H bonds in the hydrogen molecule do not directly absorb infrared radiation, indeed nor do other symmetrical diatomic molecules like N2 or O2 (no permanent dipole moments).
(2) But hydrogen is an indirect GWP, as it breaks down in the atmosphere over 1-2 years, and its reaction products increase the GWP impacts of other GHGs, such as methane, tropospheric ozone and stratospheric water vapor.
(3) The best estimates we have tabulated in our data-file give a 100-year GWP for hydrogen that is 11x stronger than CO2 and for methane that is 34x stronger than CO2 (please download the data-file for the details).
(4) Concerns? In other words, if you are worried about the climate impacts of leaking 0.6 – 3.5% methane across global gas value chains, the climate impacts are effectively the same for leaking 2 – 10% hydrogen across a hydrogen value chain.
(5) 3x higher hydrogen leakage rates are not an unjustified concern, because the radius of an H2 molecule is about 3x smaller than the radius of a CH4 molecule, and the boiling point is -253C (versus -162C for methane) resulting in more boil-off, and thus upper estimates for H2 leakage rates as high as 20% have crossed our screen.
(6) The hydrogen industry might adapt: by monitoring and mitigating its leakage rates, much like the gas industry needs to do; and by preferring shorter and simpler value chains, direct substitution for pre-existing hydrogen in industry; or transporting hydrogen in carrier molecules (toluene, ammonia, electrofuels are less likely to result in hydrogen emissions, even if they are more expensive).
(7) CH4 Condemnation? Over 50% of the GWP impacts of hydrogen arise because hydrogen mops up hydroxyl radicals, which in turn, prevents these hydroxyl radicals from breaking down methane molecules. Thus the 100-year warming impacts of methane are exacerbated. In other words, the climate impacts of atmospheric hydrogen directly link to the atmospheric impacts of methane. The more worried you are about one, then logically, the more worried you should be about the other. Hydrogen and methane are “in it together” when it comes to GWP.
(8) CH4 Collaboration. Atmospheric methane is around 1,900 ppb, 160% above pre-industrial levels. Every year, about 40% of the world’s methane emissions comes from natural sources like wetlands, 25% from agriculture, cow burps and rice, 25% from coal, oil and gas and c10% from waste landfills. H2’s GWP can be improved by encouraging better methane management in all of these other categories.
Recent Commentary: please see our article here.
The purpose of this data-file is simply to chart the typical pressures of various energy and industrial processes that have featured in our research, as a useful reference.
Pressures range from around 1 atmosphere to around 4,000 atmospheres (at which point structural steel fails).
One conclusion is that conventional energy and chemical companies have good pre-existing experience with engineering and managing pressure-vessels, as may be needed in the energy transition, especially for CCS.
H2 vehicles may be more demanding, if these tanks require 10,000 psi, which is actually more than that of a standard hydraulic fracturing operation.
To read more on pressures of industrial and energy processes, please see our article here.
Monolith claims it is the “only producer of cost effective commercially viable clean hydrogen today” as it has developed a proprietary technology for methane pyrolysis using 100% renewable electricity, producing clean hydrogen and carbon black. We like this turquoise hydrogen theme and its potentially strong economics.
The company is based in Lincoln, Nebraska and has a $100M demonstration facility at Hallam, Nebraska, constructed in 2016-18, following a pilot was build in California in 2013-15. The next step is a $1bn expansion of its Olive Creek facility and a tender of 2M MWh pa of renewable electricity (or equivalent RECs) to energize the plant.
Overall this was not one of our most successful patent screens, as we found many of the patents to be disjunctive, thus it was hard to de-risk the technology. Some specific question marks are noted in the data-file.
Turquoise hydrogen is produced by thermal decomposition of methane at high temperatures, from 600-1,200◦C.
The advantage of this process is that 3 kg of ‘carbon black’ are produced per kg of methane. This allows passable IRRs at lower costs than blue of green hydrogen.
The disadvantage is that methane decomposition is endothermic, thus an exterior energy source is required. If this energy source is natural gas, then around 2.6kg of CO2 will be produced by kg of hydrogen.
In turn, low-carbon turquoise hydrogen could be produced from low-carbon electricity (most likely a mixture of wind, solar, nuclear and hydro). Now the cost is more than blue hydrogen, but still very competitive versus green. This data-file quantifies the economics (above) and capex costs (below)
Remaining challenges are high capex costs at small scale, monetizing carbon black, the tendency of carbon ‘coking’ to clog up catalysts and reactors, the hunt for a reliable catalyst and ‘molten’ reactor design, and early technical readiness, as summarized in the final ‘notes’ tab of the model.
Electro-fuels are hydrocarbons produced primarily from renewable power, CO2 and water. They are reminiscent of the adage that ‘the fastest way to become a millionaire is to start out as a billionaire then found an airline’. Because all you need for 1boe of these zero-carbon fuels is 2-3 boe of practically free renewable energy. Abatement cost is $1,000/ton. At best this could deflate to $150/ton. An ambitious new industry is forging ahead. The opportunity and challenges are explored in this 19-page report.
This data-file derives some conclusions into the evolving landscape of green hydrogen electrolysers in Europe, based on a list of c240 distinct projects, looking project-by-project, country-by-country.
The market is shifting away from smaller alkaline electrolyers in the hundreds of kW of capacity to super-giant PEMs, and SOECs, with overall project capacities potentially reaching GW-scale.
Key controversies are visibly emerging around the powering of electrolysers (from the broader grid, rather than just from renewables), for use of the hydrogen and for delivery of ambitious, early-stage projects.
This data-file summarizes the details of c15 companies aiming to commercialise low-carbon electro-fuels, using power-to-liquids technologies.
For each company, we summarize their process, their progress, timings, employee counts, patent counts, likely products and likely energy sources. Leading companies are picked out in the data-file.
Most are trying to make substitute oil products from renewable sources such as wind and solar. However, some of the most advanced projects are actually powered by geothermal and hydro, to achieve superior utilization rates.