Green hydrogen at a crossroads

The cost-effectiveness of producing white hydrogen is raising concerns among those who placed early bets on green hydrogen

In the global journey towards an all-clean energy future, green hydrogen has emerged as one of the great hopes. Hydrogen, with its high energy density, can work pretty well in any industry that uses natural gas or liquefied petroleum gas. Moreover, it produces pure water when burnt, instead of dirty carbon emissions. It can even be used to run cars — provided one gets the technology and economics of hydrogen fuel cells and hydrogen filling stations right. Best of all, it is the most abundant element on earth — unlike many other elements that are available only in limited geographies.

Of course, even its most ardent supporters — and there are many — will admit that much of the hydrogen produced currently is neither green nor clean in most respects, though the end product obtained by burning it is pure water. A lot of hydrogen today is essentially “Grey” hydrogen that is made from methane (natural gas is predominantly made of methane) through a process called steam methane reformation. Methane is a hydrocarbon and the steam methane reformation process produces plenty of carbon dioxide. Sometimes the carbon dioxide is captured and stored and the resultant hydrogen is labelled “blue” hydrogen, a cleaner, albeit more expensive gas. (There is also black and brown hydrogen, produced from black coal and lignite, but the dirty emissions in the process make them pretty useless as a clean energy source).

That is why most hydrogen advocates are pinning their hopes on “green” hydrogen becoming more scalable and less expensive. Green hydrogen is produced by splitting water through electrolysis, using surplus clean energy from solar or wind energy plants. Billions of dollars are being invested in green hydrogen plants across the world, and, to many people, it will be far more significant than electric vehicles or solar energy plants once produced in large quantities and economically.

Japan, Europe, and India are betting big on green hydrogen. In India, several big businessmen, including Gautam Adani and Mukesh Ambani, have announced plans for green hydrogen production. For the country, green hydrogen will be of particular importance — the government expects that it will allow India to eventually not only become self-sufficient but also an exporter of fuel. Of the 5 million tonnes of green hydrogen that India hopes to produce by 2030, almost 70 per cent is earmarked for export, according to a release from the Press Information Bureau last year.

But of late, huge “white” hydrogen discoveries are making waves and could queer the green hydrogen story. White hydrogen is naturally occurring geologic hydrogen found in mines. It has excited some people enough to label it as “gold” hydrogen. So far, white hydrogen reserves have been found in the US, Russia, Mali, France, Australia, and many other places. This discovery has set off a frenzy of prospecting, similar to the search for new sources of Lithium. Some estimates put the total availability of white hydrogen on earth at around 5 trillion tonnes or more — enough to satisfy most fuel needs for decades on end.

The great theoretical advantage of white hydrogen over green hydrogen is its potential to be cheaper and less energy-intensive to extract. This possibility is raising multiple questions about the economics of green hydrogen projects.

Green hydrogen production needs an abundant supply of pure water and cheap, renewable energy. While freshwater sources are best, they are also scarce. This is why scientists and businessmen have gravitated to plants along the coast of seas or oceans. The use of saline water from oceans adds to the cost of production because desalination is a necessary initial step before electrolysis. Countries, especially low-income countries with proximity to oceans and seas and getting a lot of sunlight were considered ideal for green hydrogen production. It was assumed that having large production bases in these countries could also help their economies. European countries were mostly planning to import green hydrogen for their clean energy journey from North African nations because of the potentially lower production cost there than in EU countries.

While white hydrogen extraction is still in its infancy, it appears that it will cost considerably less than green hydrogen — and also be less energy-intensive to produce and certainly require less water. According to a study conducted in Europe, France’s substantial white hydrogen discovery could mean that extracting the gas from mines would cost one-tenth of the current expense of green hydrogen.

For instance, if green hydrogen costs 5 euro per kilo, white hydrogen would cost 0.5 euro per kilo. It wouldn’t be presumptuous to assume that the ratio of white to green hydrogen production in the rest of the world might be similar. What would that mean for green hydrogen investments? Much will depend on how rapidly green hydrogen production costs decline due to technological advancements and other factors. But even then, it is likely that white hydrogen might be cheaper to produce than green hydrogen for several decades more — especially if deposits are found in easily exploitable areas. This is something that is worrying all those who placed early bets on green hydrogen.

The writer is former editor of Business Today and Businessworld, and founder of Prosaic view, an editorial consultancy