Interview: Challenges and Opportunities in the Emerging Hydrogen Market
At the Americas Hydrogen Summit, OPIS spoke with Jon André Løkke, president of industry group Hydrogen Europe, about the future of the hydrogen economy, its challenges, and its opportunities.
Q: What are the key price benchmarks for hydrogen?
A: It is key to have some key benchmarks because the teams developing the technologies need clear goals to know when they won. For heavy duty vehicles the pump price must be $5/kg and for light duty it must be $7/kg to be competitive against gasoline. For these goals to be achieved, the production price of hydrogen must be around $1.50/kg. The price signals will be the fossil fueled solutions. If you can develop a green solution that has a lower cost, everyone will choose the green one. It is a no brainer. However, the impact hydrogen has on the final green version of a product varies. For example, for cement, hydrogen will be a small component of the final price.
Q: How far away are we from competitive hydrogen supply?
A: I think we aren’t too far away. The reason why we haven’t achieved it is because of the lack of scale. If you have one fuel station with trucks loading fuel every other day, dispatch prices will be very high. The development of dedicated facilities to supply a truck fleet could produce hydrogen at competitive rates. The challenge would be in the transportation and distribution of hydrogen as well as the maturing of H2 dispatching of 30-40 kilos into a truck under 10 minutes.
Q: What will the commercialization and pricing of hydrogen be like?
A: This is a challenging question to answer as it depends on the supply chain and the application considered as hydrogen could be consumed in liquid, gaseous, ammonia or methanol form. You can make, transport, and use ammonia to make fertilizers; all of that is fine. However, if you want to use it for shipping, the combustion engine exists but it isn’t very mature and few suppliers make them.
Q: What challenges does the industry face for international trade of hydrogen?
A: When it comes to international trade, a major problem is the transportation of hydrogen. I’m a fan of ammonia because it contains hydrogen and it is an existing international traded market, the price of which is quoted every day. You can turn hydrogen into ammonia and sell it onto the international market. If you want to move hydrogen in its gaseous state, you can do it theoretically using pipelines. However, there are no dedicated H2 pipelines in place and offtake agreements are needed to develop them.
Q: Is the demand ready to adopt hydrogen?
A: It depends on what part of the industry you are talking about. There are investors committed to buying green ammonia today because it is an existing market. However, there aren’t large retail networks willing to contract hydrogen supply because the number of fuel cell trucks on the streets is very limited. In the case of the steel industry, interest has been growing with companies acquiring hydrogen technologies. Recycling steel using hydrogen is easier compared with making raw steel. Today, 40% of the steel market is recycled. The steel industry is longing for this change, and it is very promising. Most of the end customers, like car manufacturers, want to have green steel in their cars and there is a strong demand and desire for green steel.
Learn more in the free OPIS white paper, Scaling up a Competitive Hydrogen Sector: Industry Reflections About Opportunities and Challenges