The Once and Future Price of Hydrogen
By Bill Moore
When governments and large corporations look for someone to study the future costs of energy, they often turn to SFA Pacific in Mountain View, California and its vice president, Dale Simbeck. His company specializes in consulting to the oil refining, power generation, petrochemical and environmental control industries. It provides market, economic, technological and process analysis; and usually it is SFA Pacific's conclusions that provide the basis for projections on the future cost of hydrogen.
Assuming industry can overcome the technological hurdles still confronting fuel cell development, perhaps the single most daunting obstacle remaining will be the deployment of a hydrogen refueling infrastructure, which itself will be driven or hindered largely by the cost of the gas, itself. That's why EV World decided to talk to Simbeck to get his perspective on what hydrogen is likely to cost 20 years from now, when proponents believe fuel cell vehicles will be commonplace.
I first asked Simbeck where we get hydrogen today. About 80 percent of it comes from natural gas that is stream reformed and most of the remaining 20 percent is derived from coal through an elaborate, but well-understood process called coal-gasification. In both cases, the feedstock is a fossil fuel, one that is in decline in North America and the other which comes with heavy environmental costs; and both produce prodigeous amounts of carbon dioxide. Coal gasification is used primarily in China as part of the process to make ammonia fertilizer, most of which goes towards feeding its nearly 1.3 billion population.
With the exception of handful of demonstration programs, which produce insignificant quantities of the gas, virtually not hydrogen is made from renewable energy sources.
Because most hydrogen (H2) is manufactured from natural gas, its cost today is closely tied to that prevaling market price for natural gas, the futures price of which is currently hovering between the $5-7 per thousand cubic feet. Simbeck explained that the steam reformation process is 75 percent efficient, which means that if the delivered price of natural gas is $4 per 1000 cubic feet, then hydrogen will cost $3 per thousand. Converting this into kilograms translates into a raw facility cost of $1 per kilogram, or the rough equivalent of $1 a gallon (3.8 liters) of gasoline at the refinery.
Simbeck emphasized that this doesn't include any of the distribution and handling costs, which are significant, especially since there is no consumer-centric refueling infrastructure in place, except for a handful of stations, mainly in California. His best estimate for the "pump" price of hydrogen at a near-term fueling station will be between $5-10 per kilogram.
Hydrogen Research Travels Abroad
Simbeck told me that he'd just returned from a consulting project in Japan where he was studying the issues of building a hydrogen infrastructure there. That trip included being shuttled about in a Toyota fuel cell Highlander, an experience that left him with a very favorable impression of the technology, especially the exciting low-end torque and quiet ride.
From his perspective, getting the cost of fuel cell vehicles down to something "reasonable" is the biggest issue facing the creation of a hydrogen economy, more so even than the price of hydrogen, though he views both as critical factors in the equation.
"The longevity of fuel cells and their costs per kilowatt are still outrageous," he commented.
The Status of Carbon Sequestration
If we decide to scale up the production of hydrogen, at least initially, from fossil fuels like natural gas and coal, then in order to prevent the release of ever larger amounts of CO2, especially from coal gasification, industry will have to find ways to sequester it beyond letting the oceans, forests and prairies do it for us passively.
Simbeck has also looked at the challenges of carbon sequestration in deep geologic formations, and it turns out this is a well-understood technology that's been in operation for two decades now, though nowhere near on the scale that will be required to make large quantities of H2 from fossil fuel feedstocks. He estimates that annually some 30 million tons of CO2 are sequestered worldwide; much of it injected into aging oil fields to improve the extraction of both oil and gas. Only Norway's state-run oil company is sequestering the climate-altering gas on a non-commercial basis; in other words, not to enhance oil recovery. They are pumping one million tons a year to the bottom of the North Sea to avoid a stiff carbon dioxide tax.
Simbeck told EV World that sequestering all the man-made CO2 being injected into the atmosphere today would require an infrastructure as large and effectively run as today's petroleum industry.
"You're talking about enormous amounts of liquid-handling infrastructure of high-pressure CO2 to put this into the ground."
However, he also pointed out that even if you include this additional cost into the production of fossil fuel-derived H2, it is still significantly cheaper than making the gas via electrolysis from renewable sources like wind and solar.
Hydrogen Zealots and Reason
Simbeck recently gave a speech at a conference in Europe where he stated that you can't reasonably discuss religion with a zealot. I asked him what he meant by that.
"Most people advocating a hydrogen economy are hydrogen zealots. They get very irritated with you if you rationally try to discuss the challenge it takes in terms of costs and infrastructure to do this." Simbeck believes they are so emotionally invested in the idea of hydrogen and fuel cells that they rebuff any efforts to discuss in a rational, pragmatic manner the technical and economic challenges ahead.
Does that mean we can't achieve a hydrogen economy? Not necessarily, but Simbeck pointed to the recently released National Academy of Science's report, which he helped write, that concludes that even if all the obstacles can eventually be overcome, it will be twenty-five years, at least, before fuel cell vehicles will even begin to have a positive impact on the environment.
That Pesky Chicken & Egg Thingy Again!
Having looked at the issues facing a hydrogen future, what does Simbeck see as the most logical path to that destination?
He believes carbon dioxide sequestration has to be an integral part since we are going to have to rely on fossil fuels for hydrogen production into the foreseeable future. Beyond that still lies the challenge of building affordable fuel cell vehicles and deploying a brand-new refueling infrastructure for one of the most difficult "fuels" imaginable. Not only is it the lightest element known, it also has lowest energy density by volume of any known "fuel".
This creates the classic "chicken & egg" conundrum where fuel cell cars won't be built in any affordable production numbers until there is a commensurate level of refueling stations, but no energy company is going to invest in building the stations or modify existing gasoline stations (forecourts) until there is sufficient demand.
What Simbeck thinks may unfold is a shift by electric utilities away from the burning of coal directly to local or regional gasification of coal into a hydrogen-rich fuel to power their gas turbines. Of course, the carbon dioxide – along with sulfur, mercury and other hazardous materials -- would have to be removed and the CO2 sequestered.
He explained that oil refineries have been using their "waste" hydrogen to enrich the fuel for their older gas turbine generators for a number of years now, though currently no electric utilities do so.
Under this scenario, any excess hydrogen produced by the utility could be gradually siphoned off and distributed as a liquid to local refueling points as the demand grows. The liquid H2 would then be compressed and phase-changed back into a gas for use in fuel cell vehicles. Simbeck sees this approach as a way around a number of economic and environmental contraints.
But are there other approaches or even fuel options that make more sense? What about battery electric vehicles and plug-in hybrids? I ask him these questions and more in part two of our discussion on the future price of hydrogen.