December 29, 2023
By Michael Barnard

Hydrogen Half Truths Keep Shipping Fuel Hopes Afloat

H2 Hydrogen Molecule Fuel Cell Element   -   GETTY

Maritime shipping is considered one of the hard to abate sectors, but it’s much less difficult than most assume. As we’ve seen in this series on electrifying everything everywhere all at once, bulk shipping will plummet with peak fossil fuel demand and batteries will power all inland and most short sea shipping.

But we’ll still need in the order of 70 million tons of marine diesel equivalent energy at the end of this transition. What will it be? Naturally, the hydrogen-for-energy crowd are pointing at their favorite molecule and derivatives of it. For this piece, let’s focus just on hydrogen itself.

What are the half truths about hydrogen, and how do they apply to maritime shipping?

The first half truth is that hydrogen is the most abundant element in the universe. If it’s everywhere in large amounts, it must be cheap, right? Except that hydrogen is also one of the most reactive of molecules, which means that it binds tightly to other molecules and doesn’t like to let go. Hydrogen burns well because it reacts very strongly with oxygen, giving off a lot of energy to make water. But getting the hydrogen out of the water requires the same scale of energy, and the laws of thermodynamics tell us that we’re going to lose energy every time we go through the cycle.

For shipping, water, water everywhere, but none of it turns into hydrogen cheaply or easily.

The second half truth is that hydrogen has a lot of energy for its mass, high energy density. That’s true. A kilogram of hydrogen has as much energy as 2.6 kilograms of diesel or a US gallon of gasoline. The half truth part is that hydrogen is also one of the least energy dense by volume. A kilogram of hydrogen as a gas at room temperature at sea level takes up the same volume as 11,900 liters of or 3,144 US gallons of gasoline.

That means it has to be compressed to 700 or 800 times the pressure of the atmosphere at sea level before it’s useful in a car. That’s the equivalent of being over seven kilometers or four and a half miles underwater, which is most of the way to the bottom of the Mariana Trench. And even at that, the energy density by volume is so low you can only get five kilograms of hydrogen, the equivalent of five gallons of gas, into a Toyota Mirai. Fuel cells in cars are more efficient than internal combustion engines, so it’s more like 10 gallons worth of distance, but it’s still not very much.

For shipping, that’s still far too diffuse to power a 24,000 unit container ship across the Atlantic or Pacific. Enter liquid hydrogen.

How do you turn this very diffuse gas into a liquid? Well, you chill it down to 20° above absolute zero, about 273° Celsius below the temperature we fleshy humans consider reasonably comfortable. That’s a complex, multi-step process that also requires a full third of the energy that’s in the hydrogen. Goodbye more energy.

Does that make it as dense as marine fuel? Not even close. Liquid hydrogen is only 8.5% as dense as diesel, comparing kilograms per cubic meter. The higher energy density by mass smooths that out a bit, but you still need four times the volume of shipboard tanks for the same energy in the fuel. And modern ship engines are as efficient as fuel cells, so that doesn’t help as it does in cars.

There’s also the problem with liquid hydrogen of boil off. What’s that? Well, it’s when that extremely cold liquid is exposed to the slightest of heat and it turns back into a gas. NASA has managed to not lose any liquid hydrogen from a tank for a year by building a huge, spherical, absurdly well insulated, mirror-finished tank, but as a shipping fuel in ports or at anchor, significant hydrogen will be being lost every day, likely 1% to 3%.

So liquid hydrogen at least gets into the volume range, but isn’t a slam dunk. Are there any other concerns with it?

Yes, the last half truth. There’s been a STEM- and economics-illiterate consensus that has developed over the past decade that making hydrogen eventually would be cheap, as cheap as a US dollar per kilogram. That’s as cheap as making it from natural gas in the USA without any carbon capture, and half as cheap as making it from natural gas in Europe.

Hydrogen will be much more expensive to manufacture than that, likely in the $6 to $8 per kilogram range without subsidies. Why? There are four parts to hydrogen costs to consider, but the math is simple.

The first is the capital costs, how much money the equipment costs. Electrolyzers aren’t cheap at all, and won’t be dirt cheap in the future due to the nature of what’s in them. They’ll get cheaper, which will help, but that’s not the end of the capital costs. The electrolyzer is one of about 28 components in an industrial electrolysis plant per IRENA, and the rest of the components — the balance of plant — are already commoditized, off-the-shelf technologies that are as cheap as they are going to get.

And that’s not the end of the capital costs. Remember that liquid hydrogen is required. That’s another set of commoditized, expensive, industrial scale components. Something that can achieve 20° above absolute zero temperatures makes designer Sub Zero refrigerators look like the 40 year old beer fridge at the cottage.

Capital costs matter because they have to be spread across the output of the hydrogen factory. The fewer kilograms manufactured per year, the higher the capital cost per kilogram.

That means you need more electricity, more of the time, and this gets into operational expenses for manufacturing hydrogen, the second part.

There’s a corollary half truth about the price of renewable electricity that needs to be poked at here, that it will be free some of the time because we’ll be generating too much of it when the wind is blowing and the sun is shining. The problem is, that’s the wholesale cost of electricity, not the industrial consumer cost of electricity delivered to a hydrogen manufacturing plant.

The electricity still has to get to the plant. That requires transmission, distribution, administration and profits for the organizations that own the wires and control systems. Per data from the International Council on Clean Transportation, and more on them later, that would be two thirds of the levelized cost of renewable electricity in Europe and one and a half times the cost in the USA. Those costs aren’t going away even if the wholesale electricity cost is zero.

And remember the capital expenditure per kilogram of hydrogen. If you only make hydrogen when the electricity is cheaper, say $0.04 to $0.05 per kilowatt hour because you are — in theory — only paying the transmission and distribution costs, you are only getting cheap electricity for perhaps five or ten weeks of the year. That multiplies the cost per kilogram for the capital expenses by five or ten. Lazard’s levelized cost of hydrogen for the cheapest electrolysers available today with no balance of plant with $0.05 electricity for 30 weeks a year is still $3.24 per kilogram. Add a lot per kilogram for balance of plant and only five to ten weeks per year of operation.

You can’t work under that model because high capital costs drive the cost per kilogram way up. You have to firm the electricity so you can operate at least 30 or 40 weeks of the year, preferably 24/7/365.

And that means you end up paying close to industrial rates for electricity, which in the USA are in the $0.09 per kilowatt hour range. That doesn’t seem like much, does it. But it is.

With the balance of plant you need 50 to 55 kilowatt hours to make a kilogram of hydrogen. That’s $4.5o to $5.00 per kilogram just for the electricity. And then add the capital costs on top of that, which makes it about $6.00 to $8.00 per kilogram just to manufacture the hydrogen.

Are we done yet? No. There’s still getting the hydrogen to the port. Big industrial electrolysis plants won’t be located on prime port lands because the land cost would be too high. As soon as you have to move hydrogen between two places, hydrogen costs go up again because, as noted, it’s really not very dense and it also likes to leak, being one of the smallest molecules in the universe. It’s expensive to compress it and pipe it and it’s much more expensive to put it in trucks and drive it places.

Right now, 85% of hydrogen is consumed at the point where it’s manufactured because the cost of distribution is so high. Hydrogen made from natural gas in the USA and Europe today for $1 or $2 per kilogram costs $17 to $36 to buy in hydrogen refueling stations, in large part because it’s so expensive to move around. The US Department of Energy calculates that it would take 14 hydrogen tanker trucks to move the same amount of energy as one diesel tanker truck. Just shipping it across oceans in tankers from places with lots of sunshine would cost five times as much per unit of energy as liquid natural gas, on top of the cost of hydrogen, per my assessment of a Namibia proposal.

Are we done yet? No. The hydrogen still has to be chilled to 20° above absolute zero, which you’ll remember takes a full third of the energy in the hydrogen. That kilogram of hydrogen has 33.33 kilowatt hours of energy, so another 11 kilowatt hours at $0.09 per is required, for another dollar of operational costs.

And then the capital costs for the very expensive cryogenic industrial components have to be spread across the kilograms of hydrogen before they are pumped into ships.

That brings the cost up to $8 to $10 per kilogram for shipping fuel. Is this reasonable? No. That’s $8,000 to $10,000 per ton of fuel when maritime diesel averages $600 per ton in the USA and Europe, five to six times as much per unit of energy in the fuel.

And that’s before the very expensive tanks and fuel cells required to store and use the fuel on the ships. These are realistic costs for the liquified hydrogen required for shipping fuels, and they are unreasonable because they are so expensive.

That’s most likely why Equinor, Air Liquide and Eviny abandoned work on a liquid hydrogen bunkering facility for shipping in Norway earlier this year. Norway has very cheap industrial rates for electricity and very low carbon electricity due to all of its big hydroelectric dams. They would have been able to get electricity for $0.06 per kilowatt hour. Even at that with reasonable assumptions for electrolyzer, balance of plant and cryogenic equipment costs, I calculated that the cost of liquid hydrogen would be $9.30 per kilogram, and that was with the electrolysis and liquification facility being effectively on the dock.

But it doesn’t explain why formerly credible organizations like the International Council on Clean Transportation have been using much lower costs for liquid hydrogen in their maritime shipping decarbonization studies. Unfortunately, the people writing those reports assumed that solely the cost of manufacturing the hydrogen without distribution or liquification could be used and that electricity would be very cheap. It was an obvious mistake but unfortunately all too common in their studies in the past two years.

Is it possible that this analysis would look better if we assumed we were making blue hydrogen from natural gas with carbon capture bolted on? Not really. Carbon capture technology has its own capital costs and operating expenses, 45% of the energy in the natural gas gets thrown away with the carbon, and there are still the distribution and liquification costs. As a shipping fuel it might only be four to five times as expensive, but that’s still much more expensive than alternatives.

This has been a bit of a dense introduction to the real costs of green hydrogen, and while it’s been around shipping, the same economics apply to any manufacturing and distribution of hydrogen. The half truths about hydrogen — it’s abundant, it’s energy dense, capital expenses will get a lot lower and electricity will be free — have been used to create a false consensus that it’s going to be an energy carrier in the future.

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Michael Barnard