For Official Use IEA/SLT(2003)5 IEA/SLT(2003)5 For Official Use International Energy Agency Organisation for Economic Co-operation and Development 30-Jan-2003 English text only INTERNATIONAL ENERGY AGENCY STANDING GROUP ON LONG-TERM CO-OPERATION MOVING TO A HYDROGEN ECONOMY: DREAMS AND REALITIES (Note by the Secretariat) This note is to inform the SLT on scientific and economic facts to be considered in the framework of moving to a hydrogen economy. Contact: Mr. Olivier Appert, Director, Long-Term Co-operation and Policy Analysis Office (E-mail: olivier.appert@iea.org) Mr. Fatih Birol, Head, Economic Analysis Division (E-mail: fatih.birol@iea.org) Mr. Jonathan Pershing, Head, Energy and Environment Division (E-mail: jonathan.pershing@iea.org] English text only JT00138462 Document complet disponible sur OLIS dans son format d origine Complete document available on OLIS in its original format
STANDING GROUP ON LONG-TERM CO-OPERATION Moving to a Hydrogen Economy: Dreams and Realities (Note by the Secretariat) 1. Many policy makers, energy analysts, environmental organisations and industry leaders have asserted that hydrogen is the fuel of the future. Its attraction is that it is both inexhaustible and clean (its combustion produces only water). However, the technology is not yet advanced enough for hydrogen to be commercial particularly in the areas of production and storage. 2. Notwithstanding the need for significant development prior to commercialisation, experts have developed long-term scenarios based on hydrogen to supply energy needs in power generation and in transport. According to those experts the hydrogen economy will emerge in the 21 st century and replace the old hydrocarbon economy of the 19 th and 20 th centuries. Other experts are more sceptical. To achieve commercialisation, many technological, structural and policy barriers have to be overcome. Other energy carriers, especially electricity, based on an existing infrastructure for centralised and distributed power generation, transmission and distribution, will be developed further and might win the competition for large-scale markets. This note seeks to provide a realistic assessment of the debate over the hydrogen future. Some Political Background 3. For many decades a hydrogen economy has been very popular amongst futurists, policy makers, the media and public opinion. As far back as 1875, the famous French writer, Jules Vernes, in his book L Ile Mystérieuse, projected that water would replace coal as energy "source", with water being split into its constituents hydrogen and oxygen to supply endless electricity and heat! A century later, in 1976, the famous Club of Rome in its 3 rd report was considering that at the eve of the 21 st century, we should consider the juxtaposition of 2 networks of equal importance: electricity and hydrogen which is cheap and available in huge quantities from nuclear or solar energy. 4. Policy makers have also offered strong public encouragement for the hydrogen economy. For example, on 7 th November 2000 the German Chancellor, Gerhard Schröder, gave strong support to Daimler Benz s latest fuel cell car, Necar 5, by personally presenting the prototype to the media and the general public. In a policy speech to the 154 th Session of the Diet (4th February 2002) the Japanese Prime Minister, Junichiro Koizumi, stated that, The fuel cell is the key to opening the doors to a hydrogen economy. We will aim to achieve its practical use as a power source for vehicles and households within three years.. More recently, Hermano Prodi who is chairing the EU Commission made a strong statement on the future emergence of hydrogen economy. In his State of the Union address on 28 th January 2003, President Bush committed US$1.2 billion to the acceleration of hydrogen fuel cell cars. 2
5. Industry leaders are also strongly supporting hydrogen economy. In January 2002, Rich Wagoner, CEO of General Motors, presented Autonomy, a new concept of fuel cell car and stated that this new concept will reinvent the car and 21 st century will be the century of the fuel cell. More recently, the mass media reported favourably on the initiative taken by Honda to deliver 30 fuel cell cars to the Californian market and to commit itself to market such cars over the next few years. 6. Some oil companies are also supportive of moving to a hydrogen economy. In its long-term scenarios, Shell refers to the emergence of hydrogen economy in the next decades, and in 1999, established a new unit to develop its hydrogen industry. Shell Hydrogen is participating in several R,D&D collaborations, including with the state of California, energy companies and automobile manufacturers, called the California Fuel Cell Partnership, which is to open the first dedicated hydrogen filling station and fuel cell vehicle-testing centre later in 2003. The power business is also working with Siemens Westinghouse Power Corporation to demonstrate a unique solid oxide fuel cell power generation technology fuelled by natural gas. The demonstration project is planned to take place in Norway. Both oil companies and car manufacturers are promoting hydrogen and fuel cell demonstration projects in Iceland 1. Even stock markets were favourably considering the hydrogen companies such as Ballard, which were considered to be part of the former New Economy 2. Some basic facts on hydrogen and fuel cells 7. Hydrogen is the most abundant element in the universe although little exists as a free gas on Earth. Currently hydrogen is produced mainly from fossil fuels for industrial purposes in petroleum refining, chemical production, metal manufacturing and electronics production. 8. Hydrogen is an energy carrier, not an energy source, and must be produced. Two production routes are available: conversion of hydrocarbon by partial oxidising or reforming, and electrolysis of water by electricity The electricity can be produced by a variety of inputs including fossil, nuclear or solar plants. Other routes are possible, for example, thermal dissociation of water at high temperatures. Currently, 98% of hydrogen is produced from hydrocarbons, with the production cost approximately five times the cost of the hydrocarbons used to produce hydrogen. 9. The thermal power of hydrogen per unit of volume is very low compared to natural gas, LPG, gasoline or diesel. While the thermal power of hydrogen per unit of mass is very high (51.5 Kbtu/lb of H 2 liquid compared to 18.6 Kbtu/lb for jet fuel A 1 ), hydrogen has to be liquefied at very low temperature (-253 o C). 1 Too much optimism regarding Iceland is probably unwarranted: Iceland has huge unused potential for cheap electricity from hydro or geothermal energy, expensive petroleum product logistic, and is only a tiny market. These features are very specific and do not apply in most IEA countries. 2 Ballard systems is currently selling at approximately $11/share up from its five year low of $6, but well below its five-year peak value of $144. 3
10. The potential of hydrogen has been known for almost two centuries. The first combustion engine, developed in 1805 by Isaac de Rivaz (Switzerland), was fuelled with hydrogen. This long pre-dated the diesel engine (fuelled with pulverised coal) discovered by Rudolf Diesel (Germany) in 1892 and the first electric car: La Jamais Contente of Camille Janatzy (France) which reached 100 km/h only in 1899. Fuel cells are electrochemical devices that combine hydrogen and oxygen in the presence of a conducting electrolyte to generate electricity and heat., emitting water vapour as their primary by-product. 11. The fuel cell has also had a long history. It was discovered by William Grove (U.K.) in 1839. More than one century later, many prototypes of cars with hydrogen fuel cells have been built. For example, in 1972, a car fuelled by hydrogen won the first prize for the lowest emissions in the Urban Vehicles Design Competition. Some early attempts have been made also to fuel planes with hydrogen; in 1957, a B57 of the U.S. Air Force had been partly converted to hydrogen. 12. Significant improvements have been made in fuel cell technology over the past several decades. Fuel cell technology is now well developed for low temperatures (30 o C) albeit with relatively lower efficiency, and for high temperatures (200 o C) with higher efficiency. The fuel may be hydrogen or a hydrocarbon (such as LPG, natural gas or methanol). While commercial sales of fuel cells are underway, they are currently produced only in limited quantities approximately 45 MWe globally in 2001. The largest demand has historically been for stationary fuel cells in units of several hundred kw for use in commercial applications. Present situation and long-term projections 13. Recent meetings of hydrogen experts (e.g., the National Hydrogen Vision meeting, organised by the US Department of Energy in November of 2001), suggest that hydrogen may emerge as a large scale fuel by the middle of the 21st century. However, today hydrogen represents only a minor part of world final energy consumption and according to the WEO, this situation will not change significantly in the next 30 years if no new policies and better progress in development and deployment of new energy technologies is foreseen. 14. In the US, for example, about 20 billion cubic meters of gaseous hydrogen is produced annually (compared to US production of about 550 billion cubic meters of natural gas). Most is used in on-site chemical applications. Globally, hydrogen manufacturing represents 170 mtoe or 2% of world total energy consumption. 50% of hydrogen is used in fertiliser industry, 37% in petrochemical industry and 13% in other chemical industry. (The bulk of hydrogen is produced from reforming of gas or petroleum products.) Consequently, the world's hydrogen infrastructure is still very limited. 15. While the WEO 2002 reference case suggests that that hydrogen fuel cell cars will remain marginal in the next 30 years, the WEO anticipates an increase of fuel cells in power generation (Figure 1). This is the case in commercial sector for bi-generation (electricity and 4
heating) or tri-generation (electricity, heating and cooling). Such a shift would not significantly impact the fuel mix, as the bulk of those fuel cells will be fuelled with natural gas. However, the switch will serve to slightly decarbonise the power generation thanks to the high energy efficiency of fuel cells. Figure 1 World Power Generation Capacity Additions 2000-2030 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Gas Coal Hydro Other renewables Oil Nuclear Fuel cells 16. Discrepancies between strong statements supporting a short-term hydrogen economy and the relatively sceptical hydrogen future depicted in others projections (including the WEO) is potentially a cause for concern. Are these projections ignoring some major factor or is the potential of hydrogen economy overestimated? Challenges of production, distribution and storage of hydrogen 17. A variety of critical issues remain to be resolved before hydrogen can take its place in the commercial pantheon of energy carriers. These include the hurdles in bringing down production costs, the challenge of building and paying for a global hydrogen infrastructure system (including transport, storage and final distribution), and the development of end-use markets. In addition, one of the primary attributes of a hydrogen economy, its anticipated value in reducing CO2 emissions from the power sector, needs to be evaluated. These issues are discussed below. Production and CO 2 18. Hydrogen itself including its use in fuel cells does not produce CO2. However, the production of hydrogen, currently generated from hydrocarbons at 98%, yields considerable CO2. A number of alternative routes have been proposed to eliminate the CO2; the most widely agreed have been the use of CO2 capture and storage technologies associated 5
with hydrocarbon-based hydrogen production, and the use of non-emitting sources of electricity (particularly fossil fuel power plants with CO2 capture and storage, nuclear power and renewable technologies). On the later, thermal dissociation of water at high temperature may be considered. Another way to produce hydrogen directly from renewables might be in places where insolation is high enough for direct gas reforming using concentrating solar as the heat source. 19. However, to date apart from reforming and electrolysis no alternative route has been demonstrated and neither approach is competitive on the energy market. For electrolysis, this is partly a function of the efficiency which is low. A simple example illustrates the point: Replacing all the transportation fuel used in France with hydrogen would require around four times the present electricity consumption (i.e., around 700 TWh additional consumption). Producing this electricity would require the building 60 of new nuclear plants of 1500 MW, or covering 6% of French territory with approximately 350.000 wind turbines, or covering 1% of the land with PV cells (at an even higher cost). High costs also apply to the currently available technologies of CO2 capture and storage. If the 700 TWh are provided by natural gas (the least costly fuel from which to extract CO2), capture costs alone would lead to approximately a doubling in the operating costs without the costs of transport or storage. While these technologies are currently available and even in commercial use the scale of these operations is several orders of magnitude lower than required for commercial energy application at a national level. Transportation/distribution 20. Once hydrogen is produced, it is then necessary to develop a hydrogen transportation/distribution system or grid comparable to that now serving electricity, gas or petroleum products. Hydrogen grids already exist, for example in the North of Europe. But distances between production centres and consumers (mostly big industry) are small. As hydrogen has a very high calorific value by mass but very low calorific value by volume, transportation by pipeline can be expected to be significantly more expensive than natural gas, itself around five times more expensive than liquid hydrocarbon and three times more than natural gas. Using current estimates based on the physical characteristics of hydrogen, distribution costs will be around fifteen times greater than liquid hydrocarbons. Other additional costs need to be considered such as those related to security concerns (leakages and explosions) although some of these also apply to other energy sources. Such costs are based on the assumption that hydrogen will be distributed as a gas; transportation of liquid hydrogen is not considered due to yet higher cost and safety issues. Storage 21. Hydrogen storage is another yet unsolved hurdle. Once again the very low calorific value per volume of hydrogen is an important physical fact one that poses both economic and technical problems, particularly in the case of the hydrogen car. 22. Different solutions are being considered. Hydrogen may be stored in high-pressure tanks. In the case of hydrogen cars, in order to get the same volume of tank and the same 6
autonomy as gasoline or diesel cars, hydrogen would need to be stored at a pressure of 700 bars. This may be possible. However, the closest analogue, CNG, demonstrates the difficulty: CNG tank pressure is only 250 bars, and to compress hydrogen to 700 bars requires significant energy consumption. Also, the weight of hydrogen stored represents only a few percentage points (1 to 2%) of the total weight of the tank 1. 23. Storage of hydrogen as hydrides or in carbon nanotubes is also being considered. But in this case the weight of hydrogen stored should also represent only 2 to 3% of the weight of the tank, creating mass and volume problems to achieve the necessary capacity. 24. Liquefied hydrogen storage is also a possible option that would solve the weight problem. However, considerable energy is required to liquefy hydrogen at minus 253 o C. In addition, a portion of the hydrogen would need to be released or boiled off in order to maintain the temperature of the liquefied gas (as in the case of LNG tankers): this is of the order of magnitude of 1% per day, which represents a key issue for the hydrogen car, but may be considered acceptable for planes as it is already available for rockets. Specific issues for hydrogen in the transport sector 25. While the issues of hydrogen production, distribution and storage are of general concern, special problems arise in the case of their use in the transport sector. As with stationary uses, one of the main benefits of hydrogen fuel cells is that they do not emit any pollutants on consumption. But as hydrogen is only a carrier, it is critical to consider a well to wheel approach including energy consumption and CO2 emissions for production, transportation and consumption. The comparison below considers different options based on present technology 2 : gasoline engine with injection, diesel engine with common rail, hybrid diesel (all three options are assumed to comply with EU 2005 standards), fuel cell fuelled with hydrogen from electrolysis, with methanol and methane (Figure 2). 1 However, the economics of CNG, where the tanks represent a significantly greater capital investment than the gas they contain has been profitable under certain circumstances; this may ultimately also prove true for hydrogen. 2 S. His and J. F. Gruson Comparison of fuel cell systems with conventional connectors for transport, April 2002, Institut Francais du Petrole. 7
Figure 2 Well to Wheel Comparison Efficiency Fuel Production (%) Efficiency engine (%) Thermal systems Gasoline injection 80-85 20 16-17 Diesel common rail 85-90 25 21-23 Hybrid systems Hybrid diesel 85-90 32-29 27-34 Electrolysis fuel cell 1 15-25 37-52 5,5-13 Methanol fuel cell 48-60 37-52 18-31 Methane fuel cell 40-60 37-52 15-31 Global efficiency (%) 26. The results indicate that the hybrid diesel system is the most efficient, although the methanol and methane fuel cell systems may compete in some cases. However, the overall efficiency does not present a full picture and in fact, the option may not yet be a real alternative to hydrocarbons in transportation. First, these solutions create significant constraints of volume as compared to thermal systems compared to thermal systems they require replacing one small and efficient engine with three pieces of equipment, reformer, fuel cell and electric engine. Second, in the cases of the fuel cells, the volume of fuel storage is higher due to the physical properties of hydrogen (although the same problem exists albeit at lower levels for methane or methanol). Finally, in the ignition phase, reformers are considerably slower which poses potential inconvenience and problems for the drivers. 27. It might be noted that the same problems may not exist in the case of air transportation, where the high calorific value of liquefied hydrogen may be attractive (it is around three times jet fuel). Hydrogen aeroplanes may thus be an option to be pursued. Conclusions and recommendations 28. For the last decades each energy source has been considered one after the other as the unique solution to world energy challenges. Following the oil crisis, nuclear and coal were assumed to solve all the problems. Then renewable energy appeared to be the solution. Today, according to many actors hydrogen is the new panacea and we will soon enter a new era that of the hydrogen economy. 29. While hydrogen (and fuel cells) may be part of the solution, it seems clear that policy makers need to take into consideration the huge problems yet to be solved. As outlined briefly in Annex I, a lot of work still needs to be done. 1 In this study only hydrogen produced by electrolysis has been considered. More futurist routes may be envisaged as explained in Chapter 5. 8
30. In order to inform the debate, the IEA Secretariat is organising a one-day seminar, Towards Hydrogen in the context of the 3-5 March, 2003 CERT/REWP Meetings. 31. A number of recommendations may be made: It is important to avoid creating confusion between the challenges of hydrogen and those of fuel cells. Clearly, there are links between the future of fuel cells and the potential of hydrogen. But the challenges and the timing are different. Separate, but linked, programmes may be valuable for each. It would be a mistake to focus the hydrogen economy only on the transport sector. Clearly this is the most "popular" potential market for hydrogen and fuel cells, but at the same time the least probable in the medium/long-term. Other markets such as power generation seem more realistic even if it would require significant delays. A specific focus has to be pursued on R&D on fuel cells. Technology improvements may contribute to increase competitiveness of fuel cells in power generation beyond what is anticipated in the WEO although, considering the hurdles, perhaps well short of the more optimistic projections. Hydrogen generation is a key challenge where technological breakthroughs are required. Improvement in reforming technology as well as electrolysis or thermal dissociation may have a significant impact on the present market of hydrogen as well on new power generation market and perhaps in the longer-term on transportation. A portfolio strategy is likely to be more effective than a single fuel focus. Thus, future energy systems should be designed in such a way as to be robust enough to include both hydrogen (with its well-recognised and considerable benefits) as well as other (currently more economic and practical) alternatives. 9
ANNEX I What needs to be done 1. Transportation: a. Reduction of fuel cell costs b. Hydrogen storage in vehicles, direct methanol fuel cells or onboard hydrogen production from carbon-based energy carriers c. Infrastructure (a "systems" approach from hydrogen production, distribution, storage and use to ensure a reliable and convenient infrastructure) 2. Stationary applications: a. Reduction of fuel cell costs b. System integration c. Infrastructure 3. Areas of further analysis: a. Life cycle analysis (well-to-wheel) of cost and environmental impact (some publications already available) b. Resource constraints (natural gas as source for hydrogen?) c. Platinum group metal requirements (some publications already available) d. Deployment policies and strategies, especially for infrastructure e. Economic analysis of various technology configurations from fuel supply to end-use sectors taking into account different policy scenarios. 4. Areas for further R&DD and deployment strategies: a. Short term: i. Hydrogen from fossil fuels (up-scaling, cost reduction) ii. Fuel cells (cost reduction, manufacturing technologies, reliability, operational experiences) b. Medium/long term: i. Hydrogen from hydropower, biomass, solar and wind (how to increase potential, cost reduction). Significant cost reductions for renewables would make hydrogen production possible. Biomass might offer a nearer term renewable option for producing hydrogen. ii. Hydrogen from HTGR (cost and acceptance) 5. Hydrogen from photobiological/photoelectrochemical/photochemical processes and/or fusion (very long term tasks) National and International Programmes 6. Strong past and ongoing IEA Member (including EU) country programmes with public and private sector partnerships. 7. IEA Activities: a. Implementing Agreements: Hydrogen, Advanced Fuel Cells b. Implementing Agreements: IEA GHG R&D Programme, Advanced Motor Fuels, several renewable technology Agreements. c. Secretariat activities: 10
Analysis and facilitation of international energy technology collaboration. Energy Technology Perspectives Project for economic analysis of alternative technology configurations and different energy technology policy options. 11