If there’s one thing that the ongoing crisis in Ukraine has made abundantly clear is that dependence on natural gas and foreign oil is folly if you’re incapable of sourcing your own production at home. That much is clear after a quick scan of news headlines coming out of Western Europe, natural gas prices have spiked some 60% in just a few short weeks. Germany, in particular, has been hit hard by the Russian-Ukrainian conflict, Europe’s largest economy is highly dependent on Russian gas–some sources claim Russia is responsible for roughly half of Germany’s current energy need. The German government is currently scrambling to alter its energy policy in order to safeguard national security. It’s possible this could open the door for hydrogen to gain a foothold in the larger energy market, which could prove to be a precursor to hydrogen playing a larger role in the future of transportation.
Wall Street investment bank, Goldman Sachs, believes hydrogen has the ability to turn into a trillion-dollar market in the future. Michele DellaVigna, the bank’s commodity equity business leader for Europe, the Middle East, and Africa, told CNBC earlier this week “If we want to go to net-zero we can’t do it just through renewable power. We need something that takes today’s role of natural gas, especially to manage seasonality and intermittency, and that is hydrogen.” Goldman believes hydrogen could account for at least 15% of the global energy market in the future.
Germany had plans to phase out nuclear power by the end of 2022 while coal-fired power plants were due to shutter by 2030. In light of developments, Germany is quickly walking back some of those targets, with German Chancellor Olaf Scholz and economy minister Robert Habeck even going so far as to float the idea of keeping nuclear power plants running longer, along with mapping out plans to build two new Liquified Natural Gas terminals and increasing the country’s ability to stockpile LNG. The message is clear, Germany is aiming to reduce its reliance on Russian natural gas in a big way. Germany aims for wind and solar to account for 80 percent of power generation by 2030, but those are intermittent energy sources that still lack scaleable long-term storage solutions.
The Opportunity Play For Hydrogen Power
LNG is the least polluting natural gas and has long been considered a “bridge” fuel to net zero, but the dependence on Russian sources may have soured LNG’s future role and alternatives are being sought. According to Oilprice.com, hydrogen is quickly becoming a part of the conversation due to its versatility. Hydrogen can be used as an energy carrier, fuel for transport, or used to generate electricity for heating.
The problem with hydrogen is current methods for producing green hydrogen involve using electrolysis, where an electric current splits water molecules into oxygen and hydrogen. If the electricity used is from a renewable source like wind or solar it’s considered green. The other method is termed blue hydrogen and it’s produced using natural gas. C02 emissions are subsequently captured, but the process has been criticized by some as a play by the oil companies to remain relevant.
There are other methods being explored, in particular, Japan is leading the way as it makes big bets on hydrogen to secure its energy sovereignty in the future. A country with little to no hydrocarbon resources, Japan has had a national hydrogen strategy in place since 2017, but the country has been actively researching hydrogen technologies since the ’70s. The country has one of the largest green hydrogen plants in the world located in Fukushima, while the city of Fukuoka is the only place in the world working to create and capture hydrogen from household wastewater and sewage.
If the world begins large-scale investment into developing hydrogen infrastructure and refining existing technology when it comes to sourcing hydrogen but also being able to fuel combustion engines for ground and sea transport, it’s only logical that we start to see the trickle-down effects into the consumer market. And if that means we get more zero-emission 5.0L V8 engines, then let’s do it.
