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High price of Hydrogen Fuel

In many countries, the use of hydrogen as an energy source and carrier, as well as the concept of a hydrogen economy, is still in its initial phases. Even though hydrogen fuel was invented many years ago, many people were unaware of its benefits in a variety of industries. However, some countries used hydrogen in the form of town gas for street lighting and residential energy supplies (cooking, heating, and lighting) until the 1960s, and the idea of a hydrogen-based energy system was already formulated in the aftermath of the 1970s oil crisis. Furthermore, hydrogen is a critical chemical feedstock for processes such as hydrogenation of crude oil and ammonia synthesis. The rebirth of interest in hydrogen is largely due to developments in fuel cell technology in the late 1990s. While hydrogen can be used in several ways (mobile, stationary, and portable).

However, the purpose of this discussion is to debate the necessity for hydrogen fuel and its economic implications. Why do we need to use hydrogen for energy when other options are available? Why are hydrogen fuel prices so high if we switch from conventional fossil fuels to hydrogen fuel?

As a clean energy carrier (if created from “clean” sources), hydrogen offers several advantages that are gaining increasing attention as legislative priorities. The creation of a significant market for hydrogen as an energy vector provides excellent solutions for both emissions control and energy supply security. Hydrogen is emission-free at the point of final use, avoiding both CO2 and air pollution emissions caused by transportation.

Hydrogen can contribute to a diversification of automotive fuel sources and supplies by being a secondary energy carrier that can be produced from any (locally available) primary energy source (unlike other alternative fuels, except electricity). It also offers the long-term possibility of being solely produced from renewable energies. Hydrogen could also be employed as a storage medium for electricity generated by intermittent renewable energies like wind. Assuming that CCS(carbon capture and storage) is successfully implemented on a wide scale, clean electricity generation from fossil fuels might be achieved through hydrogen production.

Without a doubt, hydrogen fuel is beneficial to the environment and plays an important role in the energy sector. But why isn’t hydrogen being used to meet all our energy needs?

There are a few issues that are impeding the use of hydrogen fuel on a large and small scale. The cost of hydrogen fuel is expensive because of these impediments. For most governments and businesses, this is not the most ideal, clean, and cost-effective energy source. It’s very volatile in its gaseous condition. While its volatility gives it an advantage over other energy sources when it comes to completing a variety of tasks, it also makes it risky to use and workaround. Some of the major causes of high prices are highlighted.

Production Costs:

The key methods of hydrogen extraction, electrolysis, and steam reforming are both exceedingly costly. This is the main reason why it isn’t widely used over the world. Most hybrid vehicles today are powered by hydrogen energy. To identify affordable and sustainable ways to harness this sort of energy, a lot of study and invention is required. Until then, hydrogen energy would be allocated for the privileged.

Natural gas reforming, coal gasification, and water electrolysis are all proven hydrogen production processes that are used on a large scale around the world. Electrolysis is more expensive; thus, it’s only used when high-purity hydrogen is needed.

Natural gas reforming or coal gasification in centralized facilities with CCS could produce hydrogen in the medium to long term. CCS is required to avoid an overall rise in CO2 emissions due to the production of fossil hydrogen, principally from coal. Since CO2 and hydrogen are already separated as part of the hydrogen production process, the (extra) costs of CO2 capture in connection with hydrogen production from natural gas or coal are mostly the expenses of CO2 drying and compression (even if the CO2 is not captured). Total hydrogen production costs rise by about 3–5% in the case of natural gas reforming and 10–15% in the case of coal gasification when CO2 transport, and storage costs are factored in.
Transportation Costs:

There are several alternatives for hydrogen transportation and distribution, including truck delivery of compressed gaseous and liquid hydrogen and pipeline supply of gaseous hydrogen. For more than 50 years, pipelines have been used to transport hydrogen, and today there are approximately 16,000 km of hydrogen pipelines around the world that supply hydrogen to refineries and chemical plants; dense networks exist, for example, between Belgium, France, and the Netherlands, in the Ruhr area of Germany, and along the Gulf coast of the United States.

Transport volumes and delivery distances determine the technological and economic competitiveness of any mode of transportation. For huge amounts, pipelines are the best solution. The operational cost of pipelines is extremely low. High capital costs, primarily for compressor power. Liquid hydrogen has a high operational cost due to the electricity required for liquefaction (which accounts for 30–60% of overall liquefaction costs and may therefore have a considerable CO2 footprint), but reduced capital costs depending on the amount of hydrogen and the distance travelled.

The distance between liquid and gaseous trailers is also a significant element. The cost of transporting hydrogen is typically in the range of 1–4 cents per kilowatt-hour (0.3–1.3 cents per kilogram). There is no “ultimate best strategy,” as each choice can play a role under specific conditions (e.g., distances, volumes, fueling station utilization, demand for liquid hydrogen, energy prices, density of fueling stations in a region), thus there is no “ultimate best strategy.” The distance to be travelled has the greatest impact on transportation costs, which affect overall supply costs of hydrogen to a considerably greater amount than liquid fuels today.

Due to the high cost of transportation, hydrogen should be produced near to the consumer centers. As a result, the key optimization goal is to reduce average hydrogen transport lengths by strategically placing production plants.

Feedstock Costs:

As feedstock prices have a considerable impact on production costs, projected hydrogen supply costs are very sensitive to the underlying assumptions about their development. As a result, uncertainty increases dramatically with longer-term estimates. The specific hydrogen supply costs in the early phase are high due to the required overcapacity of the supply and refueling infrastructure, as well as the higher initial costs for new technologies due to the early stage of technical learning, at roughly 12–14 ct/kW h (4–4.6 $/kg). In the above-mentioned regions, hydrogen costs range from 10 to 16 ct/kW h (3.6–5.3 $/kg) around 2030, mainly depending upon feedstock. Long-term, until 2050, hydrogen supply costs stabilize at this level, however with an upward trend due to expected increases in energy and CO2 certificate prices. While the cost of fossil hydrogen will climb in tandem with the predicted rise in fossil fuel prices, the cost of renewable hydrogen will fall, eventually reaching a break-even threshold.

Hydrogen generation accounts for 60–80 percent of overall supply expenses. The establishment of refueling stations accounts for around 10% of the total, with the rest going to transportation and liquefaction. Hydrogen becomes competitive in the long run with crude oil prices over 80–100 $/barrel at these supply costs (no taxes, no vehicle costs included). Depending on the scenario, the specific investments for implementing a complete hydrogen supply infrastructure (production plants, transportation infrastructure (pipelines), and refueling stations range from 150 to 190 M$/PJ until 2050, with a trend toward higher numbers in later periods due to higher feedstock prices.

In conclusion, producing cost-competitive and efficient hydrogen fuel cells for automobiles, designing safe tanks to store hydrogen aboard with an acceptable driving range, and developing an infrastructure for hydrogen production, transport, and refueling face three key technical obstacles. Both the supply side (hydrogen production technologies and resources) and the demand side (hydrogen conversion technologies) must undergo major changes at the same time, as one cannot function without the other.

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