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Envisioning a hydrogen economy

Envisioning a hydrogen economy
Hydrogen is used as a clean alternative fuel to hydrocarbons

By Catherine Dominguez

Politicians, economists and environmentalists have long envisioned a hydrogen economy by which we could replace fossil fuels with a low-carbon energy source.

A hydrogen economy promotes hydrogen as an alternative to hydrocarbons to meet the worlds need for fuel and energy without the negative environmental effects.

Proponents argue that hydrogen can be an eco-friendly source of energy to end-users, specifically in transportation applications, since it releases no pollution and no carbon emissions. Whether it is burned or made to react with air in a fuel cell to generate power, the only byproduct is water.

Hydrogen can be used in two forms, either stationary or portable.

Stationary applications include electric grid connection to provide supplemental power, and emergency power system for critical areas or installed as a grid-dependent generator for on-site services, such as in residential homes and hospitals.

Portable applications, on the other hand, can provide power for the transportation sector and charging batteries for the telecommunications industry.

Of these, portable applications are the most promising and competitive so far even without subsidies, Brian Warshay, a research associate at Lux Research, told EcoSeed.

Toward hydrogen economy

Despite the potential, a recent Lux report suggests that the dream of a hydrogen economy remains far from reach.

Over the next two decades, hydrogen fuel cells will only seize a modest $3 billion market of about 5.9 gigawatts, according to Lux Research.

While the cost of hydrogen shapes fuel cell market adoption, hydrogen fuel only accounts for 35 percent of the overall cost ownership for stationary applications and just 21 percent of the T.C.O. for portable applications. Fuel cell capital costs and membrane replacement costs make up most the difference.

Subsequently, it is not the supply chain but the high capital costs of hydrogen fuel cells and the low costs of existing technologies that pose “insurmountable barrier to widespread adoption, except in niche applications,” said Mr. Warshay, who is the lead author of the report, The Great Compression: the Future of the Hydrogen Economy.

To address capital cost concerns, improving the membrane or the component depending on the fuel cells could be the key solution, suggested Mr. Warshay.

The membrane has to be made to last longer so it needs not to be replaced, he added.

In the transportation sector, Mr. Warshay said compression, distribution and storage of hydrogen add to the high cost. Thus, these areas present biggest opportunities for improvement and innovation.

Hydrogen fuel cells market

To date, the hydrogen economy remains in its nascent stages and its market is limited to very few countries across the world.

California, Britain, Germany and South Korea are the nations that currently take the lead in the drive toward hydrogen economy, according to Mr. Warshay.

“There is strong support from the government through incentives, which makes the technology cost-effective and attractive to investors and developers,” he said.

California has a wide-ranging incentive scheme across the state. It provides rebates for plug-in hybrid and zero emission light-duty vehicles, and grants for projects aimed at reducing emissions through clean technologies including hydrogen fuel cells.

In Britain, the government has established hydrogen and fuel cells demonstration programs, which aim to accelerate the development and commercialization of these technologies. According to the Department of Energy and Climate Change, hydrogen and fuel cells have the potential to contribute to the country’s energy and environment objectives of energy security and carbon emission reduction.

Given that cost is the major barrier in realizing hydrogen economy, developed countries are expected to be the early adopters having the financial capacity to support the advancement, said Mr. Warshay.

Nevertheless, in terms of off-grid applications, which can be cost-competitive with diesel, developing countries are most likely to benefit.

Future outlook

Over the next 10 to 15 years, applications of hydrogen fuel cells will mature while costs will drop significantly, projected Mr. Warshay noting that growth will remain sluggish.

By 2030, hydrogen fuel cells for telecom power and backup will hit a $1 billion stationary market, whereas fuel cells of all types for residential, commercial and utility generation will remain inefficient in terms of cost, according to the report.

Meanwhile, portable applications will be worth $2 billion, mostly for use in forklifts and light-duty vehicles, while buses will remain a small market.

“A robust hydrogen vehicle fueling infrastructure is necessary but ultimately insufficient to overhaul the passenger vehicle market,” stated the report.

Overall, hydrogen demand from fuel cells will reach 140 million kilograms in 2030, just 0.56 percent of global merchant hydrogen demand across all industries.

These numbers remain small for such a span of time to pull off hydrogen economy, thus more intensive effort is needed to accelerate its growth and overcome barriers.

Political support would be the key driving force, Mr. Washay told EcoSeed. Governments should come up with sound policies to scale up the technology and encourage massive utilization.

Moreover, development of global facilities for hydrogen fuel cells will help it become more competitive along with other dominant renewable energy sources, such as wind and solar.

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