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Energy Transition

Further support is needed to get low-carbon hydrogen projects off the ground. (Image source: Adobe Stock)

A new report from the IEA finds that investment and projects in low-emissions hydrogen are growing, but it still accounts for less than 1% of total hydrogen production.

The IEA’s annual Global Hydrogen Review 2024 finds that the momentum for low-emissions hydrogen is growing, as illustrated by a wave of new projects, despite challenges due to regulatory uncertainties, persistent cost pressures and a lack of incentives to accelerate demand from potential consumers. The number of projects that have reached final investment decision has doubled in the past 12 months, which would increase today’s global production of low-emissions hydrogen fivefold by 2030. The total electrolyser capacity that has reached final investment decision now stands at 20 gigawatts (GW) globally. Global electrolyser manufacturing capacity doubled in 2023, with China accounting for 60% of this.

If all announced projects are realised worldwide, total production could reach almost 50 million tonnes a year by the end of this decade. However, this would require the hydrogen sector to grow at an unprecedented compound annual growth rate of over 90% between now and 2030.

Lack of clarity on government support, along with uncertainly around demand and regulatory frameworks means that installed capacity for electrolysers and low-emissions hydrogen volumes remain low, with most potential production still in planning or early-stage development, with some larger projects facing delays or cancellations due to these barriers along with permitting challenges or operational issues.

“The growth in new projects suggests strong investor interest in developing low-emissions hydrogen production, which could play a critical role in reducing emissions from industrial sectors such as steel, refining and chemicals,” said IEA executive director Fatih Birol. “But for these projects to be a success, low-emissions hydrogen producers need buyers. Policymakers and developers must look carefully at the tools for supporting demand creation while also reducing costs and ensuring clear regulations are in place that will support further investment in the sector.”

The report highlights a gap between government goals for production and demand, as well as technology and production cost pressures, with progress in electrolysers in particular stalling due to higher prices and tight supply chains. A continuation of cost reductions relies on technology development, as well as optimising deployment processes and moving to mass manufacturing to achieve economies of scale.

Unabated fossil fuels continue to dominate

Despite the growth in momentum, the report points out that low-emissions hydrogen accounted for less than 1% of total hydrogen production in 2023. Producing renewable hydrogen today is generally one-and-a-half to six times more costly than unabated fossil-based production, the IEA notes. It forecasts that hydrogen production is likely to continue to be largely dependent on unabated fossil fuels this year, with unabated natural gas accounting for around two-thirds of total production. The Middle East is a key player, producing 20% of all hydrogen from unabated natural gas.

China leads in terms of production, accounting for almost 30% of the global total, followed by the USA and Middle East with 14% each, and India with 9%. Total hydrogen production reached 97Mt in 2023, and could approach 100Mt by the end of 2024.

Industrial hubs – where low-emissions hydrogen could replace the existing large demand for hydrogen that is currently met by production from unabated fossil fuels – remain an important untapped opportunity by governments to stimulate demand, the IEA says.

The Middle East saw stronger growth in hydrogen demand than other regions (more than 6% growth year-on-year, due to an increase in demand in refining and methanol production). The region accounted for 14% of hydrogen use in 2023. The Middle East was the second largest consumer of hydrogen in industrial applications after China, with 4% growth, mainly driven by methanol production.

ZSW and Ecoclean employees jointly celebrated the commissioning of the first EcoLyzer. (Image source: Ecoclean GmbH)

The Zentrum für Sonnenenergie- und Wasserstoffforschung Baden-Württemberg (Centre for Solar Energy and Hydrogen Research Baden-Württemberg) and Ecoclean GmbH have brought the first production-ready EcoLyzer electrolyser into operation for green hydrogen production

The P200, which consists of two modular units and has an output of one megawatt, for the production of around 200 Nm³/h of hydrogen, is based on a modular system concept that the partners developed together as part of the "EcoLyzer BW" joint project, the aim of which was to develop an internationally competitive electrolysis system for the series production of green hydrogen. The modular concept enables the cost-efficient construction of plants with a system output of 1 to 20 MW close to the energy source.

"We had our first contact with the ZSW and hydrogen around three years ago and today we are producing the first green hydrogen with the P200," said Manfred Hermanns, director Sales & Customer Services at Ecoclean GmbH. "The collaboration with the ZSW helped us enormously to develop a product ready for series production and put it into operation in such a short time."

After the remaining test phase of the EcoLyzer, it will be delivered to the Rheinisch-Westfälische Technische Hochschule (RWTH) Aachen, where it will produce green hydrogen for the Chair of Thermodynamics of Mobile Energy Conversion Systems (TME).

Efficient hydrogen production

Technologically, the EcoLyzers are based on a system technology for alkaline pressure electrolysis developed and optimised by ZSW over the last 10 years. In contrast to other electrolysis processes, this technology for efficient hydrogen production does not require any resource-critical raw materials such as precious metals and rare earths. In addition, it can be easily scaled up to higher performance classes and is characterised by low-maintenance operation.

Parallel to the development of the electrolysis system, the machine and plant manufacturer has built up production capacities for the series production of electrolysers, which are already available on the market. In the first stage, production is designed for an output of 200 MW per year and can easily be doubled depending on market developments. The modular design enables cost-effective production of the electrolysers with comparatively short delivery times. They can be easily adapted to different applications in the areas of mobility, industry, energy and neighbourhood supply for on-site hydrogen production.

Hilko den Hollander and Stefan Kranz, global energy industry managers, KROHNE. (Image source: KROHNE)

In an exclusive article for Oil Review Middle East, Hilko den Hollander and Stefan Kranz, global energy industry managers, KROHNE, discuss the vital role of measurement technology in hydrogen custody transfer

Hydrogen is gaining traction as a versatile energy carrier that can help to decarbonise industries ranging from chemicals to heavy industry. Its applications are diverse, from powering fuel cells to being used as a feedstock in chemical processes. However, the successful integration of hydrogen into the global energy infrastructure hinges on critical aspects, such as precise and reliable measurement technology. From ensuring accurate custody transfer to complying with international standards and avoiding carbon emission penalties, measurement technology is one of the linchpins that holds the hydrogen economy together.

Custody transfer is a vital phase in the supply chain of any energy commodity, involving the precise measurement of the quantity and quality of the commodity being transferred. For traditional hydrocarbons, well-established technologies and standards exist to facilitate this process. However, the introduction of hydrogen and other low-carbon energy carriers necessitates new approaches. Hydrogen's unique properties, including its low density, high diffusivity, and potential for material embrittlement, present significant challenges in production, transportation, and storage. Addressing these challenges requires advanced measurement technologies that can ensure the accuracy and reliability of hydrogen handling, particularly during custody transfer—the point at which ownership of the energy commodity changes hands.

Accurate measurement essential

Accurate measurement during custody transfer is essential for several reasons. Firstly, it ensures that both the buyer and the seller are protected in the transaction, with the correct amount of hydrogen being accounted for. Secondly, accurate measurement is crucial for regulatory compliance, particularly in light of global standards and legislation that govern the hydrogen economy.

Beyond the economic implications, accurate measurement is also critical for ensuring safety in hydrogen custody transfer. The hazardous nature of hydrogen necessitates the use of advanced measurement systems that are not only precise but also equipped with diagnostic and monitoring features to detect potential issues before they escalate. Adherence to global regulations governing the handling and transportation of hydrogen is essential for avoiding legal liabilities and ensuring the safe and efficient transfer of hydrogen.

As the hydrogen economy continues to develop, the role of measurement technology will become increasingly important. The industry is moving towards greater digitalisation and automation, with advanced sensors and data analytics playing a key role in optimising custody transfer operations. Future developments in measurement technology are likely to focus on enhancing accuracy, reliability, and integration with digital platforms for real-time data analysis.

Moreover, as hydrogen production and distribution networks expand globally, there will be a growing need for standardised and scalable measurement solutions.

Companies like KROHNE are developing the advanced technologies needed to address these challenges, providing measurement solutions that are both accurate and compliant with international standards.

By adhering to global standards and leveraging advanced measurement tools, the energy sector can support the safe, efficient, and sustainable transfer of hydrogen, paving the way for a cleaner and more secure energy future.

The full article is published in the latest issue of Oil Review Middle East.

The SLB digital sustainability platform will enable industrial companies to more easily measure, report and verify their emissions. (Image source: SLB)

SLB and Aramco have signed an agreement to co-develop, commercialise and utilise digital solutions to help mitigate greenhouse gas (GHG) emissions in industrial sectors

These solutions will be integrated within SLB’s digital sustainability platform, building on the collaboration announced in 2022. They include Aramco’s in-house Combined Heat Power (CHP) optimisation solution that could potentially improve energy efficiency, and Flare Monitoring System (FMS) solution to mitigate field emissions, as well as a new co-developed decarbonisation planning solution for the forecasting of emissions, and simulating scenarios that aims to determine optimal GHG emissions mitigation pathways. These solutions are expected to leverage SLB’s digital sustainability platform’s security, data management, analytical, and AI capabilities for access at global scale.

Effective emissions tracking

The SLB digital sustainability platform will enable industrial companies to more easily measure, report and verify their emissions in the drive to net zero, not only assisting customers in ensuring compliance but also enabling them to implement more strategic decarbonisation actions, such as enhancing energy efficiency, reducing methane emissions and advancing carbon capture, utilisation and storage (CCUS) initiatives.

“Data is essential to support increasing calls for emissions transparency, and taking decisive actions on decarbonisation investments,” said Rakesh Jaggi, president of Digital and Integration, SLB. “The digital sustainability platform provides the means to leverage data at scale to drive emission reduction outcomes. We aim to expand the SLB suite of solutions with Aramco’s innovative technologies.”

“For several years, Aramco has been working towards mitigating GHG emissions from its operations with its own internally developed technologies,” said Walid A. Al Naeem, Aramco Engineering VP & chief engineer. “This agreement marks another milestone in our partnership with SLB, to bring our innovation and expertise to the global energy and industrial market.”

New research from Rystad Energy highlights the potential of electrification in reducing emissions in the upstream oil and gas industry

Converting upstream oil and gas production facilities to run on electricity powered by renewables or natural gas that would otherwise be flared could cut more than 80% of associated emissions, according to Rystad Energy.

The energy consultancy notes the success of Norway in reducing emissions from rigs and other assets by 86% through electrification, with plans to cut emissions from the continental shelf by 70% by 2040, thanks to its abundant renewable energy resources.

Other producing countries may face logistical barriers when converting assets, including significant distances from the mainland, a lack of power grid infrastructure and limited renewable power capacity.

The role of premium energy basins

‘Premium energy basins’ (PEB) – a term coined by Rystad Energy to describe oil and gas basins with ample hydrocarbon reserves and the potential to incorporate environmentally friendly practices – could play a major role in reducing upstream emissions, with the Middle East home to the top two PEBs. If PEB assets electrify and reduce emissions by 50%, a total of 5.5 gigatonnes of carbon dioxide (Gt of CO2) would be avoided by 2050. The 28 PEBs identified in the report offer estimated total emission savings of about 1.3 billion tonnes of CO2 between 2025 and 2030. The top 10 PEBs (by emissions savings) alone account for over 80% of these savings with the Middle Eastern Rub al Khali (370 million tonnes of carbon dioxide equivalent [CO2e]) and Central Arabian (251 million tonnes of CO2e) leading the rankings. Electrification in these predominantly onshore basins, if adopted more widely, would largely be driven by drawing power from a clean onshore grid.

Electrification requires careful planning, including the selection of optimal technologies, assessment of total costs and strategies to ensure a continuous energy supply, particularly in remote locations with limited grid access.

Economic and financial viability must also be prioritised. A proactive approach to electrification can enhance operational efficiency and open new revenue streams through the sale of excess renewable energy.

“As the world confronts the pressing issue of climate change, the oil and gas industry is under increasing pressure to minimise its carbon footprint and align its practices with global sustainability objectives. Where it’s possible and economically viable, electrification has great potential to lower the industry's emissions while maintaining production output,” said Palzor Shenga, vice president of upstream research with Rystad Energy.

Reducing flaring could also be an effective way of reducing upstream emissions for both electrified assets and assets with limited electrification potential, Rystad notes. Around 140bn cubic metres per annum of gas has been flared globally in the last 10 years, equivalent to around 290mn tonnes of CO2e emissions annually, mainly accounted for by major producers in North America, the Middle East and Africa.

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