Hydrogen: The Key to Achieving Net-Zero Emissions?
What the future holds for hydrogen, the fuel that could play a pivotal role in energy transition.
At Theia Ventures, we’re excited about the future of mobility and what this would mean for the climate. In the past two years, we’ve seen a flurry of activity in the electric mobility sector, ranging from i) hardware and SaaS platform infrastructure, in battery swapping and charging stations; ii) e-mobility-as-a-service: vehicle financing, ride-sharing services and network operators specifically targeted towards 2 and 3 wheelers; iii) manufacturers of electric vehicles; and iv) end-of-life batteries focused on the last mile, as well as v) new battery chemistry and sustainable energy mobility, which go beyond lithium-ion, such as zinc, polymer and hydrogen.
The transport industry is the third-highest contributor to GHG emissions. Powering a green transition, India is moving towards a ‘zero or low carbon emission’ transportation model by promoting the use of alternative fuel vehicles and EVs. Electric mobility, which had always been considered as a future aspiration, is now here. But there has been a lot of talk about hydrogen as the ‘new future’ of mobility. How realistic is this notion, and what market trends are leading to this?
Across the globe, Europe and the US are leading on the R&D for applied hydrogen technologies, while Japan and Korea are investing heavily to become global hydrogen-use champions. The EU hydrogen strategy is part of the European Green Deal which aims to achieve the following: i) by 2024, the production of green hydrogen should increase to 1 million tons per year and then to 10 million tons per year by 2030; ii) from the period between 2030 and 2050, green hydrogen is to be produced on a systemically relevant scale. As the global green hydrogen ecosystem matures, the cost of hydrogen production is expected to decrease and become comparable with fossil fuels. The world’s first large-scale alkaline electrolyser facilities in the world are in India, but these low carbon technologies are yet to be deployed at scale. Hydrogen production has been increasing along with the global demand – making it viable to invest in green hydrogen.
What’s happening in India:
India had an early start by announcing the first Hydrogen and Fuel Cell Roadmap in 2006 followed by R&D funding.
In 2021, on Independence Day, India’s PM formally announced the National Hydrogen Mission, emphasizing the greater use of ‘Green Hydrogen’ to ensure energy security.
The emphasis on Green Hydrogen exists due to a dual objective – it is a truly zero-carbon fuel and is expected to emerge as a $12-13 trillion global industry by 2050. The Mission is aimed to ramp up the production of green hydrogen used for various end-use sectors such as both manufacturing and transport. Reports by the Ministry of New and Renewable Energy (MNRE) and the stated vision documents indicate a strong global green hydrogen economy for the nation. India can leverage this initiation time to develop indigenous technologies for the global green hydrogen ecosystem and be a front-runner in developing local manufacturing capabilities. The future benefits of the energy transition are dependent on the creation of an innovative ecosystem powered by emerging technologies.
Developing hydrogen at scale is receiving a huge push from countries, companies and multilateral organisations. The ‘grey’ hydrogen production technologies are mature, but many ‘green’ hydrogen technologies are still at a stage of emergence. According to the New York Times, blue hydrogen is still not completely emissions-free due to a large amount of natural gas required for carbon capture.
In India, the majority of hydrogen produced is grey, which is also the most cost-effective. However, in the future, it is assumed that green hydrogen extract costs would lower over time - the low renewable electricity tariffs and dwindling supplies of natural gas are the key driving factors.
Hydrogen for Mobility:
Hydrogen forms an interesting use case for the transport sector. While the light passenger vehicles (2W, 3W) are going to reach the electrification stage, heavy-duty vehicles have a long road ahead. The limiting factors for the batteries include energy-to-weight ratios and the charging speed of large batteries versus the smaller rate of hydrogen refuelling.
There is an important distinction to be made between i) hydrogen as a fuel; and ii) hydrogen as fuel cells. Hydrogen fuel (like diesel), contains chemical energy. This energy can be released by creating a chemical reaction. In the case of diesel or hydrogen-powered engines, that chemical reaction is combustion or burning the fuel. In a fuel cell vehicle, hydrogen fuel is combined with oxygen. While the combustion in hydrogen or diesel-powered engine is converted into mechanical energy, in a fuel cell vehicle, the chemical energy from the hydrogen and oxygen is converted into electrical energy.
The vehicles powered by hydrogen fuel cells have an edge on electric trucks, and this will come down to cargo capacity. The top American truck manufacturer, Daimler, is betting on fuel cells that generate electricity from hydrogen. These fuel cells have a significant advantage as they produce no tailpipe emissions, and the fuel tanks can be filled as fast as the diesel ones. The batteries take longer – while the hydrogen fuel cell vehicles (FCEVs) can be recharged between 5-15 minutes, versus the well over 90 minutes is required for battery electric vehicles (BEVs). Additionally, hydrogen fuel cell vehicles have more range than their electric counterparts. This strong growth in the segment of heavy-duty trucks is a huge opportunity to transition to clean energy, however, hydrogen-powered trucks (using hydrogen fuel cells) are technically feasible but the costs are yet to stabilize.
Moreover, hydrogen refuelling stations are an integral part of the hydrogen supply chain considering the vehicular applications. The small refuelling stations can refill 10-20 vehicles and have a capacity of 50-100kg/day. In future with the adoption of FCEVs and the market is mature, there will be a need for larger refuelling stations of capacity 2000 kgs/day. In particular, heavy-duty vehicles in India are not fuel-efficient as compared to peer geographies like the USA, China and Europe. This has led to higher fuel consumption and higher fuel costs. Around 90% of road freight movement (in terms of vehicle kilometres travelled (VKT)) uses diesel as a fuel, which is a significant source of pollution in India. This creates an opportunity to switch to cleaner fuels - hydrogen-fuel-cell electric vehicles.
In other transport innovations, the Indian Railways has begun inviting bids to develop hydrogen fuel cell-based technology that can be used to upgrade existing diesel-powered trains. The project will entail retrofitting Diesel Electric Multiple Unit (DEMU) in 89 km Sonipat-Jind section. Presently, very few countries are using this method, while trials are being conducted in Germany and Poland.
Hydrogen Use Cases in Mobility and Manufacturing:
The hydrogen ecosystem has found many takers in large manufacturing houses. While Shell has launching hydrogen refuelling stations in Europe, it is also working to expand in the heavy-duty transport sector in the USA. British Petroleum (BP)’s Teesside plant in northern England will have a capacity of up to 1 gigawatt (GW) of so-called blue hydrogen, about a fifth of Britain’s target of 5 GW of hydrogen capacity by 2030. Swedish steel company, SSAB, has announced to deploy the first commercial-scale hydrogen direct reduction steel plant in the world by 2026. The applications are also being explored in the shipping sector with Maersk, a shipping major, foraying into decarbonising sea-borne freight by using hydrogen as a fuel. Siemens is also expanding its activity in hydrogen, by developing hydrogen-fuelled turbines to facilitate clean electricity generation.
Mitsubishi Hitachi Power Systems has announced its plans to switch natural gas turbines to run on 100% hydrogen in Los Angeles before 2035. In the US, C truck manufacturer, Nikola, has already received orders for 14,000 trucks. Daimler has begun testing a prototype called ‘GenH2’, a long-haul truck capable of going 600 miles between visits to the hydrogen pump. It has also entered into a joint venture with Volvo Trucks, to develop fuel cell systems that will convert hydrogen to electricity to power long-distance trucks. Companies such as Hyzon Motors focus on pure-play hydrogen mobility for the commercial vehicle market (heavy-duty trucks and buses) using their proven and proprietary hydrogen fuel cell technology.
In India, automakers like Tata Motors and Mahindra are testing hydrogen prototypes of pick-up vans, buses and utility vehicles. NTPC has announced that it will set up the country’s first green hydrogen mobility project in the Ladakh region. Reliance Industries announced the investment of $10 billion in clean energy which included setting up giga factories to produce fuel cells and green hydrogen. Adani Enterprises has joined forces with Italian conglomerate Maire Tecnimont to scale up green hydrogen production for usage in the chemicals and ammonia value chains.
What are the Challenges of adopting Hydrogen at Scale?
The main challenge centres on the high cost of hydrogen production. The infrastructure for the production and supply of hydrogen for industrial use exists in India, but it is not sufficient to support the widespread use of hydrogen as an energy carrier. In addition, adopting hydrogen at scale needs to also incorporate the safe storage, efficiency and compactness of the fuel, as the requirements from hydrogen storage is different for stationary and vehicular applications. Delivery technology for hydrogen infrastructure is currently available commercially, and several companies deliver bulk hydrogen in some countries. Some of the infrastructures is already in place in India, because hydrogen has long been used in industrial applications, but it is not sufficient to support widespread consumer use of hydrogen as an energy carrier.
For the transportation sector, the weight and size should be low, refuelling should be fast and the hydrogen storage system should have most of the characteristics which current fossil fuel vehicles have like range, passenger space, safety, cost, acceleration/deceleration, start and stop, refuelling time, life and cost. Hydrogen refuelling stations need to take into account infrastructure costs and designed considering the risk of fire and explosion.
Ultimately, the mainstream use case for hydrogen both as a fuel and fuel cell is still 5-10 years in the future, but there are great start-ups in India working in this domain, who give us a peek into how this future transformation could take place. Ossus Bio has developed a bio-electrochemical process to extract green hydrogen from wastewater; while h2e Power Systems is developing India’s first integrated hydrogen fuel cell three-wheeler using PEM (proton-exchange membrane) fuel cell and innovative hydrogen cylinders.
We at Theia Ventures look forward to seeing this space evolve as further R&D and policy shifts help to move us in the direction of climate-friendly, greener and more efficient fuels such as hydrogen, to power both manufacturing industries and consumer mobility. This will also lead to improved air quality, better public health, enhanced logistics productivity and a growth in employment opportunities.