In November, leaders in new mobility convened at CoMotion LA 2021 for a series of discussions and presentations rethinking how people and goods move in and between cities and places around globe. In a panel moderated by Sarah Busch of the Green Hydrogen Coalition, Shell Hydrogen Commercial Manager Abhishek Banerjee and Underground Storage Market Leader at WSP USA Scyller Borglum discussed how green hydrogen can revolutionize the global supply chain. The two highlight that adoption of green hydrogen at ports can help scale up the market and reduce global emissions. The full discussion can be found here.
Sarah Busch: Largely, hydrogen has been fossil fuel-based in terms of how it's produced. We like it because it's very versatile, and it can store energy for a long period of time. There's a lot of potential for helping to decarbonize the energy space, as well as those kind of hard-to-hit areas like shipping. Abhishek, what are you seeing around the production of hydrogen?
Abhishek Banerjee: I just want to start by saying we do produce hydrogen today. In the US alone, we produce approximately 10 million metric tons of hydrogen per year. It's about 1/7 of global hydrogen production. Hydrogen plays a very critical role to meet our societal needs. For example, hydrogen is used as a feedstock for refining that is used to meet our energy needs today. Hydrogen is used as a feedstock to produce ammonia that is used as a fertilizer to keep up with the growing population and food. Ammonia is used to produce methanol that is used for various applications for household goods. The question becomes how do we produce not just hydrogen, but how do we produce renewable hydrogen?
At Shell, I think one of the biggest questions is how do we make green hydrogen economical? I’ll give you a couple of salient projects that we're working on. The first one right now is a project in Germany in the Rhineland refinery. It's a 10 megawatt PEM electrolyzer. It's the first at-scale electrolyzer, and it also is coupled with the grid. Electrolysis offers a unique advantage where you could do what we call sector coupling. We’re now coupling the power sector with production of clean hydrogen. A project that was just announced in NortH2 is offshore wind. It's about a three or four gigawatt offshore wind project, again coupled with electrolysis.
In conclusion, I think the question becomes how to make renewable hydrogen competitive? I think that's about a minimum viable scale for the project. It has to be coupled with investable policy, meaning that you've got clear policy signals that would basically compete with where you value decarbonization, and how it competes with the incumbent: gray hydrogen.
Tell me more about storage and transport, this vision of bringing on green hydrogen and other types of hydrogen to the market and bringing them to commercial scale.
Scyller Borglum: I'll talk briefly about subsurface storage. Did you know that we store in the Strategic Petroleum Reserves millions of barrels of crude oil in salt caverns? On the Texas Gulf Coast, we have enormous salt domes into which we develop salt caverns. These are human made. What you do is drill a well, then use fresh water to leach it out. Salt is wonderful as a storage unit because it is a mineral. So, if there were any fractures from the drilling process, it actually self-heals because it re-crystallizes. The only access point is through a wellbore which is what makes them such a safe, reliable storage unit. There's very limited surface access. You don't have problems with weather because they're subsurface. You also are able to make sure that they aren't subject to any terrorist or vandalism threats.
You can also store in depleted oil and gas reservoirs, injection wells, or in hard rock caverns. For the most part, we're going to talk about salt caverns. You can store your hydrogen at about the same pressure and temperature specifications as you would your natural gas, but you need about three times as much hydrogen volumetrically as you do natural gas to equal the energy density.
Pipelines are one of the missing links right now in our in our hydrogen economy. Given the volumes that we are looking at for utility-scale usage of hydrogen, we need pipelines. We need pipelines connecting the production location to the storage location to the use location. When you have highly dense areas like Los Angeles, you aren't likely going to have a large scale hydrogen production facility right next to where you are going to want to use it. If your point of use is far from your production and your storage, you're going to want storage because you need to create some slack in the system. You want your production location, your storage location, and then your point of use location, but those will generally need to be connected by pipeline because the volumes we're talking about are simply not feasibly going to be transported via rail or truck.
There's so much potential for this to move forward and for industry to scale, like you're saying and do it safely. What are a few of the barriers? What do you focus on most lately?
Abhishek Banerjee: The way I think about widespread adoption of hydrogen is in two sort of areas. One would be how do we displace existing gray hydrogen with renewable hydrogen? Then, how do we have widespread adoption for emerging industries? So, existing sectors and emerging sectors are the two pronged approach.
The first thing we would have to focus on are clear policy signals and targets with a time horizon on it. It should be an investable policy, meaning that the depth of decarbonization is valued. I would say it has to focus on market fundamentals because we see hydrogen as energy vector, meaning that it can be stored can be transported. It's very resilient, and it might be quite regional as well. Focusing on the market fundamentals will be quite important. It's this is an overused phrase, but a chicken and the egg is true. What comes first: infrastructure or production? That has to be coordinated and sequenced.
Lastly, but really important: customer adoption. We are a customer-centric organization at Shell. We offer a mosaic of different solutions in the renewable energy solution space. I think the jury's still out as to where hydrogen is going to play the most critical role, but we do see hydrogen will play a role. It's a matter of being very deliberate and purposeful wherever we choose.
Scyller Borglum: I'll add one point. As a recovering politician, I think one of the one of the places that we need to take a good look at for barriers is currently a lack of dependable, reliable regulatory framework. In any other transport setting, we have the regulatory framework in place that we use be it natural gas, propane, or crude oil. So, companies like engineering consulting firms can go in. We can start the permitting process and help companies interested in doing this work move it forward. In a total absence of that framework, we can take a good guess, but we don't have anything specific to hydrogen. You can use CO2 sequestration or natural gas as your guiding principles, but big companies aren't going to want to make a massive infrastructure investment if they're not sure exactly what the rules are. Nobody wants to get a pipeline halfway built only to have it rejected.
How is hydrogen going to help ports, which are relying mostly on fossil fuel sources?
Scyller Borglum We have emissions on the order of two to three percent come from the shipping industry. Even though there has been a portion who have converted to liquefied natural gas, a considerable amount, still use fuel oil.
When you're in port, there are a number of considerations. Number one: depending on which way the wind is blowing, you could have the emissions from the stack blowing in the face of the crane operator. If that's the case, then you either have to move the ship, you have to wait, or you have to adjust how you're offloading the ship. Well, that that takes time, and ships don't make money sitting in port. They make money when they're out doing their doing their business. We also recognize that there are health and safety issues of the people who work in the ports.
In terms of the practical application, there are simple components to consider. How are you going to get the hydrogen there? You refuel ships from the water side, not from the port side. That would need to be solved for. You have to redesign the ships in some capacity.
Really, it'll come down to how can we turn over the fleet that is in existence. Many of these ships will not be able to be retrofitted. We are looking at a turnover of these ships because they will, like our vehicles, need to be redesigned completely. An example would be right now they use shipping fuel to help ballasts the ships. If you change the mechanism by which a ship is powered, then that's something that has to be reconsidered. None of these problems are insurmountable and they're being worked on as we speak, but it's rubber hits the road kinds of issues to consider.
Abhishek, I'd love to hear more about your projects at Shell. What you guys are doing in the ports right now around decarbonization? What more could we do?
Abhishek Banerjee: One of the projects that we've just launched this year is called Project ZANZEFF. It's basically zero emission and near zero emission freight projects. This is a really prime example of public private partnership. It shows you how you can overcome some of these concomitant challenges of starting a project.
The real objective of this project is twofold. First is to relaunch, if you will, the freight market for zero emission transportation using hydrogen as a fuel. Essentially, it's a heavy duty fuel cell electric vehicle. It uses pure hydrogen as a fuel to propel with basically zero emissions. Right now, in the Ports of LA and Long Beach, there are about 16,000 trucks. It's one of the largest freight corridors with a lot of shipping containers.
Also, Shell has just built three heavy duty refilling stations. It's about 1700 kilograms a day, roughly three times the capacity of our existing stations. A consortium of this type can really enable that scale at a commercial level.
Where would you like to take it next? If you could have your dream project at the ports?
Abhishek Banerjee: I think the ports will be a real cornerstone of the hydrogen strategy. The reason I say that is, when we think of hydrogen right now, one of the one of the predominant challenges is how does hydrogen become competitive? One of the ways that you could mitigate that is by having anchor customers. Across the ports, if you've got industrial clusters, you could set up collocated hydrogen production, and you could rebuild that demand. The ports would be a segue for import-export.
The hydrogen as a hub concept will take off to the ports. With those economies of scale, then you can really have a solution which is competitive and resilient. We talked about supply chain as well, I think that that's one vision where you could connect the industrial clusters along with ports. One of the elegant solutions for hydrogen is the fact that you can couple demand segments with complementary demand profiles. You could have a production asset which is serving an industry or refinery, and then you could have flex volumes that could actually be used to decarbonize transportation.
Did you have any more you wanted to add around decarbonizing the ground transportation part of our supply chain?
Abhishek Banerjee: What we see for ground transportation, in the light duty in the passenger vehicle space, we've seen a tremendous pace in progress. If I just go back to 2012, our stations were designed for about 200 kilograms a day capacity. In 2017, we double that at half the cost. In 2022, we predict further doubling the capacity and decreasing the cost by 50 percent. A lot of this is possible because now we're seeing the inflection point in hydrogen mobility. We can see that the pace of progress and the lessons learned are seeping in.
Right now in California, we've got about 9000 fuel cell electric vehicles. Last year, the Shell portfolio actually dispensed 100 percent renewable hydrogen. You can see an inflection point where you're decarbonizing the supply chain. More technologies are turning into products. You're seeing policies turning into markets. It's really a market-based mechanism. We're very encouraged to see the customer adoption at its infancy.
If I had to put you on the spot, in what year do you think hydrogen is going to reach commercial scale viability in the market?
Scyller Borglum: I would put my number more on 2040.
Abhishek Banerjee: I would concur with Scyller on that as well. I think if we if we continue to have the shared objective, I think we could get there in a decade or two.
Thinking about the future of this mostly low-carbon hydrogen-powered future, how are you feeling?
Abhishek Banerjee: I feel optimistic and encouraged. If we continue to share the common objective of decarbonization as a society, I think hydrogen will play a role. I'm cautiously optimistic, but I'm optimistic.