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Big Oil Seeks Redemption in the Hydrogen Revolution

Alternative Energy

What’s a fossil fuel company to do when the world is planning to give up on fossil fuels? Join the revolution, of course.

That helps explain the enthusiasm of Equinor ASA, Royal Dutch Shell Plc and PetroChina Co. about getting in on the switch to a hydrogen economy. For a century, oil companies have spent colossal sums of money delivering volatile liquid fuel to the power and industrial sectors. If hydrogen is supposed to replace petroleum in that equation, no one has better expertise than Big Oil.

That situation offers both opportunity and danger. As my colleague Clara Ferreira Marques has written, the European Union’s plans to spend 470 billion euros ($558 billion) switching to hydrogen by 2050 can sound almost impossibly ambitious. Still, the oil and gas sector typically spends around $500 billion developing new fields every single year. Shifting just a small share of the fossil fuel sector’s spending into hydrogen should be enough to drastically increase the technology’s scale and competitiveness.

A Sense of Perspective

Spending $351 billion by 2050 to commercialize green hydrogen in Europe sounds expensive — but the energy industry invests nearly five times that amount in a typical year

The risk, though, is that Big Oil doesn’t really have the climate’s interests at heart. Blue hydrogen — produced from fossil fuels, but with its carbon dioxide byproduct sequestered underground or consumed in other processes — may offer an intermediate step toward zero-carbon green hydrogen. On the other hand, it may end up like coal power with carbon capture and storage: a technology hailed a decade ago as a promising way of reducing emissions but now seen as a costly dead end that provided cover for a last burst of dirty coal investment in Asia.

With all the excitement around green hydrogen, there’s even a chance that we miss the strides being made by its highest-emission cousin, grey hydrogen — in particular the variety made from gasification of coal. That process already accounts for about 5% of China’s coal consumption. India will invest 4 trillion rupees ($54 billion) in the technology by 2030, with an aim of converting 100 million metric tons to natural gas and chemicals, coal minister Pralhad Joshi said earlier this year.

Not So Clean

Grey hydrogen typically causes more emissions per unit of energy than coal

A first step for investors is to make careful distinctions between the types of projects and their progress toward being built. Those concerned about decarbonization should treat all announcements of downstream spending (such as vehicle fueling networks) with a pinch of salt. In most cases, there’s no guarantee that they won’t just use grey hydrogen — which is usually more carbon-intensive than traditional fossil alternatives. That’s particularly the case in countries like China and India, where governments may see grey gas produced from coal as the best way to support jobs in a declining local mining industry while reducing dependence on imported petroleum.

More importantly, though, Big Oil needs to recognize what it can bring to the party and where it’s not needed. The key area of overlap between the current petroleum economy and a hydrogen future is likely to be in midstream infrastructure: pipelines, ships and storage facilities.

Salt caverns — artificial caves already widely used to store oil and gas, including the U.S. strategic petroleum reserve — are likely to be critical nodes in the hydrogen network. A few are already in use for industrial hydrogen, but many more will be needed. One study earlier this year estimates there’s capacity to store about 7.3 petawatt-hours of hydrogen in salt caverns near Europe’s coasts, equivalent to nearly two years of the continent’s electricity demand. Depleted oilfields can play a similar role in areas where salt formations aren’t available. No industry understands this geology better than the petroleum sector.

Engineered infrastructure will also be crucial. In the Netherlands, a consortium including Shell is planning to put green hydrogen produced by a giant 10-gigawatt offshore wind farm through pipelines serving the declining Groningen gasfield, which would otherwise be scrapped. At the port of Rotterdam, another group is hoping to spend about 2 billion euros re-powering the local industrial cluster with blue hydrogen instead of conventional fuel.

Still, the most important role for fossil fuels may prove more humdrum. For all Big Oil’s technical expertise, its dominant position in the existing energy system may prove most critical. Some 84% of the world’s primary energy still comes from oil, gas and coal. That gives fossil fuel companies an outsize share of cashflow and investment dollars — and, as we’ve argued, more spending is what’s needed to make green hydrogen competitive with dirtier alternatives.

The scale of the challenge is vast. The world will need to produce 80 exajoules of hydrogen a year by 2050, according to the Hydrogen Council. Doing that with electrolyzers, the only viable zero-carbon pathway, would require more electricity than the entire world produced in 2019. That will need about nine times more wind and solar generators than exist worldwide to date, according to BloombergNEF.

It’s going to prove difficult to do that without a spending boom that will make the past decade’s outlay on renewable power look modest. Still, if there’s any industry that’s in a place to deliver such a splurge, it’s one that’s been synonymous with bold, transformative investment since the days of John D. Rockefeller. To conquer the 21st century energy industry, oil’s giants should remember the lesson of their rise to dominance in the 19th: Go big, or go home.


8 Comments on "Big Oil Seeks Redemption in the Hydrogen Revolution"

  1. FamousDrScanlon on Thu, 3rd Dec 2020 9:29 pm 

    Green hydrogen. Fuck off. Green Horse shit hopium & corporate speak till the bitter end.

    All these media cunts are useless eaters like their owners.

    What do they produce that we can’t live without?

  2. Cloggie on Fri, 4th Dec 2020 7:39 am 

    That helps explain the enthusiasm of Equinor ASA, Royal Dutch Shell Plc and PetroChina Co. about getting in on the switch to a hydrogen economy.

    Those are 2 continental European and 1 Chinese company. They got the green light (pun intended) from their respective governments that they have a long-term green energy strategy and that it pays for said companies to invest in that green field (again, pun intended).

    That’s the enormous importance of having a government that sets these targets.

  3. duncan donuts on Fri, 4th Dec 2020 7:42 am 

    “BREAKING HUGE: Trump Team Has Dominion Machine from Small Georgia County – Shows Votes Flipped from Trump to Biden”

    “The Trump team has obtained a Dominion voting machine in Georgia. The machine shows votes were moved from President Trump to Joe Biden. BOOM. Yesterday on the War Room it was reported that the Trump team has obtained a Dominion voting machine in Georgia: At the 52:30 mark in the video below, John Fredericks shares the news on the War Room with Steve Bannon: According to Fredericks, there were 37 votes that flipped in this small Georgia County on the machine. However, this represents only .26% of the Georgia ballots. When extrapolating to the entire state, this equals more than 14,000 votes and Georgia was stolen by only 10,000 votes by Biden. This also shows that we now know conclusively in Georgia that the Dominion voting machines were flipping votes. It supports our reporting that votes were switched across the country. We were the first to report a month ago that millions of votes were being removed from the Trump column and/or moved to the Biden column based on an analysis of data from the election: This news is huge because we now conclusively know that the Dominion voting machines were flipping data. This supports our reporting on November 10 where we shared that millions of votes were flipped in the election from President Trump to Joe Biden. BOOM.”

  4. JuanP on Fri, 4th Dec 2020 8:18 am 

    For the record. I am the real JuanP and I haven’t posted a single comment here since yesterday under the ID FamousDrScanlon. I’ve moved on to greener pastures. I would recommend you all do the same. Reading the comments here or posting something is a complete waste of your lives. This website is fucked beyond redemption. Move on, guys!

  5. duncan donuts on Fri, 4th Dec 2020 8:23 am 

    “HUGE: One Batch of 23,000 Ballots All For Biden Identified in Georgia That Were Fraudulent – More than Enough for Trump Win”

    “Tonight a batch of 23,000 Biden-only ballots have been identified and determined to be fraudulent – removing these fraudulent ballots will give Georgia to President Trump. A video has surfaced showing a batch of 23,000 ballots all for Biden that were reported in Georgia – a state where the media says Biden is leading by 10,000 votes: Two affidavits describe a batch of Biden votes which were in pristine condition and perfectly made: Poll workers saw votes that were all for Biden that could be easily identified: These ballots may have been counted after Republicans were removed from the room due to a reported water main break: We however were the ones to break the story that the water main break was a fraud – it never happened – it was a lie: BOOM – there you have it – and these. Georgians need to rise up and demand justice and integrity in their election and demand these fraudulent votes be eliminated from the count. Biden should be disqualified as well.”

  6. Biden is a collection of Hair plugs in search of a brain on Fri, 4th Dec 2020 9:12 am 

    It ok Biden will forget he’s president soon and go on vacation in Hawaii.
    I would!

  7. Abraham van Helsing on Fri, 4th Dec 2020 9:14 am 

    “BREAKING HUGE: Trump Team Has Dominion Machine from Small Georgia County – Shows Votes Flipped from Trump to Biden”

    ““HUGE: One Batch of 23,000 Ballots All For Biden Identified in Georgia That Were Fraudulent – More than Enough for Trump Win””

    Good, spread the word. Let them try to deport Trump from the White House. Time for tens of thousands of patriots to show up, with arms, to prevent that. This election was stolen. Martial law, new elections without voting machines or mail votes.

  8. Abraham van Helsing on Fri, 4th Dec 2020 9:18 am 

    Paul Craig Roberts now officially is a white nationalist:

    Time to break up the republic.

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