In the quest for a symbol of the net-zero era, green hydrogen emerges as a strong contender to replace petroleum as a globally traded commodity.
As countries rich in renewable resources, including Australia, Brazil, and Chile, aim to become hubs for hydrogen production, questions arise regarding the feasibility of a hydrogen trade that can rival the dominance of the oil industry. To understand the potential impact and challenges surrounding this vision, we must examine the production, transportation, and usage of green hydrogen, while drawing parallels with existing commodity flows.
Transportation cost has historically been a key constraint on long-distance trade. Only high-value goods justify the expenses associated with shipping across oceans. Although the cost of transporting non-containerized products like oil, wheat, or coal ranges from $10 to $50 per ton, materials such as cement and sulfur, despite their abundance and affordability, are predominantly consumed near their production sites due to the impracticality of shipping them.
For most commodities, trade increases as prices rise. However, the scarcity of high-quality reserves for iron ore and crude oil necessitates their transportation from distant sources. Geology dictates their value and global trade dynamics. Green hydrogen, on the other hand, does not face a permanent shortage of its raw materials: water and renewable energy. In this aspect, it resembles products like gypsum and ammonia, which can be manufactured almost anywhere.
Although renewable energy prices vary by country, the transportation issue remains challenging. Raw hydrogen is difficult to move due to its high reactivity, low density compared to liquefied natural gas (LNG), and extremely low temperature. It only liquefies at a frigid minus 253 degrees Celsius (minus 423 Fahrenheit), approaching the temperature of ice in comparison to steam. The costs associated with chilling substances increase significantly as temperatures drop.
Proposed solutions to this challenge involve converting hydrogen into a more transportable form, such as ammonia, methanol, or toluene. However, the energy required to drive these reactions further escalates costs. Even countries like Brazil, with abundant and affordable renewables, will struggle to establish an export trade competitive with domestically produced green hydrogen.
One option to reduce costs is burning ammonia directly as fuel instead of converting it back to hydrogen. However, engineers have grappled with the associated challenges since World War II, and chemists are still grappling with the involved processes. Additionally, burning ammonia contributes to the production of NOx particulates, a major pollutant responsible for millions of deaths annually, and generates nitrous oxide, a potent greenhouse gas.
While green hydrogen holds the potential to revolutionize the energy landscape, its global trade will not resemble fleets of tankers crisscrossing the globe. Similar to sulfur and ammonia, which are predominantly used close to their production sites, green hydrogen will find applications near where it is produced. While countries may aspire to become the Saudi Arabia of the green hydrogen era, the reality is that this dream will elude them.