Is the hydrogen revolution underway? The energy world hesitates

The CERAWeek energy world conference left a lot of room for discussions on hydrogen, a sign of the enthusiasm for this emerging market.

Boosted by financial incentives from the US Cut Inflation Act, many companies are banking on exponential hydrogen growth. However, even in the energy sector, some doubt an immediate boom.

To see the agenda of the CERAWeek conference in Houston, the organizers of this high mass of the energy world are rather in the camp of enthusiasts. In three days, around thirty discussions took place on this theme and a wing was even reserved for this energy vector.

We get a lot of attention, says Andrew Stuart, president of Ontario-based company Hydrogen Optimized, who is attending the conference. His company is working on building a very large-scale electrolyser to produce green hydrogen.

The president of Hydrogen Optimized pitched his company to CERAWeek speakers in Houston, TX.

Andrew Stuart attributes much of this excitement to the US Inflation Reduction Act which offers very high subsidies for hydrogen development. It's a project magnet for the United States, he says. His company has just opened an office in Houston.

The enthusiasm goes beyond American borders, however. The Canadian government has established a strategy to stimulate the establishment of a hydrogen market. Several provincial governments also have their sights set on the potential of this market.

ABB Energy Industries, which is working with Hydrogen Optimized to establish its electrolyser, has seen hydrogen become a key part of its business. announced projects have been sanctioned with a final investment decision or have started the construction phase, but he thinks that situation will change this year. I don't have a crystal ball, but I think in terms of months and years, no more.

The solution, according to him, is to be able to produce on a large scale as Hydrogen Optimized wishes to do. This will reduce the cost of hydrogen and make it competitive with dirtier fuels and with hydrogen produced from natural gas, he says.

The Investors are also on board, according to Alejandro Perellón of investment manager Hy24. The fund created to finance hydrogen infrastructure has attracted two billion euros.

Traditional investors are ready to put their money. Wind and solar are making less money and traditional investors are looking at the new wave of technology like carbon capture and storage, Perellón said in a CERAWeek chat.

If production is well underway, the question of demand worries some companies. S&P Global estimates that hydrogen represents only 2% of energy consumption today, but could reach 25% in a carbon neutral world.

The President -CEO of Exxon, Darren Woods, however, has doubts in particular about the appetite for hydrogen produced from electrolysis, cleaner, but for the moment more expensive.

The market for hydrogen and the desire of customers to pay for steel produced with less emissions has not yet taken off. I know that our partners are struggling to find customers in Europe and Asia because of the cost.

Exxon Mobile CEO Darren Woods believes the hydrogen market still has a long way to go before it takes off.

The CEO of Linde, one of the biggest producers of hydrogen, shares the same concerns. Sanjiv Lamba sees increased interest in the transport world and in the hard-to-decarbonise industrial sector, but he does not see customers signing long-term contracts.

To Due to the higher cost of green hydrogen, it will take another 7-10 years before this type of hydrogen production becomes competitive enough to be replicated on a large scale for Linde.

At his side, Lorenzo Simonelli, director of the Baker Hughes company, opines. For him, natural gas remains the most advantageous source of energy at the moment. It's a long-term investment.

Hydrogen is often three-color coded based on the gas extraction process and greenhouse gas emissions that it produces.

• Gray Hydrogen is extracted from natural gas.
• Blue Hydrogen is extracted the same way as gray, but its greenhouse gas emissions are captured and stored in the ground.
• Green Hydrogen is usually produced from the electrolysis of water. It is not polluting if the electricity used is produced from a renewable source.