Ah, the hydrogen economy. This is the name for the future where hydrogen from carbon-free sources will be used in myriad applications to reduce the global economy’s carbon footprint.
The miracle fuel could theoretically be used to store energy from wind and solar farms, power industrial processes, and possibly even be used in certain transportation applications.
Everything looks so promising on paper. In reality, green hydrogen – and the hydrogen economy as a whole – faces a number of challenges that include economic, technical and commercial aspects. It has one of the lowest energy densities of any fuel available, poses unique safety risks, and faces logistical hurdles for storage and distribution.
These obstacles have not stopped governments and companies around the world from investing billions of dollars in hydrogen production technologies and projects. On the other hand, the same could be said of biofuels in the mid-2000s – and nearly two decades later we have relatively little to show for it. Therefore, investors should not overlook these challenges for the hydrogen economy.
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Hydrogen has a low energy density
It is common to read that hydrogen has an unrivaled energy density, but it would be difficult to find a worse fuel than hydrogen. The confusion stems from the fact that there are multiple ways to define energy density.
The two most meaningful metrics quantify the amount of energy contained in a given mass or volume.
- On a mass basis, hydrogen is one of the most energy-dense fuels. A kilogram of hydrogen contains almost three times more energy than a kilogram of gasoline.
- On a volume basis, hydrogen is one of the lowest energy density fuels. A liter of hydrogen contains only 25% of the energy of a liter of gasoline and only 20% of the energy of a liter of diesel fuel.
Which metric takes precedence? Well, hydrogen exists as a gas at atmospheric pressure and temperature. This means that one kilogram of hydrogen absorbs a very large room. A 3,221 gallon tank would be needed to hold just one kilogram of hydrogen gas.
In order for hydrogen to be useful as a fuel, stored, or transported, it must be condensed and compressed into a liquid. This requires significant amounts of energy, which represent additional costs for the hydrogen economy beyond the production of hydrogen.
For example, gasoline or diesel fuel can be stored in tanks with little maintenance. Hydrogen fuel requires a constant supply of energy and/or novel materials that must be supercooled or pressurized during storage.
Hydrogen has unique safety risks
All fuels harbor safety risks. The Miracle Fuel has a few that could be costly to nerf.
First, hydrogen flames do not burn in the visible spectrum. In other words, a hydrogen flame is invisible to the human eye. Special flame detectors are required.
This poses a unique safety risk for emergency response teams, especially as the hydrogen economy spreads beyond industrial applications. Does your local fire department have the tools needed to see hydrogen flames? How much would it cost to outfit emergency responders across the country?
Second, hydrogen is combustible at lower concentrations and lower temperatures than commonly used fuels. Even a relatively small leak could be dangerous. This risk is increased because hydrogen molecules are very small, meaning leaks are very common. The low density of hydrogen would actually help here, since escaping hydrogen would quickly disperse in the air. Nonetheless, mitigation will require special sensors to detect leaks and potentially more stringent ventilation requirements for distribution and storage infrastructure.
Third, hydrogen can make certain materials more brittle. It’s so common and annoying that it has its own technical term called “hydrogen embrittlement”. The problem has compelled engineers for decades to develop steels and materials that resist weakening, particularly for pipelines and aircraft engines. Otherwise pipelines would be thrown into the sky and planes would crash.
Although advances in materials science have reduced this risk, they were intended for relatively low concentrations of hydrogen. Materials designed to store or transport hydrogen — like your kitchen stove or the pipes that bring natural gas into your home — would need to rethink this problem.
Hydrogen distribution is challenged
Perhaps the biggest obstacle to the hydrogen economy is the transportation and distribution of hydrogen. It is caused by a combination of the above challenges.
Significant amounts of hydrogen cannot be transported in existing steel pipelines. That’s because hydrogen isn’t very dense (causing compression issues) and steel pipelines would degrade over time.
This problem is acute in green hydrogen projects. It’s one thing to build an onshore wind farm or utility-scale solar farm to produce commercial quantities of hydrogen. Getting the hydrogen to where it needs to be consumed is another thing. Many renewable energy projects are being built in areas with no infrastructure, meaning entirely new (and expensive) non-steel pipelines would have to be built.
The same obstacle stands in the way of the widespread use of hydrogen by households and businesses. Existing natural gas distribution infrastructure cannot be used reliably and safely to transport hydrogen. Even if the miracle fuel can be produced at an attractive cost, will cities, states and countries balk at the enormous expense of overhauling millions of miles of steel pipeline and distribution networks?
Challenges create opportunities
Investors should always remember that they are investing in companies, not technology. The hydrogen economy may receive a lot of investment and attention, but it faces significant obstacles to becoming a reality.
The challenges discussed above could be used to properly assess the risks for hydrogen stocks or to seek new opportunities before the rest of the market jumps in. For example, a company that manufactures hydrogen flame or hydrogen leak detectors might see a business advantage.
Likewise, pink hydrogen (produced from nuclear reactors) could have significant advantages over green hydrogen, namely in existing infrastructure and close to industrial customers.
It should also be noted that many existing technologies, from electricity to telephone lines, required massive investments in infrastructure. Society still decided it was worth the cost. Will we come to the same conclusion for hydrogen?
