H2Tech - Q2 2021 - 33

PATHWAYS FOR SUSTAINABLE HYDROGEN

SPECIAL FOCUS

icy could extend the role of blue H2 in meeting rising global
Germany or Japan, which have regional supply projections
short of demand requirements.
decarbonization needs. At present, the estimated H2 cost of
Capturing full value from new H2 market opportunities (ascoupling SMR production with CCUS is significantly cheaper
than green H2 in the Houston region due to existing SMR H2
suming incentives for clean H2 ) will likely require leveraging
the existing SMR system
infrastructure, low natural
and, potentially, creating
gas feedstock costs, and
new methane-based H2 prothe opportunity to leverage
and extend existing CCUS
duction paired with CCUS.
Leveraging world-class H2 infrastructure
infrastructure (FIG. 10).
New blue H2 production with even lower net and people skills, Texas can emerge as
Gray and blue H2 is also
emissions could be real- a leading global H2 hub, driving lower
widely available at present,
ized through constructing
while green H2 is not. Howplants with alternative tech- emissions and bridging old and new energy
ever, electrolysis investnologies, such as autother- systems to continue energy leadership.
ment costs and efficiency
mal reforming (ATR), as is
are projected to improve
planned in the Netherlands'
significantly as manufacPort of Rotterdam and UK
turing increases and techHumber areas, and/or incorporating biomass feedstocks.
nology advances. These factors, along with the previously menBuilding out the required CCUS system would likely occur
tioned renewable power availability, price reductions and other
in phases:
forces, could spur additional green H2 at lower cost (FIG. 11).
1. Activate CCUS by filling the Denbury pipeline
system with CO2 captured from eight large SMR
Longer-term decarbonization opportunities. A key decarplants in the Houston Metropolitan Statistical
bonization opportunity is the U.S. Gulf Coast region's vast indusArea (MSA), proximate to the Denbury
trial sector, which comprises approximately 30% of U.S. refining
2. Expand CCUS capacity, as needed, by building
capacity and more than 40% of U.S. petrochemical capacity.
additional CO2 pipeline capacity to exploit CO2
The region's industrial sector accounts for 40% of Texas' industrial emissions, totaling 65 metric MMtpy. Other regions,
usage and storage opportunities along the Texas
such as Rotterdam in the Netherlands and Humber in the UK
Gulf Coast and extending into the Permian.
(FIG. 12), have developed plans to use H2 to decarbonize indusAn expanded role is envisioned for green H2 as renewable
power penetration increases, as electrolysis costs and productrial process heat and power by burning H2 instead of fossil fution efficiencies improve, and as policy and market trends
els. Adapting infrastructure to burn H2 requires substantial inevolve. Green H2 could be readily integrated into the existing
vestment. The Netherlands and the UK have instituted carbon
taxes, along with public funding, to support private investment.
Gulf Coast storage, shipping and other infrastructure systems.
The Texas region has an opportunity to emerge as a leading
global H2 hub. An emerging view across many industrialized
Rollout of Texas' H2 plans. The outlook for a " rollout phase "
is uncertain and depends on multiple forces that will signifiregions with H2 plans suggests a larger role for blue H2 through
cantly shape the demand, pace and source of H2 in decarbonization. For example, public policy changes, investor prefer4.5
ences, renewables and electrolysis technology and cost trends
PEM (38% capacity factor)1
could accelerate green H2 to playing a larger role, sooner.
Potential improvement with
4.0
increased low prices
On the other hand, decarbonization goals and timing,
PEM (90% capacity factor)
2019 average delivered
3.5
CCUS technology and uptake trends, and public carbon polSMR with CCUS at $2.78/MMBtu
power price
of natural gas

H2 price, $/kg

3.0

?

2.5
2.0
1.5
1.0
Potential improvement with CCUS technology
0.5
0.0
10
15
20
Electricity cost, $/MWh*
*Costs exclude transportation, storage, and dispensing station
0

FIG. 10. Case for Houston as a global blue H2 exporter.

5

25

30

FIG. 11. Current blue and green H2 production costs in Houston.
Source: S&P Platts.
H2Tech | Q2 2021

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H2Tech - Q2 2021

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