Hydrogen Energy

Economic and Social Challenges

Paul Ekins

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781136542503
• Edition: 1
• Topic: Business
• Subtopic: Energy Industry
• Index: Business

Hydrogen could be a significant fuel of the future, with the potential to make a major contribution to the resolution of pressing social and environmental problems such as carbon emissions, energy security and local air pollution.

This book, based on four years of detailed research, subjects the promise and potential of hydrogen to searching, in-depth socio-economic analysis. It discusses the different technologies for the production, distribution, storage and use of hydrogen, and analyses the economics of these technologies and their current market prospects. It also describes various experiences with aspects of a hydrogen economy in two parts of the world - the UK and Canada - and then assesses the nature of different hydrogen futures that might develop depending on how the technology, economics, social acceptance and policy frameworks play out in different contexts. The book ends by setting out the policy drivers and levers which could stimulate a virtuous circle of research and development, innovation and investment that might ultimately generate a sustainable hydrogen economy.

This is essential reading for economists, engineers, business leaders, investors, policy makers, researchers and students who are interested in the future of the energy system and the part that hydrogen might play in it.

1

Introduction and Overview

Paul Ekins

Introduction

In their early days, new energy technologies tend to be hailed in extravagant terms as single-bullet solutions to multifarious human problems. Hydrogen is no exception to this, and has been welcomed by some as the ultimate solution to the problems of energy security, climate change and air pollution (Rifkin, 2002). There has also been more scholarly work published over the last decade or so (e.g. Padró and Putsche, 1999;NRC and NAE, 2004; Ogden et al, 2004; Hisschemöller et al, 2006; Solomon and Banerjee, 2006 and other papers in this Special Issue of Energy Policy) on the possibility and desirability of a ‘hydrogen economy’, the costs that might be involved, and how such an economy might come about.

Hydrogen’s desirability relates mainly to the challenges of pollution (especially climate-change related, but also local pollution) and energy security that current reliance on fossil fuels as the industrial world’s primary energy source has created. This book explores from first principles why and how ‘a hydrogen economy’ might come about, and identifies the main conditions that will need to be met for this to happen.

There has been a number of attempts to define the hydrogen economy (Dutton, 2002; POST, 2002; Rifkin, 2002). For POST, the hydrogen economy was seen as entailing a ‘widespread and diverse production and use of hydrogen’ (POST, 2002: p1). In the more ambitious visions for hydrogen, it is used as a fuel for all forms of transport, for heat and for electricity generation (see Rifkin, 2002). As concerns related to industrial societies’ widespread reliance on fossil fuels – reducing carbon dioxide emissions, confronting air pollution and securing (national) energy supply – have increased, so has interest in the idea of a hydrogen economy.

The definition of a hydrogen economy used here is simply a (national) economic system in which hydrogen is the energy carrier that delivers ‘a substantial fraction of the nation’s energy-based goods and services’ (NRC and NAE, 2004: p11). It would obviously be possible for the concept of a hydrogen economy to apply at a sub-national level, but the term as used here implies a certain scale that would not be satisfied by purely very local applications. As will become clear throughout this book, there is not a single view of what might constitute a hydrogen economy, but a range of possibilities as to precisely what hydrogen-related technologies, in different combinations, a hydrogen economy might include.

The current, largely fossil-fuel based, energy system in industrial countries is mature, pervasive, reasonably efficient in its satisfaction of a wide range of demands for energy services (heat, light, power, mobility), and has an extensive infrastructure which is long-lasting and has been developed over many years with very large investments. For the hydrogen economy to come about, there will need to be an extensive transition away from the fossil-fuel economy and its associated energy system.

The nature of an energy system

An energy system in an industrial country, schematically illustrated in Figure 1.1, is absolutely crucial to its functioning and is comprised of multiple sophisticated technologies in complex and continuous interactions with each other. The technologies should not be understood simply as engineering devices. Certainly they often contain engineering of a high order, but the physical components of an energy system are embedded in social and economic structures and institutions which crucially influence how they are used and how they develop.

Very briefly to describe the main pathways of Figure 1.1, the energy system may be seen to process natural resources (e.g. crude oil, uranium, wind) into energy carriers, or fuels (e.g. petrol, electricity, hydrogen), to provide the energy source for devices which will provide desired energy services to final consumers. Energy services may be one of four kinds: heat, light, (electric) power, and mobility. Power, in particular, is used to provide a very wide range of services through an enormous range of machines and appliances, ranging from factory equipment to information and communication technologies and home entertainment.

All energy carriers ultimately derive from the environment. A whole technological chain converts the environmental resources into useful fuels, which are then fed into energy demand technologies to produce the energy services required. Hydrogen, the production of which can be carried out through a number of technologies, as will be seen in Chapter 3, is one possible fuel output from this system, which can be used in a number of energy demand technologies.

The kinds of changes in the energy system that would be required for hydrogen to play a major role as an energy carrier are fundamental and far-reaching. At present, hydrogen is a negligible component of the energy system. Eighty-seven per cent of current hydrogen use is for fertilizer manufacturing and refining (Maddy et al, 2003: p29), that is, it is not part of mainstream energy demand at all. For there to be a ‘hydrogen economy’, enormous technical innovation and change will need to take place in respect of all the kinds of technology (hydrogen production, storage, transport and end-use application) identified in Chapter 3. This will require very large investments over long periods. One of the purposes of this book is to identify who might make the investments that could lead to a transition to a hydrogen economy, and why.

Figure 1.1 Schematic illustration of an energy system

Most fundamental technological changes in developed industrial societies have come about through the operation of markets. Producers have used new technologies to develop new ways of producing and delivering goods and services of superior functionality or quality, or lower cost, or all of these. Consumers have bought these goods and services for these reasons. However, even in such cases, the development, deployment and diffusion of new technologies is far from straightforward, and there has been much study as to why and how certain technological developments become established, and others do not, even when they do not seem to be so different in terms of market advantages.

For a transition to a hydrogen economy to occur through the operation of market forces, hydrogen technologies must compete effectively with fossil fuels and other alternatives to them. In particular, ‘devices that use hydrogen (e.g. fuel cells) must compete successfully with devices that use competing fuels (e.g. hybrid propulsion systems)’ and ‘hydrogen must compete successfully with electricity and secondary fuels (e.g. gasoline, diesel fuel and methanol)’ (NRC and NAE 2004: p17). This book identifies some of the main contexts for this competition, and the principal conditions which hydrogen will have to satisfy if it is to prevail.

In respect of hydrogen technologies, which are reviewed in some detail in Chapter 3, the evidence suggests that their current market advantages over incumbent and developing technologies with which they are in competition are rather few. The interest in these technologies is driven almost entirely by public interest considerations: depending on how hydrogen is produced, it may promote energy security and result in lower carbon emissions than the use of fossil fuels, and it has no harmful emissions at its point of use. Private consumers have not historically been motivated to trade off conventional consumer benefits, such as functionality, quality or cost, for such public interest considerations, which gives public policy a crucial role in promoting hydrogen technologies, as will be seen.

As will become apparent, hydrogen technologies are currently very far from fulfilling the competitive imperatives cited from the NRC and NAE report above, and there is no literature that suggests that the hydrogen economy will come to exist in the foreseeable future, if ever, without substantial and long-term public support. Even with the political will to give that support, the nature of what is being attempted should not be underestimated. It is unprecedented. Writing about the US, NRC and NAE (2004: p17) state:

In no prior case has the government attempted to promote the replacement of an entire, mature, networked energy infrastructure before market forces did the job. The magnitude of the change required if a meaningful fraction of the U.S. energy system is to shift to hydrogen exceeds by a wide margin that of previous transitions in which the government has intervened.

The same would be true for other industrialized countries.

Overview

This book explores how a transition to a hydrogen economy might come about. Its theoretical starting point is the literature on technological transitions and strategic niche management, which is the subject of Chapter 2. This makes clear that a technological transition of the kind envisaged is far more than just a change in the physical technologies employed in the energy system, important though this change is. The point is that such a change cannot and will not come about unless it is accompanied by parallel changes in the economic and social systems, which both facilitate the technological changes and make them both economically viable and socially acceptable.

Chapter 3 works through the many different technological possibilities for producing, storing, transporting and distributing and using hydrogen, discussing both the characteristics of the different technologies and estimates that have been made of their costs. Some of this material is quite technical, but understanding it is fundamental to an appreciation later in the book of what a large-scale transition to hydrogen in the future might involve.

Whereas Chapter 3 is focused mainly on the engineering and cost aspects of hydrogen technologies, Chapter 4 explores hydrogen applications more from a market and consumer point of view. Why should people want to use hydrogen technologies? What do they offer from a private consumer perspective? The answers to these questions will greatly influence the extent to which a transition to a hydrogen economy might be driven by markets, or will need to be largely brought about through public policy.

Having by this stage established what hydrogen technologies are and how they might be used, Chapter 5 returns to the theme of technological transitions that was introduced in Chapter 2, and maps out what such transitions might look like for hydrogen. The key point is that there is a number of possible transitions. Which of them comes about, if any, will depend on how the various technologies develop, and on the nature and level of public policy support. Two of the possible transitions are then modelled in some detail in Chapter 6, using a model of the whole energy system, which is essential to see how hydrogen might sit within it, and how it might compete with and displace, or itself be squeezed out by, other energy technologies. Extensions to the basic model explore the implications of changing the taxation of hydrogen, and of taking into account the spatial requirements of different kinds of hydrogen infrastructure.

The development of hydrogen technologies is very much an international affair, with global research partnerships involving the private and public sectors. While most of this book is about how these technologies might play out in the UK, a number of chapters also have a dimension of international applicability: Chapter 3 that describes the technologies, Chapter 4 that explores the markets, Chapter 5 that generates hydrogen transitions, Chapter 7 which is an international review of hydrogen experiments, demonstration projects and initiatives around the world, and Chapter 8.

Chapter 7 is also the first of three chapters which look in detail at the regional realities and motivations of hydrogen manifestations on the ground. It identifies seven different regional types of hydrogen initiatives, and explores their rationale, genesis and what it is hoped that each one will achieve. The differences are instructive as to the reasons why regional, rather than national, policy-makers might wish to establish hydrogen economies in the places where they live. Chapters 8 and 9 take as case studies and look in more depth at some of the ‘hydrogen regions’ identified in Chapter 7: Vancouver in Canada; and three different regions in the UK: London, Teesside and Wales. It becomes even clearer from these case studies that there is no single model or blueprint for ‘rolling out’ hydrogen at a regional level. To be successful, hydrogen developments must mesh with regional realities, aspirations and capabilities.

Both Chapters 10 and 11 move the focus of analysis a...

Table of contents

• Front Cover
• Half Title
• Dedication
• Title Page
• Copyright
• Contents
• List of Figures, Tables and Boxes
• List of Contributors
• Acknowledgements
• List of Acronyms and Abbreviations
• 1 Introduction and Overview Paul Ekins
• 2 Innovation and Technological Change Paul Ekins
• 3 Hydrogen Technologies and Costs Paul Ekins, Sam Hawkins and Nick Hughes
• 4 Hydrogen Markets: An Assessment of the Competitiveness of Fuel Cells Paolo Agnolucci and Nick Hughes
• 5 Hydrogen Transitions: A Socio-technical Scenarios Approach Malcolm Eames and William McDowall
• 6 Hydrogen System Modelling Nazmiye Balta-Ozkan and Neil Strachan
• 7 Hydrogen in Cities and Regions: An International Review Mike Hodson, Simon Marvin and Andrew Hewitson
• 8 Hydrogen in Vancouver: A Cluster of Innovation William McDowall
• 9 Hydrogen in the UK: Comparing Urban and Regional Drivers Mike Hodson and Simon Marvin
• 10 Hydrogen Risks: A Critical Analysis of Expert Knowledge and Expectations Miriam Ricci, Paul Bellaby and Rob Flynn
• 11 Public Attitudes to Hydrogen Energy: Evidence from Six Case Studies in the UK Miriam Ricci, Paul Bellaby, Rob Flynn, Simon Dresner and Julia Tomei
• 12 Hydrogen and Public Policy: Conclusions and Recommendations Paul Ekins and Nick Hughes
• Index