S2, E3: False Equivalences
S2, E3: False Equivalences
Series 2 Previously published on LinkedIn, March 8, 2023 (minor edits)
Previously on...
In 'episode 1' of this series I tried to show how feedstock energy-content and its pricing are decoupled on the market and I provided a quick example of two points on a oil/gas price graph separated by 14 years. In the first case energy from oil was less than half the price of equivalent energy from natural gas; in the second, energy from oil is over four times more expensive. From there the argument was made that hydrogen price would also move independently of natural gas over time.
None of that was to state that energy content, efficiency or even volumetric requirements do not matter, just that the markets are indifferent to them and what consumers are prepared to pay derives from their collective sense of benefit. Now, given the increase in domestic energy prices in the UK and most parts of Europe, this point may appear to be already disproven. Well there is a caveat to that; consumer advantage depends upon the retention of choice within a competitive market.
In S2, E3: The Hidden Dimensions of Value, I extended the argument and claimed that if, for efficiency reasons we want energy-content to be incorporated into the price, then we need to ensure the emissions potentials are also embedded. The ability to offset is therefore essential so that clean energy-products have a net value that is linked to both their energy content and lack of carbon.
Without discussing any specific mechanisms, an extension of this concept can be applied to renewables, because it is important to be able to scrutinise the environmental provenance of everything extracted from the Earth and everything made with those materials, including 'clean technology'.
This is not just a matter of monitoring the size of costs and benefits, but also, where they land. Failing to keep track will result in a growing asymmetry between those whose labour, environment and ecology are exploited and those who obliviously enjoy the benefits of an apparently clean energy lifestyle.
It therefore does not seem possible to successfully complete any type of energy transition without transitioning the energy industry. To suppose it is simply a case of ripping everything up and starting again, is to be oblivious to how extremely wasteful that would be.
I am going to stay on the topic of transitioning to blue hydrogen here, and then finish off with green hydrogen in the final episode next week, S2, E4/4: Why We Tin Tomatoes.
Natural Gas and the Realities of Displacement
I do not mean to lionise natural gas but there is a risk it might be seen that way. My defense is that to replace anything it is necessary to understand what it's currently doing for us. In the case of natural gas we can tackle the question from a number of directions.
Dependencies
Understanding regional dependencies is about where and why they do, or do not, exist. If there was any doubt about European reliance on natural gas the Russia's invasion of Ukraine created a supply shortage to jog the memory. However, France was not affected because over 70% of its energy is generated by nuclear power stations. It has committed to replacing nuclear power stations at end of life with renewables but they already have some built in contingency for any intermittency, given 12% of existing power already comes from flexible hydroelectric generation. For all practical purposes there is zero natural gas
France are going directly to green hydrogen because their enviable position means they can leap over some of the transitional stages. They are committed to building two giga factories to supply hydrogen to both industry and the domestic sectors; I imagine that this will also provide them with the capacity to incrementally buffer the increasing intermittency, i.e. as non-dispatchable renewables displace nuclear power.
Yet France's pragmatism in managing its energy security in Europe is unique owing to its legacy nuclear policy. It also bucks a global trend because the places where natural gas has not penetrated, are more typically characterised by their extreme poverty. Some of that poverty is at a level where almost any type of energy would be an improvement. Clean gases, or indeed any gases, would be a good way to implement life-saving changes in those areas quickly.
Before you dismiss this as hyperbole or an apologetic for natural gas or even energy colonialism, consider the reality for billions of people, who don't have the luxury of the same high ideals, viz.
Around 2.4 billion people worldwide (around a third of the global population) cook using open fires or inefficient stoves fuelled by kerosene, biomass (wood, animal dung and crop waste) and coal, which generates harmful household air pollution.
Household air pollution was responsible for an estimated 3.2 million deaths per year in 2020, including over 237 000 deaths of children under the age of 5.
The combined effects of ambient air pollution and household air pollution are associated with 6.7 million premature deaths annually.
Household air pollution exposure leads to noncommunicable diseases including stroke, ischaemic heart disease, chronic obstructive pulmonary disease (COPD) and lung cancer.
Women and children, typically responsible for household chores such as cooking collecting firewood, bear the greatest health burden from the use of polluting fuels and technologies in homes.
It is essential to expand use of clean fuels and technologies to reduce household air pollution and protect health. These include solar, electricity, biogas, liquefied petroleum gas (LPG), natural gas, alcohol fuels, as well as biomass stoves that meet the emission targets in the WHO Guidelines.
Household air pollution, World Health Organisation, November 28, 2022
The fact sheet for this can be found here: Household Air Pollution
This is an environmental disaster in progress that deserves the world's attention. Should we just leave nearly 7 million people annually to entirely avoidable death while we work out how to bring them heat pumps?
Natural gas is not the only solution but it is one that could be further improved by transitional decarbonisations, in the meantime, nothing can be achieved with no access to energy. Clean biomass burners and solar panels could and should be deployed but ask yourself, if this was an emerging disaster, how would you get energy into the region quickly? Wouldn't that energy be necessarily portable?
It is not possible to take the world off energy life-support without catastrophic consequences but it is also important to remember, that for billions of people, this is not a counterfactual case. The catastrophe is happening every day to people we don't seem to care very much about.
Resilience, Threats and Opportunism
Natural gas is a threat to oil in the sense it can displace it in many circumstances. This much is evident from the history; its 2014 market ascendency was due to an increasingly significant shale gas industry in the United States. In response, OPEC launched an aggressive assault on market share and as a consequence, many of the most marginal oil fields around the world were abandoned, being hopelessly ill-equipped to compete on price. On the UKCS (UK Continental Shelf) decommissioning boomed.
Most recently, Saudi Arabia bought Russian gas cheaply for domestic electricity generation and in this trade with its OPEC+ partner, became a beneficiary of the market disruption. Importing gas to offset domestic oil consumption is part of what is likely to be a prolonged hydrocarbon end-game.
Further back in time, natural gas displaced coal globally and it was seemingly decisive, but interestingly, when natural gas is in short supply, it is coal that reemerges to plug the gap. Renewables have been unable to respond quickly enough and for that reason the demand for natural gas has not been significantly dented by renewables.
The Scramble for Commodities
Like most other commodities, the demand shock of the pandemic impacted the price of natural gas although oil was hit even more badly. In China where most of the world's raw material processing and clean energy manufacturing takes place, the implementation of renewables has been rapid and on a scale not achieved anywhere else, but the response to an immediate and escalating demand for power, was predictably, to turn to coal.
Strategically, they needed domestic resources that could be relied upon, while positioning themselves to be instrumental in the business of decarbonising the rest of the world. Energy security is therefore a priority to them. The result is that coal mines and coal-fired power plants are being sanctioned at an incredible rate and although the figures are not precisely known, a conservative estimate is that this is 2 a week. What does that say about the provenance of clean energy technology?
Europe the USA and other democratic nations are in danger of being out-maneuvered on all the critical commodities including those essential to the 'clean' technologies. It is therefore essential to understand the value of what is available to us and also to offer a negotiated path to take the rest of the world with us. The race for the rare earths and metals needed for clean technology is being played out in the most vulnerable regions in the world and for an analysis on that you could probably do no better than to look at this short Ted Talk by Olivia Lazard.
The Rehabilitation of Energy
The main anxiety around the decarbonisation of feedstocks seems to be that it would serve to support 'big oil'. One has to wonder who would be commercially disadvantaged if oil majors are forced to leave the carbon in their products. Is it really better to emit than to 'collaborate' which such entities? Are we prepared to lay down other people's lives for our idealism? If none of this convinces, I just ask, 'do we want to decarbonise or not?'.
The successful transitioning the major energy companies is not a matter of their survival but of ours. By holding them accountable, their supply chains, access to expertise, resources, legacy assets and investment can be almost entirely be transitioned across to new constructs in energy production.
I believe this has to happen one way or another. Ensuring it happens properly, under scrutiny and with regulation, is a far better application of our time and focus. It is certainly more important than developing terminology for forty shades of greenwashing, while simultaneously, remaining oblivious to the sinister ironies baked into the world's need for mined materials.
False Equivalences (FE)
FE #1 Reducing emissions potential adds value but only if it's free?
Comparing blue hydrogen negatively to natural gas results from a set of false equivalences and it is necessary to tease out the strands of anti-hydrogen rhetoric to show how contradictory it is. The argument generally centres of the notion that the process of removing carbon also degrades the energy content. This simplistic analysis ignores several other factors.
Price is determined by supply and demand; clearly if we are to transition away from natural gas it has to be led by the demand-side i.e. the markets must want less of it. Here, it is useful to be more specific by clearly stating that what we really want less of is the carbon content.
In the previous subsection, I discussed just how dependent the world is on natural gas, so how can a stage be reached where the world needs and wants less? One way is to negatively monetise emissions and positively monetise their capture. Carbon therefore becomes a by-product rather than a waste product.
Currently, high natural gas prices result from having more demand than supply, but for that to change an in lieu of just finding more, our dependency on it must be reduced. Decarbonising to produce blue hydrogen is the first stage to transitioning towards whatever flavour of hydrogen that is eventually wanted. Making blue hydrogen available to the market and creating applications, that can be readily adopt it as a feedstock (examples include hydrogen-ready domestic boilers and industrial gas turbines), would enable the demand-side to be made ready to take the lead. This would be physical carbon displacement in measurable volumes.
On a scale of feedstock emissions potential, blue hydrogen would be more valuable than natural gas, so it should not be surprising that the added value has an energy cost; this is true of any value-adding process operation that is performed on raw materials.
However, although it would be incorrect to assume decarbonisation should be free, it does not mean the cost must be borne by the consumer, i.e. if the cost can be offset by the value-adding co-production of carbon for storage. That of course, assumes it is monetised effectively through various means, such as emissions trading, pricing, taxation, credits and offsets.
FE #2 Decarbonisation consumes energy - but so does mining
Subtractive processes: some industrial processes add value by removing what we don't want and there are costs attached to such activities. Those costs are seldom second-guessed by the public, assuming they are even aware of them, yet decarbonisation is also in the same class of process. Yet blue hydrogen is frequently held to efficiency and cost standards that are not applied to any other commodity in public discourse.
Hidden impacts: in S2 E2/4: Hidden Dimensions of Value, I mentioned how 1 tonne of copper might require 400 tonne of mined feedstock. If a wind turbine contains between 4 and 6 tonnes of copper, the mining burden may be up to 2,400 tonnes of earth, so the energy to move that comes with an upfront environmental and financial cost. There is no outpouring of public concern because the consequences of mining tend to be localised within impoverished and disempowered communities.
The case for leaving gas in place: if you would like the energy content from the natural gas but nevertheless find the carbon content to be intolerable, you can leave it where it is and forgo 100% of the energy; at least the carbon remains locked up. That is a rationale argument.
Yet if carbon is really the issue, and decarbonisation is an option, some energy can be salvaged. To this proposition, the common argument is that it is inefficient and wasteful of energy, therefore leave it in place. If carbon is removed and energy content is the concern, how can leaving it in place with an energy opportunity cost of 100%, be the solution?
Of course there are no shortage of supporting arguments on the safety of the gas, the provenance of hydrogen and the effectiveness of carbon capture. They can all be defeated in turn but it comes back to the same thermodynamic/economic point that I busted in S2, E1/4: Slaying Thermodynamic Dragons. It is an exercise in endless recursion.
So the economic argument is bogus, and the thermodynamic claim non-sensical, but what about that emissions provenance issue? Well there are some false equivalences lurking there too.
FE#3 The Blueness of Blue and Green
How Blue is Blue?
Twice last week I was asked to define blue hydrogen, but ultimately, it will be whatever the standards deem to be acceptable. Am I copping out? No, I am just not proposing to set standards on the hoof, nor am I prepared to pretend they are already universally defined. However, setting appropriate standards, is also an assessment of risk and here the principle of ALARP (As Low As Reasonably Practicable), is relevant to ensuring efforts are directed to greatest effect. Put another way it is a means of eliminating diminishing returns.
Of course, it is not just the standards that need to be established but also the way in which we measure, audit and assure compliance. So although currently, what constitutes blue products is not internationally agreed, qualitatively we can still understand what it means.
Blue hydrogen might be produced from -
- gasified waste: this can be net-negative process, by preventing emissions that would otherwise occur from landfill decomposition.
- SMR/ATR and CCS: this would be net-zero process if capture also accommodates all the carbon debt acquired throughout the entire plant lifecycle.
Yet, what are the appropriate performance thresholds, i.e. at what point would the efficiency no longer be good enough to be 'blue'? Presumably where the carbon debt of the process outweighs the benefits. What those margins are might be best determined on a case by case basis; this is already done in the commercial and financial settings, when assessing profit margins and tolerance to losses.
The question is not really one of technical feasibility because, despite the scepticism about the technological maturity of CCS, it is clearly not a limiting factor. Whatever we need to do is within the realms of technical stretch. The bounding case is really how far we are prepared to go for diminishing returns, recognising that 'diminishing returns' on environmental benefits, can become environmental losses.
Yet what is clear is that Blue hydrogen, by definition of being blue, must capture or utilise carbon cleanly whether the feedstock be natural gas or waste. By whatever process the default condition must be that it prevents carbon compounds from being emitted. How does this compare with clean technology for electrification?
How Blue is Green?
Renewable electrification is not an extraction-less industry and neither is it victimless or environmentally innocuous. I provide an exposition of this in my forthcoming 'Dark Materials' series. However, that is too important a topic for me to keep my powder dry until then, so in advance of those articles, I would strongly recommend that you look at this superb yet horrific, German documentary on Chilean copper mines (linked below).
To build renewable plant equipment, solar panels, turbine generators, cable arrays and batteries requires materials that are difficult to extract and as mentioned previously, are often underneath ecologically vulnerable territories. The ability to do so cleanly is highly questionable because the dependency on the extractive industries will be on an unprecedented scale.
The term 'renewable plant' is an oxymoron because it does not renew itself and it is maintainable to the extent that materials can be recovered from waste or mined at scale. This may seem self-evident or even petty but there is a real point to this; the upkeep of renewable infrastructure will depend upon continuous mining - the energy will never be free just because it is being harvested from the immediate environment.
Extraction requires energy (and I realise that this is almost a trivial point when you look at the entire problem) but even were we to assume that heavy earth moving equipment could be electrified, how would the materials be acquired to manufacture them? How do we get to the critical mass of clean energy where it becomes in any sense renewable? Well not without energy if at all.
There are very few people talking about this, although one of the notable exceptions being Mark P Mills. The name dropping is a reference for you but more importantly because I want to make an salient point. I am not aligned to all of his arguments and am fairly confident he would detest my position on hydrogen, but as human beings, I hope we would agree that making victims out of the most vulnerable people on Earth is a despicable hypocrisy.
Most advocates of renewable energy would surely be disgusted by the environmental and human cost if they knew of it; I count myself as one amongst them. Yet, they cannot be blamed for being oblivious because the conversation is not really taking place, it is easier to assume the issues will be ironed out and in the end it will be worth it.
Yet if you have read this far, dear reader, please recognise that I have now surreptitiously recruited you into having a the choice to inform yourself or not. I apologise for the burden, but it seems to me that the conversation might need your input, so hopefully you won't ignore this out of opposition for what you may think I stand for.
FE#4 Radiative forcing of hydrogen: displacement over addition
Hydrogen's GWP (Greenhouse Warming Potential) is indirect because it reduces the hydroxyl radicals in the upper atmosphere. These radicals (OH) reduce the atmospheric residency of compounds like methane (CH4) which has a GWP of around 34. Anything that affects OH also offsets its ability to influence the longevity of methane, one way or the other. Hydrogen has a GWP of around 5.8 by virtue of its ability to reduce OH, therefore hydrogen leaks would indirectly allow methane to exist longer in the upper atmosphere. I was recently sent a paper which suggests this is a low-ball estimate for hydrogen GWP and I will write about that in a standalone post. Yet all this is only one side of the story.
You see hydrogen also receives criticism from for something that, to the extent it exists, increases hydroxyl radicals. When combusted in air, hydrogen can produce NOx via the thermal formation mechanism of formation, the only one that applies to it. This is dependent on threshold temperatures being exceeded and the availability of nitrogen in air and there are various ways to mitigate or prevent it from happening in the first place. This is unlike natural gas that has several mechanisms for forming NOx that are difficult to eliminate simultaneously.
Yet NOx has no GWP rating and in fact, the IPCC consider that the net effect might be one of cooling, precisely because is produces hydroxyl radicals that reduce the atmospheric residency of methane. None of that detracts from the toxicity of NOx in the lower atmosphere but in terms of evolution and mitigation, hydrogen is a far better option than natural gas because it is less of a problem and easier to manage. I previously discussed this in Series 1, Part 4: NOx and Greenhouse Warming Potential and Part 5: NOx and the Availability of Nitrogen.
On initial inspection is seems that the GWP of hydrogen only becomes an issue if more gas is leaked than combusted but I appreciate that this requires a quantitative approach to be definitive. I really don't feel the need to beat that drum at the moment, because it seems that the confounding relationship between leaked hydrogen and the products of its combustion are, in the most important sense, a distraction from the natural gas emissions it has the potential to displace.
Hydrogen produces none of the carbon compounds including HCN (hydrogen cyanide) which provides the route between fossil fuel combustion and N2O (nitrous oxide). So decarbonisation has to be a net win but to maximise the chance of doing that the demand-side for hydrogen must be developed. Sure it is important to displace grey hydrogen but creating new demand will provide more reasons to decarbonise.
Arguing about what applications might be appropriate is one thing (for some it's a job and others a hobby), but the crux of my argument that blue hydrogen is a decarboniser in the same way that green hydrogen isn't.
For hydrogen to be green it must be produced via electrolysis using 'green' electricity, which means that any carbon displacement has already taken place. Consequently, green hydrogen currently decarbonises nothing - in fact it reduces the carbon that electricity can displace. By which I mean under existing constructs.
That is not to say green hydrogen is not clean, just that it's creation is not taking carbon out of the system, which leads me to a surprising claim. In the last part of this series S3, E4/4: Why We Tin Tomatoes, I will return to the theme of value-dimensions, introducing one that could improve the case for green hydrogen economics and, once Utility Scale Storage (USS) has been attained, even help it become a true carbon displacer.
Concluding Remarks
Over the past three years I have frequently commented that green hydrogen would not dominate until at least 2040 but this was without claiming any uncanny prescience; much was gleaned from reading the energy outlook packs of energy companies and various IPCC reports.
Some things were learned by paying a bit of attention to the Investor Day Q&As that usually accompany shareholder meetings. It is not that the questions were particularly insightful but that they display a general ambivalence between genuine personal environmental concern (these are people with families too) and a professional scepticism about how investable wide energy diversification can really be. They tend to ask when a particular acquired clean energy company are going to be divested, while obviously struggling to understand how they could be possibly be integral to the core business, long term. These concerns influence corporate decision-making and hence my previous comment about transitioning investment too.
Investor scepticism is as understandable as is the public distrust of energy companies. Ultimately those corporations must become trustworthy and reliable because that is what it will take to navigate the energy transition.
An exemplar of a company that truly understands itself is Berkshire Hathaway. They have frequently displeased investors by being unpopularly risk averse and not bowing to pressure to be more speculative. However, over nearly seventy years, Warren Buffet and Charlie Munger have been candid. They have shown themselves to have integrity and good judgement and their successes vastly outnumber mistakes. These are much needed qualities for addressing global challenges; flakey corporate policy that bends to any light breeze cannot inspire confidence in the long game, and nor should it.
Meanwhile the blue/green hydrogen transition is limited by economic scalability. For renewables to buffer their own intermittency via hydrogen, the capacity would have to be developed unfeasibly quickly, yet the alternative is not any better. Diverting clean electricity to the production of green hydrogen, during the scaling of generation capacity, would undermine the economics of that scaling.
Some people have suggested to me that higher efficiency electrolysers would change that, but it was never my point that this was really an efficiency issue, but rather that creating green hydrogen results in a different type of value that is not currently monetised. I would also argue that until generation capacity reaches the level for USS, it can't be effectively monetised - again under existing constructs.
I have to say that over the past 6 months my confidence in the timing of green hydrogen's ascendency has taken a hit, but one thing I remain convinced about is that to have any chance of getting to USS with green hydrogen, it is necessary to go via blue.
Next time...
S2, E4: Why We Tin Tomatoes: what is the value of energy storage and how do we measure it? Perhaps, more importantly, why do we tin tomatoes anyway?