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Oil giants are breaking into the hydrogen industry. Total and Shell, in particular, are opening charging stations at their respective petrol stations, and the heavyweights are also planning to produce hydrogen themselves. Oliver Bishop, general manager of Shell Hydrogen, a subsidiary of the Anglo-Dutch group, answered questions from Swissquote Magazine.
Why are oil giants increasingly interested in hydrogen?
At Shell, we think that this type of energy has enormous potential and that it will play an increasingly important role over the next decade in markets such as Germany, the UK, Benelux, the United States, Japan and Switzerland.
Why do you think that?
The world is in a situation where demand for energy is increasing, but at the same time, greenhouse gas emissions need to be reduced in order to comply with the objectives of the Paris Agreement. That means that we need low-carbon fuel sources. Given that, I think that hydrogen will play a major role, whether in the form of green hydrogen, produced using renewable energy, or in the form of blue hydrogen, produced from methane with the carbon emissions captured and stored underground.
This isn’t the first time that hydrogen has been heralded as the clean energy of the future. Why do you think this time is different?
There’s finally a real sense of enthusiasm about the industry. Thanks to political support, scale up and substantial cost reduction, hydrogen is becoming a viable alternative to fossil fuels. In recent weeks, we saw the European Union adopt an enormous bill in favour of hydrogen, and many countries, including Germany, China and Australia, have done the same. These investment plans will help hydrogen overcome the initial hurdle, in exactly the same way that solar and wind energy were supported for several decades before reaching the point they are at today. I am convinced that 2020 is a turning point for hydrogen.
“The technology to produce green hydrogen is operational but costs need to continue to fall”
Oliver Bishop, general manager of Shell Hydrogen
Battery-powered electric cars are a growing success. What can hydrogen bring to the mobility sector?
Battery-powered vehicles have a big role to play, but when you need high energy density, the size of the batteries become a major obstacle due to their heavy weight. I think that we’ll see hydrogen play an increasingly significant role in heavy duty transport such as buses, trucks, trains, ships and ferries, and in the longer term possibly even aviation. I would also not rule out hydrogen in larger passenger vehicles such as SUVs or specific fleet applications where you need short recharge times or long ranges. Hydrogen refuelling for passenger cars can be done in 3 minutes, similar to gasoline or diesel refuelling. Today, you can buy a hydrogen fuel cell electric car and drive the length and breadth of Germany – there are almost 90 stations there. You can see that also in Switzerland the industry has opened hydrogen stations and more are in the works.
And what about in industry?
Hydrogen is relevant to a wide range of industries. It could, for example, replace coal in the blast furnaces used to produce steel, or replace the fossil fuels used to make cement. The chemicals sector, which already uses grey hydrogen produced from gas, would also benefit from converting to a carbon-free hydrogen. Fertiliser production is one of the largest consumers of fossil-based hydrogen today, so a logical step will be to use renewable hydrogen.
What is Shell’s strategy with regards to hydrogen?
We’re aiming to supply both blue and green hydrogen products in line with market demand. We see opportunities across the entire hydrogen supply chain, including production, storage, and shipping of hydrogen, as well as sales to end clients.
Blue hydrogen is controversial because it is produced from fossil fuels... Why not focus solely on green hydrogen?
That’s the long-term goal, but transitioning to green hydrogen via blue hydrogen will allow the industry to lower its production costs and ensure green hydrogen can compete with other energies more quickly.
When will green hydrogen become competitive?
Hydrogen as an industry is still in its early stages, and even though production costs have dropped significantly over the last decade, the production of green hydrogen is still relatively expensive compared to existing alternatives (ed. note: two to three times more expensive than the grey hydrogen usually used by industry). The technology to produce green hydrogen is operational but costs need to continue to fall. According to the latest estimates, green hydrogen will be able to compete with methane by the end of this decade.
Do you have landmark projects in the works for green hydrogen?
In February, we announced the launch of a feasibility study for the NortH2 project, located in northern Netherlands, alongside our partners Gasunie and Groningen Seaports. It’s a very large wind farm in the North Sea that is able to reach a capacity of approximately 10 gigawatts. The first turbines are expected in 2027 and will be used to produce green hydrogen. If this project comes to fruition, the hydrogen produced by NortH2 will be used primarily to supply the industrial sector. This sector already consumes large quantities of hydrogen, but the hydrogen is currently produced from natural gas. NortH2 could produce approximately 800,000 tonnes per year by 2040, which would avoid the release of approximately seven megatonnes of CO2 per year.