Hydrogen labelled the ‘Swiss army knife’ of decarbonisation

Hydrogen has been labelled as the “Swiss army knife” of decarbonisation, in that it should only be used in instances where “there’s no alternative”.

Michael Liebreich, founder of Bloomberg New Energy Finance, said the production of green hydrogen is too expensive and inefficient for it to see the widespread use envisioned by some proponents.

Liebreich was reframing comments by US energy secretary Jennifer Granholm who previously described hydrogen as the “Swiss army knife” of decarbonisation on the basis that “it can do just about everything.”

He said this is “a perfect analogy” as “we don’t do with them everything we could. We don’t cut our hair with them. We don’t prune trees with them… You don’t butter your sandwiches with the little knife. Why? The reason is there’s almost always something cheaper, safer and more convenient.” He said they are only really used when “there’s no alternative”.

Liebreich said hydrogen’s role in the economy will be the same: “It will only be used where it’s cheaper, safer or more convenient, which it never is, or where there’s no alternative.”

He said there are some industrial processes for which hydrogen is the only option and some other use cases, such as chemical feedstocks, aviation and shipping fuel, and long-duration energy storage in the power sector, where it may also be the best option available.

But he said meeting just this demand using green hydrogen produced from electrolysis would require a vast amount of renewable electricity. “That’s why I’ve made my peace with blue hydrogen,” he added.

Liebreich said the widespread use of green hydrogen, such as for domestic heating, would require prices to fall by more than an order of magnitude to not much more than €1/kg. But he said hopes that green hydrogen costs will follow a similar trajectory to those of technologies such as wind, solar and batteries are ill founded.

He cited recent analysis by the Dutch research institute TNO, which estimated the current levelised cost of green hydrogen at around €13.70/kg based on data provided by developers of a number of projects in the Netherlands.

Liebreich said capital expenditure accounts for 36% of this figure, but noted that the electrolysers, which will become much cheaper through learning only account for 11%. He said the rest of the capital expenditure covers civil engineering, which is unlikely to come down much in price. And he said electricity costs, which account for 38% of the total, are also unlikely to drop by enough to make the extensive use of green hydrogen viable.

He was particularly dismissive of the idea of blending hydrogen into natural gas networks, which he described as the “the stupidest idea from stupidville.”

“You’ve done all that work making hydrogen… and the first thing you do when you blend is reduce that hydrogen to its heat value”.

He made the comments as part of a lecture at Imperial College London, which was also attended by Octopus Energy chief executive Greg Jackson.

Responding to Liebreich’s presentation, Jackson described the pursuit of a hydrogen economy as a “white rabbit”.

“A few years ago, our company was growing and I read an article that described us as a clean energy company and I was so proud,” he recounted. “But I knew that even then we were selling gas to a million households. Today, we’re the second biggest seller of gas to households in the UK.

“And I thought about just stopping selling it because I just couldn’t live with that terrible secret that we’re a terrible emitter when we’re meant to be a clean energy company. But, of course, people still needed to heat their homes. And we began looking at how do you heat homes without gas.

“And we put some really good engineers on this question and it became apparent that it takes six to eight times more electricity to create the green hydrogen to heat a home than if you use a heat pump.”

Jackson highlighted Transport for London’s rollout of a small fleet of hydrogen buses, now massively outnumbered by electric buses, as an example of hydrogen proving to be a distraction: “This is the equivalent of if you’re sailing on the titanic, we haven’t got enough lifeboats to begin with, and then most of the people that should be getting passengers on the lifeboats are f***ing around playing instruments and we’re all going to drown.”