Can Hydrogen Blending Reduce Industrial Carbon Costs Under ETS Rules?

The United Nations (UN) has reiterated the need to expedite projected emissions reductions from the use of fossil fuels.

According to a recent UN assessment, while the global emissions curve is evolving, the goal of limiting global temperature rise to 1.5 °C is still not being met. Indeed, rather than reducing emissions by 45 % by 2030, they are expected to increase by 11 %.¹

Failing to meet intermediate targets clearly risks missing the goal of reaching net zero emissions by 2050, which is a legally enforceable obligation for many countries. The International Energy Agency describes an inflection point that will accelerate the transition away from fossil fuels and toward cleaner alternatives.

Emissions Trading Programs

The world's leading economies have programs in place to encourage participants to cut their emissions, with many of these programs taking a 'cap and trade' approach. The European Commission (EC) explains the European Union's (EU) Emissions Trading System (ETS):

A cap is set on the total amount of certain greenhouse gases that can be emitted by the operators covered by the system. The cap is reduced over time so that total emissions fall. Within the cap, operators buy or receive emissions allowances, which they can trade with one another as needed. The limit on the total number of allowances available ensures that they have a value. The price signal incentivizes emission reductions and promotes investment in innovative, low-carbon technologies, whilst trading brings flexibility that ensures emissions are cut where it costs least to do so. After each year, an operator must surrender enough allowances to cover fully its emissions, otherwise heavy fines are imposed. If an installation reduces its emissions, it can keep the spare allowances to cover its future needs or else sell them to another operator that is short of allowances.²

Despite no longer being a member of the EU, the UK ETS adheres to the same rules as the EU ETS. The United States also has a 'cap and trade' scheme to incentivize greenhouse gas reductions.

Energy-intensive businesses such as oil refining, metallurgy, and power generation must comply with CO₂ emission restrictions. Noncompliance carries penalties: in the EU and UK, fines are currently set at £100 and €100 per ton, respectively.

The Hydrogen Element

Hydrogen generated from ‘clean’ renewable energy can help make the transition away from fossil fuels more feasible. The primary emission from burning hydrogen is water, and while the combustion of hydrogen produces NOx emissions that are concerning, it does not cause carbon emissions.

In the United Kingdom, the Energy Networks Association (ENA) announced Britain’s Hydrogen Blending Delivery Plan, stating that gas grid companies will reach the government's aim of blending 20 % hydrogen into natural gas provided to British homes and businesses.

According to the ENA, adding 20 % of hydrogen to the gas grid will reduce carbon yearly emissions by an amount equivalent to taking 2.5 million automobiles off the road.³

The European Commission's Joint Research Centre (JRC) published a report titled, "Blending hydrogen from electrolysis into the European Gas Grid."

According to the findings, up to 5 to 10 % by volume of hydrogen could be injected into the natural gas grid without requiring end users to adjust installations or large modifications to transmission structures.

Solar and wind power generation can reduce the use of fossil fuels for hydrogen generation. However, the JRC states that additional renewables and storage will be required to reduce reliance on fossil fuel-based electricity, and JRC modeling suggests that storing just a few hours of supply can reduce the carbon intensity of hydrogen produced by electrolysis by up to 40 %.⁴

In support of the aforementioned measures, the UK and EU are developing infrastructure to create and use growing volumes of hydrogen. In the north of the United Kingdom, one such project, known as ‘HyNet’,⁵ is intended to absorb and store CO₂ as well as manufacture, transport, and store hydrogen.

This project is already underway. Captured CO₂ will be stored in almost empty gas fields beneath the sea at Liverpool Bay, while low-carbon and flexible hydrogen production will support the supply of cleaner hydrogen for use by nearby industries and eventually blended into the gas grid for homes and businesses.

A buffer supply of hydrogen will be kept in former salt caverns that currently store natural gas. These repurposed caverns will hold 35,000 tons of hydrogen to help manage energy demand peaks and troughs. Figure 1 shows the structure of HyNet Northwest.

A similar initiative in Europe is underway, known as the European Hydrogen Backbone (EHB). This program, supported by 31 energy infrastructure companies from 28 countries, aims to establish a pan-European hydrogen pipeline infrastructure required to ensure demand and supply security, as recognized by the EC's hydrogen and decarbonized gas package, published in December 2021.⁶

The EC's ambition is to develop a 20.6 Mt renewable and low-carbon hydrogen market, and EHB supports this by developing "five pan-Europe hydrogen supply and import corridors connecting industrial clusters, ports, and hydrogen valleys to regions of abundant hydrogen supply".

References

1. United Nations. Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions Report From the United Nations’ High-Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities. (2022). Available at: https://www.un.org/sites/un2.un.org/files/high-levelexpertgroupupdate7.pdf.
2. European Commission. Language selection | Climate Action. Available at: https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets.
3. https://www.energynetworks.org/newsroom/britains-gas-grid-ready-to-deliverhydrogen-across-the-country-from-2023-energy-networks-announce
4. https://joint-research-centre.ec.europa.eu/jrc-news-and-updates/blendinghydrogen-eu-gas-system-2022-01-19_en, 19th January 2022.
5. HyNet. HyNet - Hydrogen Energy and Carbon Capture, Usage and Storage. Available at: https://hynet.co.uk/.
6. Grid, A. and Bulgartransgaz. A EUROPEAN HYDROGEN INFRASTRUCTURE VISION COVERING 28 COUNTRIES APRIL 2022. (online) Available at: https://ehb.eu/files/downloads/ehb-report-220428-17h00-interactive-1.pdf.

Acknowledgments

Produced using materials originally authored by Daniel Merriman from Thermo Fisher Scientific.

This information has been sourced, reviewed and adapted from materials provided by Thermo Fisher Scientific – Environmental and Process Monitoring Instruments.

For more information on this source, please visit Thermo Fisher Scientific – Environmental and Process Monitoring Instruments.