Paul Rodden • Season: 2024 • Episode: 287
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Welcome to The Hydrogen Podcast!
In episode 287, Are high hydrogen costs a myth? An article in gas world seems to think so. And Kraft Heinz is looking to leverage hydrogen to decarbonize their massive facility in the UK. I’ll go over this news and give my thoughts on today’s hydrogen podcast.
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Paul Rodden
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Transcript:
Are high hydrogen costs a myth? An article in gas world seems to think so. And Kraft Heinz is looking to leverage hydrogen to decarbonize their massive facility in the UK. I’ll go over this news and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where’s capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article in gas world.com Chuck Hayes writes busting hydrogen myths cost. battery powered electric vehicles are gaining traction in popular culture as the alternative of choice to replace hydrocarbon powered vehicles. Every major automobile company is moving toward the production of battery powered vehicles and consumers are beginning to adapt to this new reality. While they are certainly an improvement, battery powered EVs do present challenges. The electricity used to power them can still come from hydrocarbon power plants, which offsets the often touted reduction in tailpipe greenhouse gas emissions the vehicles offer.
In addition, the batteries themselves present the market with challenging issues of what to do with them after their lifecycle is over. Though companies that recycle lithium ion batteries exists today that industry is still in its infancy, and it is not ready to handle an overwhelming influx of batteries as the adoption of battery powered EVs grows. Hydrogen has all the advantages of a battery power to EV, but you can generate electricity from onboard supply, which saves the lengthy recharging time.
Such cells are safe, reliable and environmentally friendly and the infrastructure to support their use can be replicated by converting existing refueling stations. As with all hydrocarbon fuel alternatives, hydrogen does have its critics, but those criticisms are often grounded in misinformation. One such myth is that hydrogen is too expensive to use as a widespread vehicle fuel source. Despite empirical evidence to the contrary, traditional fuel is currently cheaper than most hydrogen power, but that will soon change as hydrogen production scales up and becomes less expensive. countries and organizations that play a major role in global oil production have committed to significantly reducing their production levels to prop up unsustainably low prices. This restriction in supply will likely raise prices for consumers who drive internal combustion engine vehicles dependent on hydrocarbons.
Meanwhile, the price of green hydrogen continues to fall and is expected to do so even more quickly over the next decade. Experts suggest that within 10 years, hydrogen fuel will be cost competitive with other mobility fuel sources, the cost of renewable energy sources solar wind and water are also continuing to fall and that trend is expected to affect hydrogen fuel costs. In addition, governments across the globe enacting more stringent carbon dioxide emission standards, hydrogen will be able to scale up quickly with government subsidies incentivizing its growth.
For example, the US Department of Energy launched its Earth shots program, which is specifically intended to encourage the development of hydrogen fuel in ways that will further reduce its costs by as soon as next year hydrogen fuel cell buses will be less expensive to operate than battery powered and internal combustion engine buses this according to a study by Deloitte. In fact, projections indicate that green hydrogen will be less expensive than natural gas by 2050.
All these trends tend to point to hydrogen power becoming increasingly less expensive than other fuels, which could transform the transportation sector into a clean energy powerhouse. To make the hydrogen fuel economy go, a strong hydrogen fuel infrastructure will need to be built. The components used in the transport and refueling stations must be able to withstand the specific challenges hydrogen fuel’s present, whether that’s a constant concern of hydrogen leaks or the long term risk of hydrogen embrittlement. Choosing components for the systems that are made of high quality stainless steel can reduce the costs of unscheduled and potentially expensive maintenance.
Working with a reliable and experienced fuel systems expert will allow companies to capitalize on the currently underserved hydrogen fuel market. And so the bottom line is this as hydrogen becomes a viable transportation fuel option, the misinformation surrounding its deployment will continue, including the myth that hydrogen is more expensive to deploy than traditional hydrocarbons. This myth is being dispelled as prices for hydrogen fuel continue to drop due to the economies of scale and traditional fuel prices rise thanks to production cuts by major oil producing nations.
Additionally, governments around the world are increasing their support for hydrogen fuels through government subsidies, which will drive prices down even further. At this point in time, there’s no reason to believe that those trends will reverse. Deploying hydrogen fuel on a global scale will require building both new and refitted refueling infrastructure. And the components used in that infrastructure will have to withstand hydrogens uniquely challenging characteristics.
Working with fluid systems experts who have experienced in the containment of small molecule gases under pressure will give you confidence that your hydrogen fueling stations will be safe, reliable and profitable, long into the future. Okay, so obviously, I’m a proponent for the hydrogen economy, but I realized there are certain rivers that need to be crossed to make it the fuel of the future globally. So when I saw that headline that high cost for hydrogen was a myth, I had to take a deeper look.
And the truth is that hydrogen, especially the green variety, is still very expensive to produce. Chuck is right that economies of scale and government subsidies will reduce cost over time and electrolyzer efficiencies will continue to increase, but there isn’t a normal timeline for any of that to happen. In some cases. Right now, hydrogen is cost competitive with traditional hydrocarbon fuels, but that would be blue hydrogen and only under certain applications.
And while government subsidies are nice, and certainly will help drive the hydrogen economy, we don’t want to rely on them indefinitely, they will dry up and when they do, we’ll need to be producing hydrogen at a lower price point, with market pricing also lower than traditional fuels. Now, I believe we will get there but it will take time and effort on all of our parts to have that happen. Next, in a press release on Monday, February 5, Kraft Heinz partners with Carlton power to deliver company’s first ever renewable green hydrogen project in the UK. The Kraft Heinz Company has signed an agreement with Carlton power, the UK energy infrastructure development company to study the development of a renewable green hydrogen plant, and its Kitt Green manufacturing plant in Wigan, Greater Manchester.
Kitt Green is one of the largest food processing plants in Europe and one of the largest Kraft Heinz facilities in the world, producing a quarter of a million tonnes of food annually and employing approximately 850 people. The proposed 20 megawatt Kitt green hydrogen plant, the first to be taken forward by Kraft Heinz globally will meet more than 50% of the plant’s annual natural gas demand and reduce the plant’s carbon emissions by 16,000 tonnes per year. The hydrogen will be produced with an electrolyzer using an electricity generated from sources of renewable energy, primarily wind and solar power.
The Kitt Green Project is the fifth green hydrogen project that Carleton power is taking forward within the UK. Eric Adams hydrogen projects director at Carleton Power said, we’re delighted to be working with Kraft Heinz to bring forward a green hydrogen facility at Kitt green to help the company accelerate its efforts to decarbonize their operations. It’s critical that projects like this are brought forward to support British companies, especially in manufacturing in reducing their carbon emissions and reaching Net Zero. Jojo Lins De Noronha president of northern Europe, the Kraft Heinz Company said our agreement with Carlton power is an important step forward in our efforts to reduce carbon emissions and achieve our global goal of net zero emissions by 2050. With a 50% reduction in emissions by 2030. We’re excited to partner together to develop our first renewable hydrogen energy project globally, and hope to see more projects like these in the future, subject to planning, approval and financing.
The 40 million pound Carlton Kraft Heinz renewable hydrogen scheme is earmarked to enter operation in 2026. Its construction will be contingent on securing financial support from the UK government’s second hydrogen allocation round of the hydrogen production business model which the government has launched because support UK industries switch to hydrogen and encourage growth of the hydrogen economy across the country. Over the next 12-18 months, Kraft Heinz and Carlton Power will seek to obtain planning permission for the scheme. In parallel, the two companies will work together to obtain grant funding and operational financial support from the UK Department of Energy Supply and Net Zero (DESNZ) with a target to deliver hydrogen to Kitt Green in 2026/27.
A submission to DESNZ will be made this year (via HAR2), following consultations with local and national stakeholders. The green hydrogen scheme is Carlton Power’s third to be developed in the North West of England and its second in the Greater Manchester region, the others being at Trafford in Greater Manchester which received planning consent in 2021 and at Barrow-in-Furness (South Cumbria) which was consented in June 2023. In December 2023, these two projects, (as well as Carlton’s Langage scheme near Plymouth, Devon) secured financial support through the Government’s Hydrogen Allocation Round 1 (HAR1).
In 2021, Kraft Heinz announced its goal to achieve net zero greenhouse gas emissions across its operational footprint (Scope 1 and Scope 2) and entire global supply chain (Scope 3) by 2050. Okay, so I ran across this press release, and I wanted to cover it as this brings another potential offtake market to the front of the line. Large scale food manufacturing is a massive co2 emitting industry and a massive potential market.
Last year in January, we saw the press release of Absolut Vodka getting into hydrogen, and I know of a few more beverage manufacturers looking to do the same. There’s also hydrogen adoption in the food delivery services leveraging hydrogen. And while this is all still in its infancy, the hydrogen economy is steadily gaining ground. And with this announcement of one of the largest food manufacturers globally, I’m sure we’ll continue to see more adopt this mindset now to wait and see just how Heinz plans to fully utilize hydrogen and how it ultimately affects their earnings.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
