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Hydrogen is found in numerous natural compounds, like water, and cannot be accessible in its pure form on the earth. When used as fuel, it emits only water vapor as a byproduct. It has no carbon emissions and can thus be created through completely renewable methods. This makes it an incredibly appealing source of energy.
Buyers of hydrogen must understand the various types available to settle on the right product for their unique needs. On that note, here are the main types of hydrogen:
Gray hydrogen is produced by a process called steam methane reforming. This process involves extracting hydrogen from natural gas. As mentioned earlier, natural gas is mostly methane, which is an essential component of hydrogen extraction. Steam methane reforming accounts for approximately 95% of the currently produced hydrogen in the United States.
While this method is affordable and efficient, it has some major environmental drawbacks. The process emits large amounts of carbon dioxide (CO2) into the atmosphere, which contributes to climate change.
Blue hydrogen is pretty much the same as gray hydrogen, only that the CO2 emissions are captured and stored instead of being released into the atmosphere. The carbon capture technology used in blue hydrogen production reduces greenhouse gas emissions, making it a better environmental alternative to gray hydrogen.
When extracting gray hydrogen, producers use coal instead of natural gas. This type of hydrogen is known as brown hydrogen. Coal has carbon content, so the production of brown hydrogen creates a high carbon footprint. For this reason, it's the least preferred method of hydrogen production among businesses seeking to go green.
Green hydrogen is produced through the electrolysis of water, with electricity sourced from renewable energy like wind, solar, and hydro power. Although this method is the least prevalent and accounts for only 5% of hydrogen production, its use is projected to rise significantly in the future, thanks to the declining costs of renewable energy and the increasing demand for low-carbon fuels.
Since hydrogen is an energy source, its prices can fluctuate based on several factors, such as market demands, production costs, and geopolitical events. Moreover, the cost of producing, storing, and transporting hydrogen affects its price. Some of these costs include:
At its current price, hydrogen gas can be used in numerous industrial applications, with the most common being:
One of the largest use cases of hydrogen gas is in the production of ammonia. Ammonia is used across different industries, particularly in agriculture as a nitrogen fertilizer. A substantial portion of hydrogen used in ammonia production is derived from natural gas. However, there is a rising trend toward using green hydrogen to produce ammonia and reduce carbon emissions in the process.
Hydrogen gas is also used in oil refining to remove sulfur from crude oil. This process creates low-sulfur fuels that comply with environmental regulations. The hydrogen used in this case is mainly gray or blue.
Methanol, a chemical used to produce plastics, fabrics, and other materials, is produced using hydrogen gas. Methanol production also relies on hydrogen for the hydrogenation of carbon dioxide captured from the atmosphere. This offsets the carbon emissions of companies that utilize this process.
Traditionally, carbon has been the main reducing agent in iron ore to produce steel. However, there is a growing focus on using hydrogen as a greener alternative to carbon in this process. This is mainly for companies aiming to achieve net-zero emissions by 2050.
NASA space rockets utilize hydrogen fuel to power their engines. When this fuel combine with oxygen in the space shuttle, it produces the energy needed to propel the shuttle and water, which astronauts can drink.
Continuous innovations in technology have led to the development of fuel cells that generate electricity using hydrogen and oxygen. These fuel cells are now used in vehicles, providing an alternative to battery-electric cars.
Aside from these applications, hydrogen gas is also used to produce clean energy through a process known as hydroelectricity. All these applications require a lot of hydrogen, so the more the demand, the higher the gas price, and vice versa.
As the need for cleaner energy solutions increases, the usage of hydrogen gas is also bound to increase. On that note, here are some scenarios that can lead to large-scale projects and consequently increase the price of hydrogen gas:
Hydrogen is currently used in some vehicles, especially heavy-duty trucks. These vehicles make it the most practical option for decarbonizing the transport sector. Construction of infrastructure and transportation networks to support this fuel will lead to increased demand and price.
Industries like steel, cement, and chemical manufacturing are huge consumers of hydrogen. Replacing the traditional fossil fuels with hydrogen to decarbonize these industries will ramp up the hydrogen demand and inflate its price.
Hydrogen can be used to generate electricity by burning it directly or using fuel cells. Power plants transitioning from fossil fuels to hydrogen will have massive hydrogen requirements, increasing its price significantly.
With the increasing use of renewable energy, excess power is stored for later use to ensure a constant electricity supply. Hydrogen can be produced using excess renewable energy and stored for later use. This provides a solution for electricity availability and creates a huge project demand for hydrogen.
Developing the necessary infrastructure for hydrogen transportation, such as pipelines and terminals, will significantly increase the overall demand for hydrogen. This will bear a direct impact on its market price.
Any international conflicts that affect the global energy supply can potentially increase the price of hydrogen. This is particularly true for buyers relying on imported fossil fuels for hydrogen production. Economic sanctions can also halt the importation of fossil fuels and compel countries to produce hydrogen domestically, resulting in a sudden spike in demand and price.
One of the main factors to consider when buying hydrogen is the price. Therefore, buyers should do everything possible to ensure they purchase hydrogen at an optimal cost by considering the following key elements:
A1. The production method, demand, transportation costs, and the buyer's location are mainly what make the price of hydrogen gas high.
A2. Hydrogen is highly flammable, making it a safety hazard to handle, especially in high-concentration environments. This is particularly so for buyers storing the gas in high-pressure tanks.
A3. Hydrogen does not expire. Its chemical properties remain unchanged over time. However, it can be contaminated with other gases, reducing its purity and making it unsuitable for applications like fuel cells.
A4. The standard purity level for hydrogen gas is 99.999%. This level is known as the "five nines" level and is typically used for high-demand industrial applications such as electronics manufacturing and hydrogenated vegetable oils.
