Kemianteollisuuden lausunto EU:n vetystrategian konsultaatioprosessiin (ENG)
Kannanotot | 08.06.2020
European Commission roadmap – an EU hydrogen strategy
The EU is heading towards climate neutrality by 2050. Finland is setting even more ambitious targets and is aiming at being climate neutral by 2035. In the context of Finland’s target, different industry sectors and companies have started to establish how climate neutrality could be accomplished within their industry or company boundaries. The chemical industry in Finland is also building a roadmap for climate neutrality. The final roadmap will be published on 9th of June 2020.
In the chemical industry roadmap greenhouse gas emission reduction are taken into consideration from three different angles, greenhouse gas emission reduction from processes (scope 1), energy use (scope 2) and raw materials (scope 3). When looking at the solutions for climate neutrality, a large toolbox of different technologies will be needed. One of the major technology platforms needed is renewable or zero-emission hydrogen. Hydrogen is unique in its versatility to address many greenhouse gas emissions reduction challenges and to replace fossil alternatives in many parts of the value chain. In the chemical industry, renewable or zero-emission hydrogen enables a broad array of solutions for the industry itself as well as for chemical industry customers.
The chemical industry in Finland presently uses over 120 kton of hydrogen in their processes. The great majority of the hydrogen is produced by reforming natural gas. Water electrolysis technology is also used, but to a smaller extent. Hydrogen is used for fuels, bulk chemicals, specialty chemicals and manufacture of industrial gases. In some cases, excess hydrogen formed as a by-product in chemicals manufacturing is also used in energy generation (for example to supply district heating networks). Looking at the work done to date on the chemical industry roadmap for climate neutrality, we expect strong growth of hydrogen use. The main applications for hydrogen would be to manufacture low-carbon fuels, add flexibility in production by adjusting between energy storage and chemicals production and to address new business opportunities through sector-integration. To decarbonize scope 1 and 2 emissions, the need for hydrogen will grow substantially. The estimate is that an additional 310 kton hydrogen would be needed, 40 kton of added reforming capacity, 160 kton of electrolysis capacity and 110 kton for hydrogen for methanol production. 8 terawatt hours of emission free electricity will be needed to produce the new hydrogen. Decarbonization of the existing and added reforming capacity presents a challenge, where carbon capture, utilization and storage is part of the solution. When looking at feedstock manufacturing (scope 3), the needs will be many times that of scope 1 and scope 2.
he versatility of hydrogen is apparent, since it can replace fossil energy alternatives across the value chain. From the chemical industry point of view, hydrogen can have a significant impact on many aspects of industrial activity.
Hydrogen in the future value chain
Hydrogen is already an important feedstock in the chemical industry. The majority of hydrogen is produced through methane reformation, which is a highly greenhouse gas emissions intensive production method. To be able to reduce the emissions from hydrogen production, we need to develop new technology and scale up existing technologies with the ultimate aim of providing commercial and cost competitive options to the market. To reduce emissions, hydrogen needs to be manufactured increasingly with water electrolysis technologies or by adding carbon capture and storage to methane reformation. Use of bio-based methane in the latter can also be a viable option. Electrolysis is an electricity intensive production route, so the source of the electricity determines its viability. From the Finnish chemical industry point of view, it is important that the electricity is free from emission, securely distributed and available and globally cost competitive. The growth of renewable electricity - in particular solar and wind - have opened up a viable path for hydrogen production. This presents opportunities to adopt more widespread use also in the chemical industry.
Since electricity prices can be more volatile in electricity grids with large amounts of renewable production that still lacks adequate balancing mechanisms, hydrogen production can help balance grids during peak renewable power production hours. During these hours it is important to be able to utilize and store as much of the produced electricity as possible, to improve the utilization rate of these important investments in generation. From this point of view, the chemical industry can provide multiple solutions, since the experience of using and transporting hydrogen is well established. Converting electricity into hydrogen or further synthesized chemicals can be an effective way to both store and transport the electricity. Hydrogen can be used as such or converted into ammonia, methanol, methane or synthetic gases, that can either be converted back into energy or low-carbon fuels or be used as feedstock in the chemical industry. In some cases, chemical industry companies can also be connected to district heating or natural gas networks and respectively provide energy and hydrogen to these. These options allude to the great challenge facing our economies, namely that of decarbonizing heat. Green hydrogen is a unique solution to this challenge and its versatility lends very well to further sector integration and efficiencies.
Regarding feedstocks, low or zero-emission hydrogen can enable completely new ways of manufacturing inorganic chemicals and hydrocarbons, which are the main raw materials in organic chemistry. In combination with carbon capture and use, hydrogen could form the backbone of a new chemical industry in Europe along with other manufacturing routes such as bio-based and circular feedstocks. What is important to consider is that this will require significant investments into expanding power generation capacity and energy systems integration. Furthermore, from a feedstock point of view, the manufacturing logic is different than in energy storage, where peak production hours of renewable energy can be efficiently utilized. In feedstock production, the capital-intensive electrolysis equipment needs to reach a high level of utilization to be cost efficient. This requires a steady and secure supply of emission free electricity at a globally competitive price.
From the chemical industry point of view, the versatility of hydrogen is the key. It can be used in energy storage and as an energy carrier, it can be used as a syngas and it can work as a feedstock component to produce materials or low carbon liquid fuels. To capitalize on the opportunities that the hydrogen economy presents, a gradual and complete transformation of the current fossil fuel energy -based economy is needed, at cost parity. Also, the safe use of hydrogen needs to be taken into consideration. Hydrogen requires new methods of production, distribution and end use, which presents challenges from a safety point of view. The development and education of best practices will contribute to a safe handling hydrogen also in the future.
The requirements to move into a hydrogen economy
Enough technology exists today. What is critically needed, is scaling up these technologies through demonstration and infrastructure investments that build up a sizable network. Without scale up support, hydrogen cannot compete with the existing fossil fuel energy economy that has benefitted from several decades of investment and optimization.
To enable hydrogen technologies, we will need:
- Enough electricity to enable electrification of chemical industry processes. The electricity needs to be emission free, securely available and globally cost competitive
- Enable the use all different emission free electricity sources in the production of hydrogen with electrolysis
- Support for early stage technology and scale-up projects. Especially enabling scale-up like piloting and demonstration
- To accelerate adoption through public procurement, fast-tracking permitting
- Secure financing mechanisms for a broad array of low emission hydrogen related projects, for example through the EU Innovation fund and the IPCEI platform
- Secure enough financing to education and research of hydrogen related subjects and to encourage cooperation between these and the industry or other business
- Investments into infrastructure to be able to transport hydrogen in different forms
- Develop best practices to produce, distribute and use hydrogen without compromising safety
The Chemical Industry Federation of Finland
Senior Advisor, Energy & Climate