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* Hydrogen seen as major fuel in energy transition
* But costs of low-carbon hydrogen remain high
By Ron Bousso and Stephanie Kelly
March 3 (Reuters) - Governments and energy companies are
placing large bets on clean hydrogen playing a leading role in
efforts to lower greenhouse gas emissions, but its future uses
and costs are highly uncertain.
"Without hydrogen by 2050 we cannot aim to be a net zero
(carbon) economy," Royal Dutch Shell CEO Ben van Beurden told
the CERAWeek online conference this week.
The universe's most abundant element, hydrogen has been
touted for decades as an alternative to fossil fuels, but
attempts to commercialise it for use in vehicles and industry
have largely failed.
So far, commercial-scale production has been from natural
gas or coal and it is a niche market used mainly in oil refining
and heavy industry.
But so-called blue hydrogen, where carbon emissions from its
production are not released into the atmosphere, and green
hydrogen, which is made with renewable power, are attracting
huge interest as a clean alternative to natural gas that can be
used for heating homes, heavy industry and transportation.
The European Union, Britain, Japan and South Korea, as well
as leading oil and gas companies, such as Royal Dutch Shell
, BP and Total, have set out plans to
invest heavily in hydrogen.
In the Canadian province of Quebec, where hydropower is
abundant, green hydrogen is going to be a reality, Canadian
Natural Resources Minister Seamus O'Regan said. Canada last year
unveiled a hydrogen strategy that could be worth $40
billion.
But converting natural gas storage, pipelines, furnaces and
boilers to hydrogen will be a costly and long process.
"Hydrogen will not be the solution to each and everything...
it's not the silver bullet that solves all problems," Siemens
Energy CEO Christian Bruch told the conference.
"I don't see really a large-scale commercial viability any
time before 2025 or even the end of the decade," Bruch added.
"There is still some way to go to prove we have resilient and
reliable systems."
One challenge is the cost of producing green hydrogen, which
cannot compete with natural gas or with hydrogen produced from
natural gas.
Known as grey hydrogen, hydrogen produced from natural gas
or coal in a process that emits high levels of carbon dioxide,
is the most common form of the fuel produced today and costs
around $1 per kilogram.
Cleaner blue hydrogen, which captures and stores the carbon
dioxide, costs $2 to $3 per kg to produce while green hydrogen -
based on the use of clean energy and electrolysis to extract
hydrogen from water - costs around $5 per kg, BP's head of
innovation & engineering David Eyton said.
He said transporting hydrogen was also expensive even if it
is converted to liquid in the form of ammonia, which Saudi
Arabia's national oil company Aramco has begun offering
customers.
"Hydrogen is expensive to transport. So if you can use it
locally, that's a much more sensible thing to do than sending it
a long distance," Eyton said.
Shell's van Beurden also said that hydrogen was for now a
very small business.
"It will scale up, and it will take a long time before it is
a business that is large enough to start making a real
difference on sort of planetary scale," he said.
(Additional reporting by Isla Binnie and Nia Williams; editing
by Barbara Lewis)
