ON THE RISE
Mike Graff, head of Air Liquide’s U.S. operations, is bullish on hydrogen
Using hydrogen as a source of energy has offered a glimmer of hope for an oil and gas industry facing an existential threat as nations move to address climate change. The belief is that hydrogen produced from natural gas could be used to power cars, fuel power plants and even heat people’s homes.
But daunting questions surround the concept of hydrogen as a savior for the natural gas industry. One is the head start electric vehicles have, as evidenced by the rise of Tesla and GM’s announcement it plans to produce only electric vehicles by 2035 and Volvo’s plan to go all-electric by 2030. Hydrogen has thus far found customers in warehouses and airports, closed facilities where vehicles can easily be refueled, but it’s unclear if there’s a market on the open road.
Then there is the fact that hydrogen is increasingly being sourced from water, not natural gas, a technology that NASA has utilized on spaceships for decades. For now, those costs are high, but as greenhouse gas regulations tighten, the cost differential with hydrogen made from natural gas is likely to shrink.
At the forefront of the effort to develop hydrogen energy is Air Liquide, the more than century-old French industrial giant, which maintains large operations in Houston. Mike Graff, the CEO of the company’s American operations, sat down to talk about hydrogen’s past, present and future.
Q: There’s been a fair amount of buzz around hydrogen energy in recent years. What are your expectations on where this is going?
A: The estimates today would suggest that hydrogen over the next 30 years could grow up to 20 percent of the world's total energy demand. A lot of that in transportation, and some of that industrial use for feed stocks, for heating and another big application could be as part of grid backup, in order to enable the use of renewable power generated from solar or from wind that obviously is not available all the time. You're able to convert that into hydrogen and then utilize it as needed.
“We’ve been handling hydrogen ourselves for 50 years very safely.” Mike Graff, head of Air Liquide’s U.S. operations
Q: How much of that hydrogen do you see coming from natural gas? NASA has been converting water into hydrogen on space ships for years through electrolysis, and I understand Air Liquide recently opened a plant in Canada using that same technology.
A: The cost today with these initial electrolysis facilities is much higher, not quite a factor of two but probably about 90 percent higher than natural gas. But that’s without carbon capture. And so if you add carbon capture, they're not exactly the same, but they're very close and recognize that over time as we begin to scale the knowledge we begin to scale the technology the expectation is we will reduce the difference.
Q: You’re pretty bullish on
the future of hydrogen vehicles. But so far most major auto manufacturers are committing to electric vehicles, not hydrogen.
A: So I think where the automakers will be on a passenger vehicle is they will have both available. And the customer will choose based on the region and what they're looking for in terms of ease of use. There's a whole variety of things that come into play. I mean, if you were in an urban area and you have a need for just a small vehicle and you're going to drive less than 50 miles a day, it could be that that battery powered vehicle is what you need. But let’s face it, batteries don’t work that well if you're in a cold climate. And if I'm starting to look at a commercial vehicle, a large electric tractor trailer, which needs a heavy battery and and I have to carry half the normal payload, that's not going to be cost effective.
Q: Sure, but it seems like you have to convince the automakers of this. And so far, it doesn’t seem like they’re biting.
A: Everybody can plug their car into their garage socket. We're not worried about where power is coming from, so they didn't have to build the infrastructure to make that work. It’s clear that we need to have the infrastructure for hydrogen in order to fully enable this. And we have already started to invest in that, in California and in the Northeast. Not that we want to be long-term retailers, but to invest with companies like Toyota to help get it off the ground.
Q: Where do you see as the biggest market for hydrogen vehicles? It looks like the South Koreans are investing in hydrogen infrastructure pretty aggressively.
A: If you look around the
world, Germany, France and the Nordics are investing and subsidizing large levels of new infrastructure for hydrogen through public-private partnerships. I think Japan is filled with promise. For Korea, and even for China, it's not necessarily just a climate issue. They are in a very different place. They do not have a sizable indigenous source of energy except for maybe China that has coal, but they don't have enough energy to meet their needs. They import vast amounts of energy. If they can self-generate, utilizing renewable sources of power, that’s important to them. It’s a different dynamic.
Q: What about home heating? There’s discussion in
Europe around piping hydrogen into people’s home for heating using the existing natural gas infrastructure?
A: The pipelines you move natural gas with are designed with a certain metallurgy that allows them to carry that gas at a certain pressure. When you upgrade to hydrogen and get to a certain purity level, you need a higher-grade metallurgy. We think that could be something much further down the road. Look at the Northeast United States. That could be a good place to do that today, and I think in parts of Europe it makes makes sense. But I don't think that's the first use of hydrogen.
Q: Is part of the issue there
safety? Hydrogen is highly explosive, and I imagine some might be concerned having it piped into their homes.
A: It came up early in some of the discussions. But we've been handling hydrogen ourselves for 50 years very safely. Hydrogen has been used to produce fertilizers for over 100 years. And you have an existing hydrogen business that is working today, whether it's for industrial use or now evolving for transportation. Just look at the number of forklifts fueled by hydrogen. There's something on the order of 33,000 forklifts in operation. Once someone understands what we do and how we do it, we have all the capabilities to manage this very safely.
Q: Clearly, a big factor in hydrogen demand is going to be greenhouse gas regulations. So far, a lot of promises have been made by governments, but not a lot of policy to carry it through. When does that change?
A: I think we’ve reached that tipping point, and it’s going to evolve around the world. We clearly see in Europe today not just talk but action. You see active projects that have been invested in. They’re being engineered, they’re being built and they’re being started up, with the clear purpose of reducing the amount of carbon from a climate perspective. Within the U.S. a few states are very interested and they've started to work that so we're helping see that they get funded.
Q: What about less developed economies, where people are struggling just to eat and get by? How do you expect they shift from, say, coal to hydrogen energy or wind power?
A: There are some geographies which are devoid of hydrocarbon resources and need to import energy. But they have a vast capacity to generate wind or solar power. They’re not replacing a lot of existing infrastructure. Just as a lot of the world had to adjust to cell phones, rebuilding our infrastructure from copper wire to cellphone towers, they just built the cell phone towers. And I think you’re going to see some of that here. Admittedly, there are other geographies where it will be slower. They’re worried about growth and they have a supply of energy already available. But I don’t know that’s something we should be worrying about because those countries are not really contributing to the climate issues we see today.