Green hydrogen is China's next overnight game-changer greentech...

Green hydrogen is China's next overnight game-changer greentech segment.

I slept on it for a long time, because the applications for hydrogen-to-power are very underwhelming, but turns out the real big deal is things like green methanol and ammonia. 🧵
maersk.com/news/articles/…

We don't have to speculate too hard about how much economic sense these technologies make, if major multinationals are already making such huge bets.

A fleet of methanol-burning vessels means long-term, stable demand for the output of these projects.

fuelcellsworks.com/2024/11/11/gre…

I spend most of my time deep in the weeds on individual solar projects, or on the pennies of difference between power tariffs in different provinces. So I don't begrudge articles like this SCMP one, for taking a narrow view on Chinese overcapacity.

scmp.com/business/china…

I too, have to remind myself to come up for air and try to look at things from a big-picture perspective. It's not natural for me.

After working mostly on the project level, it feels too abstract, too Ted-Talky, too MBB. I'm a consultant, but I'm not THAT kind of consultant...

...but let me indulge for just a moment in a manner of discourse I don't usually adopt: macro thinker big picture Ted Talk guy:

In 2025, with China's current state of green energy production capacity (overcapacity?) we are witnessing apivotal inflection point moment.

Every outlook for China's long-term energy growth says solar and wind capacity are only going to continue growing, eventually getting to the point where oversupply at certain hours is going to be MASSIVE.

Storage will help, but what about the rest? What to do with extra power?

Let's say by 2040, China has 1000s of GWs of surplus solar at midday, more than it'll need for powergen needs. It can churn it all into hydrogen for something else...what applications become interesting? What technical or economic pathways open that didn't exist previously?

Methanol and ammonia are the big topics now.

The current industrial production methods for methanol (CH3OH) and ammonia (NH3) are both fossil-fuel intensive and will sooner or later become a chokepoint for deep decarbonization.

Unless green hydrogen means they aren't.

Methanol is mostly produced by steam-reforming (a process that uses natural gas as a feedstock to obtain hydrogen) followed by methanol synthesis. Swapping in green hydrogen produced via electrolysis yields a much cleaner final fuel (i.e., green methanol).

Besides being a useful and flexible hydrocarbon fuel that shippers like Maersk are interested in (and for which they are already signing supply contracts) methanol is used as a precursor for a ton of important chemicals.

As for ammonia, its production typically also starts with steam-reforming of natural gas to derive hydrogen. Later, in the Haber-Bosch process, this hydrogen is combined with nitrogen separated from the air to yield ammonia. "Green ammonia" would swap the steam-reforming step for hydrogen produced via electrolysis instead.

Most certification standards for green ammonia only require the use of green hydrogen, without adding explicit references to the energy source used for Haber-Bosch. Theoretically, burning of green hydrogen could also be used to provide the heat needed in that step, but this is a poor and inefficient use of hydrogen. I hope we find a better heat source if Haber-Bosch remains the key synthesis process long-term.

Most ammonia production worldwide goes into fertilizers, although it's also used in many other industrial applications and as a chemical precursor.

Ammonia was also being considered as a candidate for shipping fuel, and the IEA released an outlook in 2023 suggesting ammonia would be the winner of that comparison, but I think players like Maersk putting in orders for 12 methanol-burning vessels suggests at least some players have already chosen a different path.

Besides the huge list of things downstream of methanol or ammonia (formaldehyde, acetic acid, urea, hydrazine, melamine, etc.) as well as synfuels (synthetic hydrocarbons) there are many other chemical applications for green hydrogen in the "technically possibly but wildly expensive" category that might become possible as green hydrogen gets cheaper, like ethylene, propylene, butadiene, etc.

And that's all before considering the absolute worst applications for green hydrogen, like combusting it (for heat or steam) or turning it into fuel cells. I don't like these applications, but hell, if the stuff is super cheap and abundant, maybe that helps it edge out over things like biofuels, other synfuels, LNG vehicles, etc.

So yeah, as long as our energy economies are chock-full of fossil-fuels, and there's this whole world of potential applications for "abundant and cheap renewable energy churned into hydrogen", I just don't see how there can be overcapacity of wind turbines or solar panels.

I don't think these hydrogen applications will come into existence without the supply-side abundance of cheap green power.

So sure, take necessary steps to keep the cleantech producers in business. Make sure they make enough money to get up and go to work each day...

..but don't allow actual scarcity pricing! Because energy abundance and cheap power is what's going to drive the next generation of deep decarbonization solutions...

Not soaring solar panel and wind turbine manufacturer PROFITS, but crashing solar and wind POWER PRICES.

In fact, considering how rapidly China is stacking its exposure to electricity to operate its economy, it would be quite catastrophic if we get to the point where the profits of cleantech producers play the role of bottlenecking the next generation of cleantech breakthoughs.

Thank you for coming to my Ted Talk. 😏