Ukraine war | Green hydrogen 'now
cheaper than grey in Europe, Middle East and China': BNEF
By
Leigh Collins
The invasion by Russia and the subsequent
moves to reduce reliance on its gas means that renewable H2 could
already be seen as a viable option over the long term, says analyst
The Ukraine war has pushed up natural gas
prices to the point where green hydrogen is now cheaper than highly
polluting grey H2 in Europe, the Middle East and Africa (EMEA)
and China, according to a new paper by analyst BloombergNEF (BNEF).
Grey hydrogen produced from unabated
fossil gas now has a levelised cost of $6.71/kg in the EMEA region,
compared to $4.84-6.68/kg for renewable H2 (using Western
electrolysers), according to a BNEF study entitled Ukraine War
Makes Green Hydrogen Competitive.
Similarly, the cost of green hydrogen in
China is currently $3.22/kg (using Chinese electrolysers), compared to
$5.28/kg for grey H2, it adds.
Similar conclusions were made for Europe by the consultancy
ICIS last November.
The price of green and grey ammonia has
followed the same trends, as they are produced by combining hydrogen
with nitrogen from the air.
The paper says green ammonia in EMEA and
Asia-Pacific would be cheaper than grey with renewable H2 prices at
$6.04/kg and $4.50/kg or less, respectively.
These figures are based on prices and
costs calculated on 2 March, and exclude carbon pricing on grey H2.
“Russia’s invasion of Ukraine has added
pressure to global natural gas prices, which were already at record
levels due to tight supply,” says the report, which was ;ead-authored
by Meredith Annex, BNEF’s head of heating and hydrogen.
“The price of natural gas-derived
products like ammonia, as a result, is up to three times higher now
than it was a year ago. This has opened the door for ‘green’ hydrogen
and ammonia produced from renewable electricity to compete with
unabated natural gas-based processes.”
The note points out that month-ahead gas
prices on the Netherlands’ TTF exchange have been more than six times
higher than they were a year ago since Russia’s invasion on Ukraine on
24 February. And liquefied-natural-gas prices in Asia have been five
times higher over the same periods, according to Platts’ Japan-Korea
Marker index.
“These prices could rise further as the
conflict in Ukraine continues,” it adds.
“With Europe looking to wean itself off
Russian gas imports, which account for a third of the continent’s
supplies, gas markets seem set to face substantially higher prices for
the foreseeable future.”
The paper points out that it was
“unimaginable two years ago” that green H2 and ammonia
would be competitive with grey versions without a carbon price.
“While the economic story may change in a
few years, companies could still view green hydrogen as a more viable
option that they once did — especially as they look to wean themselves
off gas for social, environmental and security-of-supply reasons.”
The situation is very different in the
US, where natural gas prices have only risen 60% over the past year.
Grey hydrogen in the States would cost $1.20/kg at current gas prices,
compared to $3.32/kg for renewable H2.
The price of green hydrogen would
therefore have to be an impossible $0.12/kg for green ammonia to be
cheaper than grey, according to BNEF.
Nevertheless, ammonia prices have tripled
on the US Gulf coast since February 2021, partly because of the local
need for NH3 imports.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
Nathan1@greenplayammonia.com
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