The Federal and Victorian Governments are spending $100 million building a Japanese coal to hydrogen demonstration plant. That’s $50 million each. Before any of you get upset at the cost, I’ll mention I originally thought it was $500 million, so we’re already $400 million better off than I thought we were a few hours ago. At this rate I’m sure coal to hydrogen will be making money for the average Australian in no time. And in other news, monkeys may fly out of my butt.
In case you can’t tell on account of how subtlety is my middle name1, I am being a bit sarcastic. I doubt coal to hydrogen will ever be cost-effective. I expect it will be cheaper to produce hydrogen using renewable energy. I also doubt Japan will ever import significant amounts of hydrogen.
This makes me confident the $100 million in government funding for a Japanese coal to hydrogen demonstration plant in Victoria’s Latrobe valley will be a waste of money. The total cost of the Kawasaki Heavy Industries plant will be $496 million, so other people — presumably the Japanese public — will be wasting even more.
Some interesting points about the coal to hydrogen project are:
- Despite costing $496 million cost it will only run for 12 months.
- It will produce up to 3 tonnes of hydrogen.
- 3 tonnes of hydrogen has the energy equivalent of 12,500 litres of petrol. That’s less than 10 average Australian cars use in a year.
- If it produces 3 tonnes of hydrogen the total cost will be $165,000 per kilogram, which is around 130,000 times its current price.
- Generating electricity with hydrogen-from-coal will result in roughly the same greenhouse gas emissions as simply burning coal in a power station.
While the cost of the hydrogen produced is astronomical it is a demonstration plant and not meant to be economically viable. The goal is to research how to effectively produce hydrogen from coal. But it looks like they have their work cut out for them because Japan has a goal of getting the cost of hydrogen down around $4.20 a kilogram by 2030.
You Can’t Magically Make Clean Hydrogen From Coal
Producing gas from coal isn’t new technology. It was first revealed to the public in London in 1807. That’s the same year the British Empire abolished slavery. (I guess they didn’t need slaves to pedal the street light generators any more.) This gas was made by simply heating coal. But after 211 years of development and a $496 million investment we will be able to produce hydrogen gas by complexly heating coal.
Coal to hydrogen is a misleading name because the bulk of the hydrogen comes from water. Coal has a small amount of hydrogen but it’s mostly carbon. To produce more hydrogen you can add steam at high temperature. I can even show you the chemical equations:
Don’t worry if you can’t tell the difference between a chemical equation and a cannibal whale nation, just take it from me that coal to hydrogen produces a lot of carbon dioxide. Kawasaki Heavy Industries — a producer of motorcycles, bulldozers, trains, ships, boilers, turbines, robots, and soon hydrogen — says carbon capture and sequestration will be necessary for an environmentally sustainable process. Despite saying this, they aren’t actually going to capture and sequester the project’s carbon dioxide. If they did it would make the demonstration plant even more expensive.
Cost Of Carbon Dioxide Sequestration
If you can follow the chemical equations I put above, they show one carbon dioxide molecule is produced for every two hydrogen molecules. This may not seem so bad, but because it is so much heavier 11 kilograms of carbon dioxide are produced for every kilogram of hydrogen. The process also requires energy, which comes from burning coal or various gases given off during the process. This report says if the hydrogen is used to generate electricity, it would result in emissions as great as if the coal was burned in a power station. This means it may produce roughly 22 kilograms of carbon dioxide per kilogram of hydrogen.2
Estimates vary on what it will cost to capture carbon dioxide at a power station or coal to hydrogen plant and then liquefy it, transport it, and inject it underground somewhere it will hopefully stay and not cause problems. A cost of 5 cents per kilogram is what I would call optimistic and would need $1.10 to be spent on sequestration per kilogram of hydrogen produced.3
Currently Japan can produce hydrogen from natural gas for around $14 a kilogram. Their goal is to get the cost of hydrogen down to around $4.20 a kilogram by 2030 while capturing and sequestering any carbon emissions that result. To reach that target, hydrogen from coal would have to be very cheap if sequestration is equal to at least one quarter of the target price.
Plants Can Substitute For Coal
Instead of using coal, wood or other plant material can be used to produce hydrogen from coal using the same process. If it is harvested sustainably the carbon dioxide released into the atmosphere will equal the amount absorbed by the plants grown for this purpose. Currently coal is cheaper than plant material but this is may change once the cost of sequestering emissions is included.
It Pollutes The Atmosphere
In addition to greenhouse gas emissions, coal to hydrogen will release various toxins into atmosphere including particulates, heavy metals, ozone, and other threats. Presumably this would be reduced if all the CO2 emissions were sequestered. But stopping all pollution would not be cheap.
It Creates Dangerous Solid Waste
After making hydrogen from Victorian brown coal what will be left is a low quality soft coke.4 Unlike hard coke it’s not suitable for use in existing iron smelters. It is potentially dangerous because people might be tempted to burn this low quality coke and this would result in carbon dioxide emissions. Hopefully Japan would refuse to buy hydrogen produced from coal where the waste coke is burned instead of carefully buried.
Hydrogen From Clean Renewable Energy Is Likely To Be Cheaper
Hydrogen can be produced from water plus electricity with 80% efficiency. This means it would take 50 kilowatt-hours to produce one kilogram of hydrogen. This year the average wholesale spot price of electricity in Australia has been over 8 cents a kilowatt-hour and at that price it would need over $4 of electricity to produce 1 kilogram of hydrogen. But this is not what it will actually cost because:
- Expanding renewable generating capacity is putting downwards pressure on wholesale electricity prices.
- It is possible to only produce hydrogen when prices are low.
An electricity generator such as a solar power or wind farm could produce hydrogen when the price of electricity is low. If the electricity used to create hydrogen could instead have been sold for an average of 2 cents per kilowatt-hour, then the electricity cost per kilogram of hydrogen would come to $1. That’s less than an optimistic estimate of the cost of carbon dioxide sequestration for coal to hydrogen.
It not quite that straightforward because if hydrogen isn’t being produced all the time it may make sense to use cheaper methods to make it, which are less efficient and so need more energy – but given we can expect renewable energy to continue to fall in cost, I doubt coal to hydrogen will be competitive in the future.
Japan May Not Want Our Hydrogen
I don’t think Australia should invest significant amounts of money into preparing to export hydrogen to Japan because at the moment there is no guarantee Japan will buy any significant amount of hydrogen from us. Japan’s Prime Minister, Shinzo Abe, has said he wants a hydrogen economy but this doesn’t mean he’ll get one. It doesn’t even mean he actually wants one.5 It may seem they want a hydrogen economy because Japan has invested around $2 billion in hydrogen research over the past 6 years, but they also spent around about $16 billion on nuclear research in that time and they’re not in a big hurry to build new nuclear reactors.
The main uses touted for hydrogen in Japan are:
- Power vehicles
- Generate electricity
The problem with hydrogen for road transport is battery electric vehicles have a huge head start over hydrogen ones in terms of numbers sold and price. In March in Norway 5,322 fully electric cars were sold. The number of hydrogen cars sold was four. At the moment I see no prospect of hydrogen cars falling in price faster than battery electric ones.
While hydrogen can be used to generate electricity, this will only make sense if the cost of producing hydrogen in Australia, shipping it to Japan, and then using it to generate electricity is less than the cost of generating electricity in Japan.6 At the target price for 2030 of $4.20 a kilogram, if hydrogen is used to generate electricity with 50% efficiency the cost of hydrogen alone would come to 21 cents per kilowatt-hour. Given that Germany can now produce solar power from 5.8 to 18 cents per kilowatt-hour and electricity from German solar farms is expected to fall below 3.8 cents per kilowatt-hour by 2030, it is implausible that Japan with its better solar resources could not produce it for less in the future. If their Prime Minister wants a hydrogen economy I think he would have to be magically talented to get one.
Coal To Hydrogen Is Unlikely To Be A Worthwhile Investment
Victorian brown coal is very cheap. It only costs a few dollars per tonne to dig it up. If health or the environment were not considerations, it would probably be a cheap way to create hydrogen from steam. But if there were no health or environmental considerations no one would produce hydrogen. We would just use good old coal gas like Conan Doyle used to huff or simply burn coal.
Coal to hydrogen is a bad investment for a number of reasons with three major ones being:
- Renewable energy is likely to beat it on cost.
- It’s likely to create harmful pollution.
- Japan changing to a large-scale hydrogen economy looks next to impossible.
But lets say you are one of the politicians who are forking over a total of $100 million while saying coal to hydrogen is wonderful and will bring large amounts of money into the country. If that’s true then you’re being bloody stupid. If it’s as good as you say then the amount of money you need to hand over is $0. You could easily get industry — or possibly the Japanese Government — to foot the entire bill.
- Actually my full name is Ronald Subtlety Danger Brakels. ↩
- Assuming the hydrogen is used to produce electricity with a 50% efficient fuel cell or 50% efficient combined cycle power station. Pelican Point in South Australia is an example of a natural gas combined cycle power station that is just over 50% efficient. ↩
- What often isn’t mentioned is low figures for carbon capture and storage are generally for plants that only capture some of their CO2 while releasing most into the atmosphere. The Japanese Government says in the future all emissions from coal to hydrogen must be captured and sequestered so I would say 5 cents is definitely optimistic. ↩
- Coke is coal after it has been heated without being burned. It is far worse than Pepsi. ↩
- For all I know Japan’s push for hydrogen is simply the result of Toyota wanting to discourage electric car purchases before they have perfected their own. ↩
- It would also need to be less than the cost of importing natural gas or other fossil fuel and then removing the resulting carbon dioxide emissions from the atmosphere and sequestering it. ↩