Energy Tribune

Since 2006, Duncan MacLeod has served as a global vice president in charge of Shell Hydrogen. MacLeod, with Shell for over three decades, has held positions in Venezuela, the Caribbean, Nigeria, Japan, and the Netherlands. He is a member of the Advisory Council for the E.U. Hydrogen and Fuel Cell Technology Platform, the California Hydrogen Highway Network Advisory Panel, and the California Fuel Cell Partnership Steering Team.

Duncan hails from Scotland’s Western Islands and studied economics and geography at Birmingham University in England. He corresponded with Robert Bryce in mid-August.

ET: What are the biggest myths about hydrogen and its application as a fuel of choice for transportation and/or power generation?

DM: There are probably four hydrogen myths that are most commonly associated with hydrogen.

Myth 1: Hydrogen is dangerous.
Safety is one of the most important issues. In general, hydrogen is neither more nor less inherently hazardous than gasoline, diesel, liquefied petroleum gas, or compressed natural gas. There is a great deal of knowledge available about producing and transporting hydrogen on a large scale. The Shell refineries have been manufacturing hydrogen for decades and produce thousands of tons a day, mainly for internal use in the same refineries.

Every new form of energy requires time before it becomes accepted. The general public must be made familiar with the idea that a different form of energy supply can be just as effective and secure as the source they are currently used to. Shell considers the responsible handling of safety aspects as one of the core components of responsible business practice, and together with its business partners is focusing maximum attention on these aspects.

International standards ensure the safe production, storage, transport, and use of hydrogen. In addition, governments and companies have a role to educate the public about the proper use and handling of hydrogen.

Myth 2: Hydrogen is too expensive.
While cost remains a key issue at present, it is recognized that fuel cells have the potential to be produced for even less than traditional combustion engines, as there are fewer internal moving parts. However, hydrogen markets are still in the very early stages of being developed both as a transport fuel and feedstock for clean power generation, which will eventually enable this source of energy to become accessible to the everyday consumer. Based on the current development plans of O.E.M.s [original equipment manufacturers], it is generally recognized that the mass production of F.C.V.s [fuel cell vehicles] will begin around 2020 with commercialization a few years earlier.

Myth 3: Hydrogen is not a clean fuel.
Not only do F.C.V.s emit just water vapor and heat – significantly improving air quality – they are also very energy efficient, using 40 percent to 60 percent of hydrogen’s energy, compared to the 30 percent used by conventional fuels. However, currently 95 percent of hydrogen is manufactured using natural gas. While this process produces fewer carbon dioxide emissions than gasoline production, the challenge is to move to green or “fully renewable” hydrogen as fast as possible. In the intervening period an important feature will be dealing with carbon dioxide emissions in the manufacturing process. Different countries will make different choices, depending on their current energy availability and future priorities.

Myth 4: It’s not efficient to produce hydrogen from renewable energy sources.
Hydrogen can be made from many sources, from fossil fuels such as coal and natural gas, to renewable energy sources, such as solar and hydropower, giving societies real choice in how they address their energy security and environmental and economic requirements. Today, a substantial part of hydrogen produced in the world is derived from natural gas via a steam-reforming process. Though hydrogen can be produced from many sources, it is steam reforming of natural gas that is an important bridge to sustainable hydrogen production from renewable energy. The next step for renewable production is mass-producing the process, making it more efficient and easier to manufacture at scale.

ET: There is a lot of debate about potential sources of hydrogen. In Madrid, you said that you believe that there are likely to be several methods of hydrogen production. Why?

DM: There are likely to be several methods of hydrogen production because while most hydrogen is currently produced from natural gas, we need to look at how to transition fossil-based hydrogen into clean and then green hydrogen. The natural gas pathway will be necessary for the short to medium term; however, there should not be a complete dominance of the production route.

Shell would like to move to fully renewable hydrogen as soon as possible, but it will take some time before green hydrogen can be produced viably in large quantities, so in the meantime industry is pushing ahead with solutions for clean hydrogen, especially carbon capture and storage, or C.C.S.

Case study: Shell has invested considerable resources in participating in demonstration projects to explore promising opportunities and technologies to reduce C02 emissions around the world. The ZeroGen project in Australia is a low emission coal-fired power project, which has signed a license agreement to use Shell’s coal gasification technology, and which aims for geological storage of CO2 emissions. In addition to the gasification, Shell is providing technical support for the C.C.S.

While C.C.S. remains a key solution for the production of large-scale, clean hydrogen, there are also other things that can be done to reduce carbon dioxide emissions in the manufacturing process. Just three examples:

• Shell has been operating a forecourt reformer from H2Gen at our Westhollow research and development facility, where feedstock options such as natural gas and bio-feedstock are being evaluated.
• We’ve also undertaken a techno-economic evaluation of converting syngas from coal or biomass into clean/green hydrogen in local settings, such as India or in California.
• Finally, we have entered into a five-year joint development agreement with Virent Energy Systems to further commercialize its BioForming technology, which enables hydrogen to be produced economically from renewable glycerol and sugar-based feed stocks.

ET: You’ve said that about 95 percent of hydrogen is now produced from natural gas. Over the long term, doesn’t it make the most sense to produce hydrogen from natural gas than from other sources?

DM: Yes, while most hydrogen is produced from natural gas, we still need to look at how to transition fossil-based hydrogen into clean and then green hydrogen. Shell is focused on learning as much as possible about hydrogen refueling and how to meet future customer needs as demand increases in the next 10 to 15 years. This means that hydrogen will initially be obtained mainly from natural gas; ultimately we expect hydrogen to come increasingly from renewables, such as wind and solar – and some of our existing stations, such as Iceland and New York, are already making hydrogen using electricity generated from renewable sources. The wide introduction of hydrogen technology based on natural gas will already substantially reduce greenhouse gas emissions. Where hydrogen is produced from renewable sources it may lead to zero emission power.

ET: There are a number of problems associated with storing and transporting hydrogen, including hydrogen embrittlement. Is the embrittlement issue the biggest challenge when it comes to storing hydrogen? Or is the bigger storage challenge elsewhere, such as in designing adequate seals and valves on hydrogen tanks?

DM: Yes, hydrogen embrittlement (caused by high-pressure gas diffusing into certain types of metal) requires the selective use of steels, and obviously in a high-pressure gas system the integrity of seals and valves is important. However, the energy industry has considerable experience handling gases, including LPG and CNG, and volatile liquids at high pressure and temperature, and we are confident these can be accommodated technically and economically.

ET: How many hydrogen-vehicle refueling stations does Shell now have in place?

DM: We are actively involved in demonstration projects around the world, and are the only major energy company supporting fuel-cell vehicle demonstrations in all three major hydrogen markets – Asia, North America, and Europe. This has taught us what it takes to deploy various supply options in regions with differing legislation, codes, and standards, as well as public attitudes towards alternative fuels. These options comprise liquid hydrogen supply, gaseous hydrogen supply by trailer, on-site production through electrolysis, and S.M.R. [steam methane reforming]. We are now moving from low-use, stand-alone demonstrations into building the foundation for higher-use, longer-term mini networks, working closely with auto O.E.M.s to build retail facilities in cities that are showing the greatest interest in cleaner transportation fuels.

Such networks will play a crucial role in bridging the gap between current demonstration projects and full infrastructure roll-out. This cannot beachieved by one company. It must be a coordinated effort, comprising hundreds of vehicles from different car companies; a number of combined hydrogen and gasoline refueling stations; two or more energy companies; and two or more fleet owners with hydrogen mainly sourced from central production. Only in this way can we coordinate the mechanisms that build long-term investment and supply-chain confidence, supported by a regulatory framework and public support. The current range of Shell hydrogen demonstration projects include the following.

Shanghai: Tongji
Shell Hydrogen is the technical partner to the Anting hydrogen refueling station located at the International Automotive City in Shanghai. The refueling station will dispense hydrogen for a fleet of fuel-cell cars and buses operating in the Shanghai region.

Tokyo: Ariake
As part of the Japan Hydrogen and Fuel Cell Demonstration Project, 12 hydrogen refueling stations for 60 cars are being built in and around the Tokyo area. Showa Shell, a company partly owned by Shell, operates one of these, which is the most heavily used site in Ariake.

Washington, D.C.: Benning Road
Shell Hydrogen opened the first hydrogen pump on a conventional Shell gas station forecourt in the U.S. in November 2004.

West Los Angeles: Santa Monica Boulevard
Shell Hydrogen’s second U.S. combined gasoline and hydrogen station opened more recently in June 2008 on Santa Monica Boulevard, where hydrogen is produced on-site by the electrolysis of water.

New York: City of White Plains
Shell Hydrogen is operating another hydrogen refueling facility in New York’s Department of Public Works yard in White Plains. This is also part of a U.S. Department of Energy hydrogen infrastructure program, where Shell will provide hydrogen fuel to General Motors.
Germany: Berlin Lighthouse Project Shell Hydrogen is developing a hydrogen refueling station in Berlin (opens 2009) as part of the Clean Energy Partnership, a public-private partnership between 11 industrial groups and the German government.

The Netherlands: Rotterdam Shell Hydrogen is working to create a large hydrogen public transport project in Rotterdam before the end of the decade. Buses would be fueled from a Shell combined gasoline-hydrogen service station – the first in the Netherlands.

Iceland: Reykjavik
Shell was a founder member of the Ecological City Transport System project that denoted the feasibility of using hydrogen to power a public transport fleet in Iceland. The station has fueled three hydrogen-powered buses for three years and is now fueling 10 hydrogen I.C.E. [internal combustion engine] passenger cars and two fuel-cell vehicles until 2010.

E.U. Joint Technology Initiative Shell has been leading the development of the proposed Joint Technology Initiative for almost four years. This is a substantial public-private partnership at the European level to define and implement a European program of industrial research, technological development, and demonstrations on hydrogen and fuel cells to prepare for the roll-out of these technologies – and will be launched in October 2008.

ET: Shell recently opened a hydrogen station in Los Angeles that produces hydrogen on-site, using an electrolyzer. Is that hydrogen produced from natural gas?

DM: No. Shell Hydrogen recently opened its second combined gasoline and hydrogen station on Santa Monica Boulevard in West Los Angeles in June 2008. Hydrogen at the Shell station is produced on-site by the electrolysis of water using electricity purchased from the Los Angeles Department of Water and Power. This process uses electricity and a catalyst to separate the hydrogen from the oxygen in water. It is then compressed and stored to provide daily fueling.

ET: How much is Shell charging motorists for the hydrogen on a gallon of gasoline equivalent basis?

DM: Our aim is to provide hydrogen at a price comparable to existing fuels within the next 10 to 20 years, when mass production of F.C.V.s is likely to begin. Hydrogen is dispensed by the kilogram (kg) and not by the gallon. A kg of hydrogen in a fuel-cell vehicle is about twice as efficient as a gallon of gas in an internal combustion engine, and it is estimated the market price for each kg would be about twice the cost of a gallon of gas. Some of our pilot stations have dispensed hydrogen at a notional cost of $5 per kg – equivalent to $2.50 per gallon of gasoline – but future prices are likely to follow market economics in the same way conventional fuels do.
The cost of hydrogen still needs to decrease in order to become competitive with conventional fuels, even using currently available excess hydrogen and existing infrastructure. The retail end of the supply chain has the biggest cost reduction potential, and there are options available that help lower the costs: integration into existing retail sites, avoiding overcapacity through coordinated roll-out, and government incentives that account for an increase in supply costs when new assets have to be built. This is not something that one company can accomplish on its own and it will require a cooperation of energy companies and policymakers as well as O.E.M.s, all working together to achieve this.
ET: On average, about how much does a new car powered by a hydrogen fuel cell cost to produce?

DM: My understanding is that the first generation of F.C.V.s, most of which were individually hand-built, cost between $500,000 and $1 million each to produce; however, this figure is not relevant for the future, since once the O.E.M.s have completed two, or perhaps three, more generations of demonstration programs and move into mass production, I am confident they will produce at costs similar to existing I.C.E. vehicles. I would suggest you check with auto O.E.M.s on these numbers.

Fuel-cell vehicles have the potential to be produced for less than current conventional combustion engines, owing to fewer moving internal components. However, the biggest obstacle to widespread fuel-cell deployment today is cost and durability. Hydrogen fuel cells – both stationary and automotive – are nowhere near cost-competitive yet with existing technologies, despite rapid improvements in recent years. However, car companies, governments, and others are actively working on fuel-cell solutions today to further drive down costs.

ET: One part of the “hydrogen economy” that is often overlooked is the amount of hydrogen that refiners are using in order to produce cleaner motor fuels. About how much hydrogen does Shell produce each year? About how much hydrogen does Shell use in its own refineries per year?

DM: Shell produces thousands of tons a day globally in its manufacturing centers, and has been producing these kinds of volumes for decades. Of course, virtually all is currently used for processing heavier crude oils and in meeting higher quality end-product specifications, since the transport fuel business is in its infancy.

ET: We have been hearing about the “hydrogen economy” for years. In your view, how many more years will pass before we see hydrogen-powered cars taking a 10 percent share of the passenger car market in Europe or the U.S.?

DM: Based on the current development plans of auto O.E.M.s, it is generally recognized that the mass production of F.C.V.s will begin around 2020 with commercialization a few years earlier. To this end, Shell has restructured its organization to prepare for hydrogen’s transition into the mainstream, bringing it into our downstream fuels portfolio, alongside gasoline, diesel, LPG, and CNG, as well as biofuels and GTL.

The hydrogen industry now stands at a pivotal juncture: investment is rising, costs are falling, and technology is rapidly advancing. Numbers of F.C.V.s have been demonstrated successfully and more hydrogen refueling stations are being put in place.

Although there is a broad consensus that the mass roll-out of F.C.V.s by 2020 is achievable, no outcome can be guaranteed. It is therefore essential that industry steps up its game, and all stakeholders in the value chain work together with regular, open, and transparent dialogue.