The Hydrogen Economy Faces Big Challenges

Despite the hype, hydrogen is a poor fuel facing major obstacles. It may only play a marginal role in the energy transition.

Ah, the hydrogen economy. That’s the name given to the future where hydrogen made from zero-carbon sources is used in myriad applications to lower the global economy’s carbon footprint.

The wonder fuel theoretically could be used to store energy from wind and solar farms, power industrial processes, and potentially even be used in certain transportation applications.

It all looks so promising on paper. In reality, green hydrogen – and the hydrogen economy at large – faces a number of challenges spanning economical, technical, and commercial. It has one of the lowest energy densities of any available fuel, presents unique safety risks, and faces logistical hurdles for storage and distribution.

These obstacles haven’t stopped governments and companies across the globe from investing billions of dollars in hydrogen manufacturing technologies and projects. Then again, the same could be said of biofuels during the mid-2000s – and we have relatively little to show for it nearly two decades later. Therefore, investors shouldn’t overlook these challenges facing the hydrogen economy.

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Hydrogen Has a Low Energy Density

It’s common to read that hydrogen has an unrivaled energy density, but it would be difficult to find a worse fuel than hydrogen. The confusion stems from the fact there are multiple ways to define energy density.

The two most meaningful metrics quantify the amount of energy contained within a certain mass or volume.

On a mass basis, hydrogen is one of the most energy dense fuels. One kilogram of hydrogen contains nearly three times more energy than one kilogram of gasoline.On a volume basis, hydrogen is one of the least energy dense fuels. One liter of hydrogen contains only 25% of the energy of one liter of gasoline and only 20% of the energy of one liter of diesel fuel.

What metric takes precedent? Well, hydrogen exists as a gas at atmospheric pressure and temperature. That means one kilogram of hydrogen takes up a very large space. A 3,221-gallon tank would be needed to hold just one kilogram of hydrogen gas.

For hydrogen to be useful as a fuel, stored, or transported it must be condensed and compressed into a liquid. That requires significant amounts of energy, which represents additional costs for the hydrogen economy beyond manufacturing hydrogen.

For example, gasoline or diesel fuel can be stored in tanks without much maintenance. Hydrogen fuel requires constant energy input and/or novel materials to be supercooled or pressurized during storage.

Hydrogen Has Unique Safety Risks

All fuels present safety risks. The wonder fuel has a few that could be costly to mitigate.

First, hydrogen flames don’t burn in the visible spectrum. In other words, a hydrogen flame is invisible to the human eye. Special flame detectors are required.

That poses a unique safety risk for emergency response teams, especially if the hydrogen economy becomes widespread beyond industrial applications. Does your local fire department have the tools needed to see hydrogen flames? How much would it cost to outfit emergency responders across the nation?

Second, hydrogen is flammable at lower concentrations and lower temperatures than commonly used fuels. Even a relatively small leak could become dangerous. This risk is elevated because hydrogen molecules are very small, which means leaks will be very common. The low density of hydrogen would actually help here, as hydrogen leaks would quickly disperse into the air. Nonetheless, mitigation will require special sensors to detect leaks, and perhaps more stringent ventilation requirements for distribution and storage infrastructure.

Third, hydrogen can make certain materials more brittle. It’s so common and vexing it has its own specific engineering term called “hydrogen embrittlement.” The problem has for decades forced engineers to design steels and materials that resist weakening, especially for pipelines and aircraft engines. Otherwise, pipelines would be jettisoned into the sky and planes would fall out of it.

Although advances in materials science have mitigated this risk, they were intended for relatively low concentrations of hydrogen. Materials intended to store or transport hydrogen – such as your kitchen stove or the pipes delivering natural gas to your home – would need to tackle this problem anew.

Hydrogen Distribution is Challenged

Perhaps the biggest obstacle facing the hydrogen economy is the transportation and distribution of hydrogen. It’s caused by a combination of the challenges above.

Meaningful volumes of hydrogen cannot be transported in existing steel pipelines. That’s because hydrogen isn’t very dense (leading to compression challenges) and steel pipelines would be degraded over time.

This problem is acute for green hydrogen projects. It’s one thing to build an onshore wind farm or utility-scale solar farm to generate commercial volumes of hydrogen. It’s another thing to move the hydrogen where it needs to be consumed. Many renewable energy projects are built in areas without infrastructure, meaning entirely new (and expensive) non-steel pipelines would need to be constructed.

The same obstacle is staring down the widespread use of hydrogen by homes and businesses. Existing infrastructure for distributing natural gas cannot be reliably or safely used to transport hydrogen. Even if the wonder fuel can be manufactured at attractive costs, will cities, states, and countries balk at the enormous cost of overhauling millions of miles of steel pipelines and distribution networks?

Challenges Create Opportunities

Investors should always remember that they invest in businesses, not technologies. The hydrogen economy may receive a lot of investment and attention, but it faces significant obstacles to becoming a reality.

The challenges discussed above could be used to properly assess risks for hydrogen stocks, or to seek out emerging opportunities before the rest of the market catches on. For example, a company that manufactures hydrogen flame or hydrogen leak detectors could see a boon in business.

Likewise, pink hydrogen (manufactured from nuclear reactors) could boast significant advantages over green hydrogen, namely in existing infrastructure and being located near industrial customers.

It’s also worth pointing out that many existing technologies, from electricity to telephone lines, required massive investments in infrastructure. Society still decided it was worth the cost. Will we come to the same conclusion for hydrogen?