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June 15 (Renewables Now) - The global refining industry could create demand for low-carbon hydrogen of 50 million tonnes per year (Mtpa), Wood Mackenzie has estimated.
The sector is a large hydrogen consumer and in 2020 used about 32 million tonnes of hydrogen, accounting for 30-35% of global hydrogen demand, the firm said last week.
More than 65% of this demand, however, is unlikely to be substituted with green or blue hydrogen as it is met by hydrogen as a by-product. So, potential demand for low-carbon hydrogen here is seen at up to 10 Mtpa by 2050.
A larger market for low-carbon hydrogen could be created by replacing fossil fuels in combustion applications to generate heat and steam, potentially reaching up to 40 Mtpa by 2050 for a total potential demand of up to 50 Mtpa by that year, explained Wood Mackenzie research director Sushant Gupta. This use of low-carbon hydrogen could reduce carbon emissions in the refining sector by up to 35%.
“In addition to falling costs for low-carbon hydrogen, higher carbon prices, financial incentives and stronger policy support will be necessary to accelerate adoption by the refining sector,” said Gupta.
At current high and volatile gas prices and in the aftermath of the war in Ukraine, green hydrogen is cheaper than fossil fuel-based grey hydrogen, the firm says.
With respect to combustion applications, a much bigger cost reduction, or a much higher carbon price is needed for low-carbon hydrogen to compete than the levels required to compete with on-purpose hydrogen.