How and why energy companies go for hydrogen

Indian Oil Corp., one of Asia's largest refineries, is taking the bus to reach what it considers the future of energy : hydrogen. The company that sells nearly half of India's petroleum products will deploy 50 buses around the capital powered by fuel cells that run on hydrogen compressed natural gas, President Shrikant Madhav Vaidya said. The fleet will serve the public and could start circulating as early as this year, potentially creating a new market for a manufacturer looking to recover from its first annual loss in at least 20 years.

Hydrogen, long touted as the fuel of the future, had some success at this week's S&P Global Platts Asia Pacific Petroleum Conference, as some of the world's largest refiners, drills and traders hailed it as the key to fighting climate change. – writes Bloomberg . The efforts are emblematic of an oil industry seeking to reposition itself after the pandemic has wiped out demand and as shareholders are calling for a reduction in greenhouse gas emissions.

" Hydrogen appears to be the most disruptive and has the potential to grow 10 times between now and 2050, " said Giovanni Serio, global research manager for Vitol Group, the world's largest independent oil trader. " It could be the one that solves the problem of energy storage and later also tackles the demand of the transport sector ".

According to BloombergNEF, nearly $ 11 trillion in infrastructure investments for hydrogen production, storage and transportation are needed to meet about a quarter of the world's energy needs by 2050.

The fuel's unique benefits include high energy density, flexibility of production sources, and a wide range of applications, Vaidya said. It also does not emit greenhouse gases if produced with renewable energy, even if most of the current production takes place with polluting methods.

" With India and Asia set to drive global energy demand in the future, hydrogen represents a potential panacea, " Vaidya said.

Not everyone is thrilled that gas plays a role in the near future. Costs haven't come down enough yet, said Ed Morse, Citigroup's global head of commodities research. There are also safety concerns following the explosion of hydrogen tanks in South Korea and Norway last year. Morse sees carbon capture as a more realistic prospect of a short-term energy transition.

" I'm looking at hydrogen as a late decade phenomenon ," he said.

China's largest refinery, Sinopec, will integrate hydrogen at its retail refueling stations around Beijing. The country wants 1 million fuel cell vehicles on the roads in a decade.

Equinor ASA of Norway is building a large carbon capture and storage facility that could be a source of hydrogen in the future. BP Plc. expects hydrogen power generation and green ammonia to be areas of growth, Eugene Leong, chief operating officer of BP Singapore Pte Ltd., said at the conference.