Hydrogen Economy - Perspective: Current Hydrogen Market (current Hydrogen Economy)

Perspective: Current Hydrogen Market (current Hydrogen Economy)

Hydrogen production is a large and growing industry. Globally, some 50 million metric tons of hydrogen, equal to about 170 million tons of oil equivalent, were produced in 2004. The growth rate is around 10% per year. Within the United States, 2004 production was about 11 million metric tons (MMT), an average power flow of 48 gigawatts. (For comparison, the average electric production in 2003 was some 442 gigawatts.) As of 2005, the economic value of all hydrogen produced worldwide is about $135 billion per year.

There are two primary uses for hydrogen today. About half is used in the Haber process to produce ammonia (NH₃), which is then used directly or indirectly as fertilizer. Because both the world population and the intensive agriculture used to support it are growing, ammonia demand is growing. The other half of current hydrogen production is used to convert heavy petroleum sources into lighter fractions suitable for use as fuels. This latter process is known as hydrocracking. Hydrocracking represents an even larger growth area, since rising oil prices encourage oil companies to extract poorer source material, such as tar sands and oil shale. The scale economies inherent in large-scale oil refining and fertilizer manufacture make possible on-site production and "captive" use. Smaller quantities of "merchant" hydrogen are manufactured and delivered to end users as well.

If energy for hydrogen production were available (from wind, solar, fission or fusion nuclear power etc.), use of the substance for hydrocarbon synfuel production could expand captive use of hydrogen by a factor of 5 to 10. Present U.S. use of hydrogen for hydrocracking is roughly 4 million metric tons per year (4 MMT/yr). It is estimated that 37.7 MMT/yr of hydrogen would be sufficient to convert enough domestic coal to liquid fuels to end U.S. dependence on foreign oil importation, and less than half this figure to end dependence on Middle East oil. Coal liquefaction would present significantly worse emissions of carbon dioxide than does the current system of burning fossil petroleum, but it would eliminate the political and economic vulnerabilities inherent in oil importation.

Currently, global hydrogen production is 48% from natural gas, 30% from oil, and 18% from coal; water electrolysis accounts for only 4%. The distribution of production reflects the effects of thermodynamic constraints on economic choices: of the four methods for obtaining hydrogen, partial combustion of natural gas in a NGCC (natural gas combined cycle) power plant offers the most efficient chemical pathway and the greatest off-take of usable heat energy.

The large market and sharply rising prices in fossil fuels have also stimulated great interest in alternate, cheaper means of hydrogen production. As of 2002, most hydrogen is produced on site and the cost is approximately $0.32/lb and, if not produced on site, the cost of liquid hydrogen is about $1.00/lb to $1.40/lb.