20.11.2024
Grey Hydrogen: The Most Widely Used Form of Hydrogen – And Why We Need to Move Towards Green Hydrogen
Takeaways
- Definition: Grey hydrogen is the most common type of hydrogen used today, primarily produced from natural gas.
- Production Process: Grey hydrogen is created through steam methane reforming (SMR), which releases CO₂.
- Primary Users: Industries like refining, ammonia production, and methanol manufacturing are major consumers.
- Pros & Cons: It is cost-effective but has a very high carbon footprint.
- Costs: Grey hydrogen is less expensive than green hydrogen due to lower production costs.
- Transitioning to Green: While the shift is challenging, existing infrastructure can sometimes support green hydrogen.
- Future Trends: Rising carbon taxes and emissions targets are driving a push toward lower-emission alternatives.
Introduction to Grey Hydrogen
The grey variant of hydrogen dominates the current industrial hydrogen market. For many companies, it’s the preferred choice, largely due to its availability and lower costs. But with global pressure to cut carbon emissions, its environmental impact is under scrutiny. This article will explore this type of hydrogen in-depth, covering its production, use cases, cost implications, and challenges associated with shifting to green hydrogen.
What Is Grey Hydrogen?
Grey refers to hydrogen produced from natural gas through a process known as steam methane reforming (SMR). Unlike green hydrogen, which uses renewable electricity and water electrolysis, grey hydrogen is associated with CO₂ emissions. This method is straightforward and cost-effective, making it popular across multiple industries. However, it has a high environmental toll.
The Science Behind Grey Hydrogen Production
During SMR, natural gas is combined with high-temperature steam, causing a reaction that generates hydrogen gas and CO₂ as by-products. The CO₂ released during this reaction contributes directly to greenhouse gas emissions. Despite this, SMR is widely used due to the simplicity and efficiency of the process.
Natural Gas Input: Methane is the primary input.
Steam Reforming: Methane and steam react to form hydrogen and carbon monoxide.
Water-Gas Shift Reaction: The carbon monoxide reacts with steam again, producing more hydrogen and CO₂.
Hydrogen Separation: The hydrogen is then separated from other gases for use in various applications.
Where Grey Hydrogen Is Used and Why
Industries that consume vast amounts of hydrogen tend to use this type of hydrogen because of its cost-effectiveness and accessibility. Key sectors include:
Petroleum Refining: Used to remove sulfur from crude oil, creating cleaner-burning fuels and complying with emissions regulations.
Ammonia Production: Essential for nitrogen-based fertilizers, indispensable to the agriculture industry.
Methanol Production: Methanol, produced using hydrogen, is foundational for many plastics, resins, and chemicals.
Steel Manufacturing: Some steel producers use hydrogen to reduce the iron ore, though grey hydrogen’s CO₂ footprint makes it less ideal.
Electronics and Semiconductor Manufacturing: Grey hydrogen is sometimes used in controlled environments for applications like semiconductor manufacturing.
Reasons for Widespread Use in Industry
Grey hydrogen is popular due to some practical advantages:
Cost Advantage: The infrastructure needed to produce hydrogen is established and affordable, allowing companies to operate with minimal investment.
Supply Chain Readiness: Grey hydrogen benefits from an existing supply chain, making it easier to transport and use in multiple industrial applications.
The Pros and Cons of Grey Hydrogen
Benefits
Low Production Costs: Grey hydrogen is currently more affordable than green hydrogen, costing roughly $1 to $2 per kilogram, while green hydrogen costs can reach $4 to $8 per kilogram (approximated prices in 2024).
Infrastructure Compatibility: The storage and distribution systems for grey hydrogen are well-established, meaning industries don’t need to invest heavily in new infrastructure.
Reliability: SMR is a mature technology that provides a reliable hydrogen supply without the intermittency associated with renewable energy sources.
Drawbacks
Carbon Emissions: Grey hydrogen’s primary disadvantage is its high CO₂ emissions. For every ton of hydrogen produced, up to 10 tons of CO₂ are emitted compared to 3 tons of CO₂ emitted when a ton of gasoline used
Fossil Fuel Dependency: Grey hydrogen production relies on natural gas, perpetuating the reliance on fossil fuels and contributing to the depletion of nonrenewable resources.
Environmental Costs: Grey hydrogen’s contribution to climate change is increasingly seen as a disadvantage in light of global emissions reduction targets.
Political instability: The availability of grey hydrogen depends on the cost and availability of natural gas. As the war between Russia and Ukraine and the global energy market have shown in recent years, the price of natural gas can be easily inflated due to political situations which in turn drives up its cost.
Cost of Grey Hydrogen
The cost of production remains lower than that of green hydrogen, driven by the widespread availability of natural gas and established SMR technology. Here are the major cost factors:
Natural Gas Prices: As the primary input, fluctuations in natural gas prices directly impact grey hydrogen’s production costs.
Carbon Taxes: Many regions impose carbon taxes on CO₂ emissions, potentially raising the overall cost of grey hydrogen.
Maintenance and Operational Costs: Compared to emerging green hydrogen technology, grey hydrogen systems have lower ongoing costs due to the maturity of the technology and smaller required energy input.
While it remains affordable today, rising carbon costs may lead to a shift in pricing dynamics, making green hydrogen increasingly competitive in the future.
Grey Vs. Green hydrogen
The following table provides a concise yet comprehensive comparison of grey and green hydrogen:
| Category | Grey | Green |
| Definition | Produced using natural gas through steam methane reforming (SMR). | Produced by water electrolysis powered by renewable energy sources. |
| Production Process | Uses methane (natural gas) and steam; releases CO₂ as a by-product. | Splits water into hydrogen and oxygen using renewable electricity, emitting no CO₂. |
| Environmental Impact | High carbon footprint; emits ~10 tons of CO₂ per ton of hydrogen produced. | Zero direct emissions; environmentally sustainable. |
| Primary Energy Source | Fossil fuels (natural gas). | Renewable energy (solar, wind, hydro). |
| Cost | $1–$2 per kilogram (depending on natural gas prices). | $4–$8 per kilogram (costs decreasing as technology improves). |
| Infrastructure | Established pipelines, storage, and distribution systems. | Can use existing hydrogen infrastructure with no modifications. |
| Industrial Applications | Widely used in refining, ammonia, methanol production, and steel manufacturing. | Emerging uses in energy storage, transport, and decarbonised industrial processes. |
| Advantages | Low production cost. Mature technology. | Environmentally friendly. Supports global decarbonisation goals. Renewable. |
| Disadvantages | High CO₂ emissions. Fossil fuel dependency. Unsustainable long-term. | High initial production cost. Dependent on renewable energy supply. |
| Scalability | Easily scalable due to existing infrastructure and technology. | Scaling requires significant investment in renewable energy and electrolyser production. |
| Regulatory Pressure | Increasingly taxed for CO₂ emissions and facing stricter environmental policies. | Supported by subsidies, incentives, and global emissions reduction goals. |
| Safety | Requires careful handling due to flammability and high-pressure storage. | Requires careful handling due to flammability and high-pressure storage. |
| Future Prospects | Likely to decline as green hydrogen becomes cost-competitive. | Expected to dominate hydrogen markets as technology advances and costs fall. |
Transitioning from Grey to Green Hydrogen
Using Existing Infrastructure
In many cases, the infrastructure for grey hydrogen, including pipelines and storage tanks, can be adapted to support green hydrogen without modifications. This adaptability is a significant advantage as industries work to reduce their carbon footprint without overhauling their entire infrastructure.
Technological and Economic Challenges
Switching to green hydrogen is not without obstacles. Green hydrogen production relies on electrolysers powered by renewable energy sources, and while costs are dropping, they remain relatively high. Additionally, scaling green hydrogen production to meet the demands currently met by grey hydrogen will require substantial advancements in renewable energy capacity.
Government Incentives and Funding
Several governments are incentivizing the shift to green hydrogen through subsidies, tax breaks, and research funding. These measures are aimed at helping industries bridge the cost gap between grey and green hydrogen. For instance, the European Union’s “Fit for 55” plan encourages industries to adopt low-carbon technologies, including green hydrogen, as part of its emissions reduction goals.
Is Grey Hydrogen Dangerous?
While it is non-toxic, it is flammable and requires careful handling. Hydrogen is highly reactive and can leak more easily than other gases due to its small molecular size. Safety standards are strict in hydrogen-using industries, which helps prevent accidents, but any type of hydrogen storage and transport must be managed carefully to avoid leaks and potential explosions.
Environmental Regulations
Carbon Taxes and Emission Limits
As carbon taxes and emission reduction targets rise, the cost of grey hydrogen is likely to increase. Some countries are imposing stricter carbon caps on industries, pushing companies to consider alternatives. This regulatory pressure is a key driver for exploring green hydrogen and other low-emission solutions.
Corporate Sustainability Initiatives
Many large corporations are setting ambitious sustainability goals, which could accelerate the transition away from the grey variant. By switching to green hydrogen, companies can better align with their corporate social responsibility (CSR) objectives, positioning themselves as leaders in sustainable practices.
Frequently Asked Questions About Grey Hydrogen
What is grey hydrogen?
It is hydrogen produced from natural gas via steam methane reforming, which emits CO₂.
How does grey hydrogen differ from blue hydrogen?
Blue hydrogen is also produced from natural gas but includes carbon capture and storage (CCS) to reduce emissions.
Why do industries prefer grey hydrogen?
Its low cost and established infrastructure make it an accessible option for high-volume use.
Is grey hydrogen safe?
Hydrogen is flammable, but with proper handling and protocols, it is safe for industrial and consumer use.
Can grey hydrogen infrastructure be used for green hydrogen?
Yes, it accommodates green hydrogen.
What are the environmental impacts of grey hydrogen?
Its production emits CO₂, contributing to global warming.
Can grey hydrogen be made carbon-neutral?
Carbon emissions can only be reduced with carbon capture technologies, which are not widely applied yet and do not fully eliminate the emissions
Which sectors rely most on grey hydrogen?
Oil refineries, fertilizer producers, and chemical manufacturers are the primary consumers.
How long will grey hydrogen remain dominant?
Likely until green hydrogen production becomes more cost-competitive and scalable.
Does grey hydrogen contribute to air pollution?
Indirectly, as its production releases CO₂, contributes to climate change.
Conclusion
Grey hydrogen remains central to many industries, offering affordability and accessibility. However, with environmental impacts and evolving regulatory standards, the future of hydrogen lies in greener alternatives. Here’s a recap of the key points:
Grey hydrogen is widely used but contributes to CO₂ emissions.
Industries like oil refining and chemical production rely heavily on grey hydrogen.
Transitioning to green hydrogen requires economic incentives and infrastructure adjustments.
To learn more about how to migrate your industry from grey to green hydrogen and become part of the future of sustainable hydrogen technologies, contact our team of experts.
