20 May 2022
Insuring the Unknown Quantity: Hydrogen from Waste
Drawing together the benefits of green hydrogen production and sustainable waste management, is green hydrogen-from-waste the next frontier for bioenergy?
Grey, blue – sometimes even pink, yellow, turquoise – the taxonomy of hydrogen production is a veritable rainbow of colours; the goal, however, is green. Green hydrogen is now generally accepted to be essential to meeting net-zero goals with a market potential of €10 trillion by 2050, according to Goldman Sachs. Currently, the technology route to green hydrogen receiving most attention is renewable electrolysis, which comprises an electrolyser, powered by renewable energy, split water into its component chemicals – hydrogen and oxygen. Various technologies are available; however, they remain far from cost competitive with traditional grey hydrogen production. Grey hydrogen itself is a carbon-intensive process that uses natural gas or coal as a feedstock. Grey hydrogen plants can be equipped with carbon capture and storage (CCS) to lower their carbon intensity and produce ‘blue’ hydrogen, but capture rates fall below 90%. Other technologies may offer higher capture rates (e.g., methane pyrolysis, or ‘turquoise’ hydrogen’), but these remain in the pilot stage of development. The above production techniques are also subject to the vagaries of the energy market – whether that be the availability of sufficient renewable energy2 or fossil fuel prices. As of December 2021, increases in the price of natural gas in Europe had driven the cost of grey hydrogen above that of green hydrogen. This was before the disruption to gas supplies brought on by the crisis in Ukraine. Another factor is the efficiency of the electrolysis process itself, which consumes much more energy than it produces (as hydrogen), although ongoing research is likely to see this improve. Against this background, interest in alternative green hydrogen production methods is rising. One such pathway is the production of hydrogen from biomass – and particularly, from waste.
A potted history of bioenergy
Biomass has, of course, been used as an energy source since the dawn of time. The late 20th Century saw interest in biomass rise, as a more sustainable way of fuelling traditional steam-based electricity generation. Unlike fossil fuels, biomass – whether agricultural or forestry waste, or crops grown for the purpose – is considered carbon-neutral, as it absorbs sufficient CO2 during its growth to offset the CO2 emitted when it’s burned. This remains the model for the world’s largest biomass-fired power plant: Drax in the UK. From around 2015 to the end of subsidies in 2017, the biomass industry in the UK evolved towards the use of municipal solid waste (MSW) as the fuel source (a technology that had been adopted for some time in other European countries). Energy-from-waste (EfW) has the linked-benefit of helping reduce the quantity of waste heading for landfill. But it remains controversial and often the victim of local opposition (not to mention here). In recent years, the EfW sector has continued to develop with companies looking into value-added processes that produce alternative fuels, such as sustainable aviation fuel (SAF). And this is where EfW intersects with green hydrogen.
Green hydrogen from waste
The basis of any fuel-from-waste process – whether that be green hydrogen or SAF – is gasification, which converts MSW into a synthesis gas. This is an important departure point from incineration-based processes, as gasification uses MSW not as a fuel but as a feedstock for the production of higher-value commercial products. The benefits of hydrogen-from-waste are potentially significant. For a start, it is cheaper than electrolysis. It also allows renewable energy generation to be focused on other areas of the net-zero transition, such as charging electric vehicles. There is also the issue of availability: ‘everywhere that people live, waste is generated, but not everywhere […] is great for wind or solar’, as one industry participant put it. And there is a lot of waste. The world currently generates about 2 billion tonnes of MSW; by 2050, that amount is expected to have reached 3.4 billion tonnes. As landfills overflow, the most obvious challenge is where we will put such a huge volume of our detritus. A secondary challenge arises from the fact that landfilling also produces methane– a greenhouse gas (GHG) that is significantly more harmful than CO2. Waste-to-fuel processes therefore offer a double-win when it comes to GHG emissions reduction in that they both replace the use of fossil fuels with clean alternatives, and eliminate a potent – but hard-to-abate – source of GHG emissions.
The gasification technology challenge
Gasification technologies are not without their challenges. Despite much initial hype, a number of MSW gasification projects in the UK have failed at a cost of more than £1 billion. Newer technologies and projects are emerging, however, that are raising hopes for cost-effective hydrogen-from-waste. Gaining insurance coverage for such projects can – as with all new technologies – be a challenge, but a challenge that can be mitigated by early engagement with an expert broker. With experience in obtaining insurance for both prototypical technologies and gasifiers in the bioenergy sector, Gallagher understands the concerns insurers have about such projects, and has a track record of successfully organizing coverage.
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