Energy Gang: “Does Clean Hydrogen Have a Future? Finding a Role for Hydrogen in a Low-Carbon Energy Economy”

Release Date: January 22, 2025
Host: Ed Crooks (Wood Mackenzie)
Guests:

• Dr. Melissa Lott (Microsoft)
• Austin Knight (Chevron New Energies)

Episode Overview

This episode delves deep into the evolving role of clean hydrogen in the low-carbon energy transition. Hydrogen, often touted as the “Swiss army knife” for decarbonization, faces complex practical, policy, and economic challenges that are shaping its real-world deployment. With perspectives from Microsoft’s Dr. Melissa Lott and Chevron’s Austin Knight, the discussion explores where hydrogen genuinely fits in the future energy mix, scrutinizing its practicality across industrial, transportation, and power sectors—and weighs the hype cycles, infrastructure hurdles, and real-world economics underpinning hydrogen’s road ahead.

Key Discussion Points & Insights

1. The Promise and Pragmatism of Hydrogen

• Hydrogen’s Core Value: Hydrogen’s primary appeal is its potential to decarbonize sectors where electrification is impractical or expensive, making net zero more cost-effective in select applications.
  • “On a trajectory towards net zero, it is cheaper to achieve net zero by utilizing hydrogen in certain sectors than it is to achieve net zero without utilizing hydrogen at all.” — Austin Knight [04:36]
• Swiss Army Knife Analogy: While hydrogen is versatile, it is not always the best or most economical solution everywhere:
  • “Swiss army knife does not replace my favorite at-home toolbox...It doesn't make a lot of sense if you're really trying...you probably don't want to do that with the Swiss army knife. You want a proper wrench.” — Melissa Lott [05:38]

2. Moving Past Hype: Where Is Hydrogen Really Useful?

• Recognition that hydrogen goes through cycles: from overhyped cure-all to periods of skepticism, with the current mood shifting to sobered pragmatism.

  • “Hydrogen has gone from the hydrogen future, the hydrogen revolution...to like, okay, how do we do this in these places that make sense to do it?” — Melissa Lott [08:39]

• Hydrogen “Rainbow” and What Matters Most

  • Multiple colors denote hydrogen’s production pathways (green, blue, pink, etc.), but the focus should be carbon intensity, not nomenclature.
    • “The only question you should ask is, is it clean for me and you?... Tell me what that means in terms of carbon intensity.” — Austin Knight [10:44–11:19]
  • Policy and public acceptance for “which color” depends on each country’s goals and context.

3. Where Does Hydrogen Fit?

Austin Knight (Chevron) identifies three primary sectors:

1. Heavy Industry (Industrial Heat/Processes):
   • Especially where high, always-on heat is required (steel, refining, petrochemicals) and electrification is difficult or cost-prohibitive.
   • Blue hydrogen (from natural gas with CCS) seen as more readily scalable now; green hydrogen (from renewables) has future potential.
   • “Heavy industry, always on type of processes...[is] where hydrogen applications may fit, you’re always going to have alternatives...” — Austin Knight [13:22]
2. Heavy-Duty Transport:
   • Focus on heavy trucks, long-distance, high-utilization vehicles, select shipping, perhaps long-term potential in aviation (via hydrogen derivatives like ammonia or synthetic fuels).
   • Still early—batteries are rivals for some applications, infrastructure and vehicle costs remain hurdles.
   • “When there’s a desire to move large quantities of cargo or people very heavy over long distances with high utilization hydrogen is a solution that is viable there.” — Austin Knight [31:33]
3. Power & Long-Duration Energy Storage:
   • Used to store surplus renewable generation for grid reliability, not aiming to out-compete batteries for short duration, but uniquely applicable for seasonal/long-term backup.
   • Projects like Utah’s ACES (Advanced Clean Energy Storage) are cited as case studies.
   • “The electrons that are coming into this process are otherwise curtailed electrons...The batteries can't do it at the scale that we’re talking about for the seasonality...” — Austin Knight [40:13]

4. What About Hydrogen in Homes?

• Blending hydrogen into natural gas for home heating is likely a niche, stepping-stone application at best (for safety, economic, and infrastructure reasons).
  • “I do think it’s more of a stepping stone or a niche application more than something that will be wholesale adopted where you’re really going to see the value and the benefits pay off for hydrogen to be the winner.” — Austin Knight [15:50]

5. Infrastructure & Safety Challenges

• Existing gas infrastructure often isn’t ready for high hydrogen blends due to issues like embrittlement and incompatibility with legacy pipes—fixable in principle, but expensive and complex.
  • “Existing infrastructure not being ready for it...Is the material that that pipeline is made of able to be in contact with hydrogen or just some crazy chemistry happen...it breaks, which not good when you want to move gas around.” — Melissa Lott [20:22]

6. Economics: The Cost Challenge

• Clean hydrogen remains substantially more expensive than fossil alternatives; broad deployment hinges on higher carbon prices and/or strong policy incentives.
  • “Clean hydrogen is not naturally competitive with higher carbon alternatives...It’s the right solution for those hard-to-abate sectors...going to be more costly in terms of dollar per ton abatement.” — Austin Knight [47:11, 65:39]
  • “$5 per kilo…is about 6x the energy equivalent cost of natural gas in Europe pre-Ukraine crisis ($6/mmbtu).” — Ed Crooks [64:04]

7. Policy, Coordination, and the Path Forward

• Hydrogen’s success will require strong policy frameworks, multistakeholder alignment, and clear market signals—not just for supply, but for coordinated demand.
  • “No one group can go it alone…if you’re going to deploy this at scale, it takes a lot of coordination, a lot of effort.” — Melissa Lott [51:26]
• Recent National Petroleum Council report (NPC) provides sober, practical pathways; US policy still nascent; export markets (Europe, Asia) may drive initial demand but face the same cost challenge.

Notable Quotes & Memorable Moments

• Melissa Lott on hydrogen hype cycles:
  “There are these moments where it’s like hydrogen everywhere for everything. Oh, wait for nothing. Oh, wait for some things. And I just feel like it’s important to highlight that part of the conversation.” [05:38]
• Austin Knight on cost and carbon:
  “The carbon intensity of how that hydrogen is produced really matters. It is useful shorthand, but it doesn’t tell you the thing that really matters most…ultimately, you’re replacing something else, because this is the best way to reduce the carbon intensity of an operation.” [11:19]
• Melissa Lott on the TEAM approach for decarbonizing the grid:
  “To get to a mix where you have 24/7, 365 reliable and affordable electricity, you need firm dispatchable power in addition to energy storage, in addition to variable renewables…” [42:06]

Timestamps for Key Segments

| Timestamp (MM:SS) | Topic / Segment | |-----------------------|---------------------| | 00:01–02:13 | Intro and guest introductions | | 04:36 | “Why hydrogen?”—hydrogen’s fit in net zero strategies (Austin Knight) | | 05:38 | Hydrogen as the “Swiss army knife”—utility vs. best fit (Melissa Lott) | | 08:27–09:46 | Hype, reality cycles & optimism for practical solutions (Melissa Lott) | | 10:27–13:22 | The “hydrogen rainbow” and focus on carbon intensity not just color | | 15:18–18:05 | Hydrogen for home energy use—why it’s a limited market (Austin Knight, Melissa Lott) | | 18:05–22:23 | Safety, infrastructure challenges, and real-world feasibility | | 22:30–30:35 | Top potential applications: heavy industry, transport, energy storage—what’s plausible? | | 31:33–37:37 | Hydrogen for trucks, shipping, aviation; fuel cells vs. e-fuels; cost and scaling up likely pathways | | 37:37–46:02 | Long-duration energy storage: the Utah ACES project—promise, challenges, critique on efficiency | | 47:11–58:06 | Hydrogen’s economic / policy headwinds; findings from National Petroleum Council’s major study | | 58:06–68:38 | Supply-demand disconnect, what’s needed for customers to want hydrogen, and future prospects | | 64:04–67:56 | The fundamental cost challenge: can hydrogen compete? | | 68:38–69:09 | Close and signoff |

Conclusion & Final Takeaways

• Hydrogen will not be a universal solution, but it is likely to be crucial for hard-to-electrify sectors that demand high heat, high utilization, or seasonality solutions (e.g., steel, refining, long-haul trucking, power backup/storage).
• Economics and infrastructure are the biggest barriers. Hydrogen is still pricey, and its infrastructure isn’t “drop-in” compatible with today’s fossil systems.
• Policy remains critical. Scaling clean hydrogen demands persistent, coordinated effort between government, industry, and researchers.
• Hydrogen’s time horizon is long-term. Major growth won’t be rapid over the next 5–10 years; it’s about laying groundwork now so that hydrogen can scale as harder abatement is required.
  • “This is the activation stage of all of this. Right? We’re not even to expanding those solutions yet, we’ve got to activate it first.” — Austin Knight [67:56]

Further Resources

• National Petroleum Council hydrogen study: harnessinghydrogen.npc.org (Exec Summary ~68 pages, full report 1200pgs)
• To get involved or provide feedback, email: podcasts@woodmac.com
• Mentioned episode: "The Big Switch" (deep dive into transport & hydrogen derivatives)