What Drives This Insanity On Hydrogen?

Lately, somebody reached out to me with this query. They acquired an engineering diploma and an MBA from good faculties, have labored at one of many world’s prime consultancies, have executed CEO-level technique work, and presently have decarbonization accountability for a $4 billion annual income transportation firm. They’ve the STEM and monetary chops that make it apparent hydrogen for vitality is a lifeless finish, in addition to pores and skin within the recreation.

As a result of they really know the science, run the numbers on decarbonization options, and take care of in any other case shiny, knowledgeable, competent individuals who have lots of these attributes, they have been deeply perplexed why they have been getting hydrogen for vitality questions and proposals twice a day. Of their phrases, “What drives this insanity on hydrogen?” They hoped I may shed some gentle on the topic to assist them take care of the matter extra successfully and effectively.

I’m withholding the identify for a few causes. One, the individual in query has an vital and already conflict-laden function of transformation, and wouldn’t be helped by turning into a lightning rod inside their agency, shopper, and provider group. I’ll floor that cost for them. Second, I get this query on a regular basis from totally different individuals I interact with globally. Once I take care of funding teams, regularly they’re questioning the identical factor even when they don’t have the STEM chops to comply with Paul Martin’s explanations within the area. They respect my full disregard for individuals’s emotions in my ruthless adherence to working the numbers in a number of domains, respect the outcomes in areas they perceive, but see the disconnect between the present hydrogen hype and my positions and evaluation of hydrogen for vitality. We’re all bullish on hydrogen electrolysers and constructing plenty of inexperienced vitality to energy them, however are practical about what off-takers really exist for initiatives.

The newest individual to ask the query had the identical context I do with my projection of hydrogen demand by 2100, the identical as BNEF founder Michael Liebreich along with his wonderful hydrogen ladder, and the identical as chemical engineer and co-founder of the Hydrogen Science Coalition Paul Martin along with his many explainers on the science and actuality of hydrogen. They know we use about 120 million tons of it yearly in trade — 90 million tons of pure hydrogen and 30 million tons of hydrogen in artificial gases. They understand it’s a vital industrial feedstock and that it’s a significant local weather change drawback. They know that we now have to fabricate low-carbon hydrogen for these functions. They know we now have to make ammonia-based fertilizers rather a lot greener by changing black and grey hydrogen with inexperienced hydrogen.

However as a transportation and decarbonization knowledgeable with STEM and enterprise levels, my most up-to-date correspondent on this matter is aware of that it’s simply nonsense as a retailer of vitality for the overwhelming majority of purposes. (Michael Liebreich is bullish on hydrogen for very long-duration storage in salt caverns, whereas I believe we must always simply fill the caverns with as a lot of the biomethane we will’t keep away from producing as potential and construct much more HVDC. I think that is likely to be a subject of dialog at dinner with him and inexperienced funding banker Laurent Segalen subsequent week in London.)

That they had at the very least a tough thought of why oil and fuel majors have been motivated to push hydrogen for vitality, if solely to delay the inevitable transition. However they have been very perplexed (and undoubtedly regularly aggravated of their day jobs) about the remainder of the hydrogen foyer pushing hydrogen into non-viable small pockets similar to their phase of transportation to justify their investments. They have been questioning the way it helped them. As they requested, “Certainly they will need to have run the numbers though they don’t dare present them. Proper?”

Right here’s my response, evenly edited:

There are a number of teams I separate this into.

Clearly, there are the oil and fuel corporations. They’ve two motivations. Delaying the transition is certainly one of them, in fact. But when they’ll’t persuade everybody that hydrogen is required for vitality, they gained’t be capable of flip their hydrocarbon reservoirs into cash through blue hydrogen, and they are going to be nugatory. As corporations like Shell and bp have 4–10 billion barrels of confirmed reserves, these property will grow to be nearly nugatory. And these corporations deal with these reserves as a fiscal software for debt financing. Nugatory reserves = monetary establishments calling of their money owed, the collapse of their inventory costs, and the chapter of these corporations.

Monetary establishments with large positions in oil and fuel corporations have a vested curiosity in these corporations persevering with to be wholesome, they’re stuffed with individuals with enterprise levels, however normally empty of individuals with STEM levels. I’ve been in classes with 25 funding managers for multi-billion-dollar infrastructure funding funds, and once I acquired to hydrogen I requested how many individuals had chemistry, physics, or different STEM levels. Nobody did. This doesn’t make them dangerous individuals, however the lack of STEM chops signifies that they’re depending on advisors and targeted on due diligence on the enterprise facet, not the technical facet. The oil and fuel trade tells them hydrogen is the reply, fills their eyes with greenback indicators, after which primary human nature turns them into boosters.

One thing related occurs within the corridors of governmental energy. 6.1% of Norway’s GDP is from its fossil fuels. 25% of Saudi Arabia’s is. There is no such thing as a future the place hydrogen isn’t a supply of vitality the place these percentages don’t simply disappear. There are secondary and tertiary GDP impacts as properly, so the precise financial losses are larger, doubtless double. And because of the outsized financial significance in fossil-fuel-heavy international locations like these, Canada, Venezuela, and Australia, governmental politicians and bureaucrats have a revolving door into and out of trade, and their doorways are all the time open to lobbyists. Politicians and bureaucrats could also be wonderful individuals, however it’s fairly uncommon to search out arduous engineering backgrounds amongst them. And so, the oil and fuel trade tells them hydrogen is the reply, they usually imagine them as a result of in any other case they don’t have a great reply, governmental revenues plummet, they usually don’t have their comfortable jobs or board positions after they exit public service.

The following are individuals with a expertise that makes hydrogen or makes use of it, like Ballard or Plug Energy. They acquired invested in it in some unspecified time in the future prior to now, usually previous to 2000 when batteries and renewables sucked, after which affirmation bias and their paychecks simply maintain them from accepting actuality, reducing their losses, and pivoting to one thing helpful. I all the time like to have a look at inventory value historical past with corporations like that. Each of these corporations had peak inventory value in March of 2000, which clearly means it was peak hype available on the market, and at the moment are at 3% and 0.6% of that inventory peak respectively, which actually ought to inform the fiscal individuals one thing.

Then there are the businesses who’re lifeless, however nonetheless shifting round. Cummins is a living proof. They construct large engines, nearly completely for floor transportation (though, they’ve a marine division). All of their mental capital is about burning stuff inside large inside combustion engines. Just about their whole market goes away if hydrogen isn’t the reply. Since I needed to search for if they’d a marine engine division, I can assure that they’re unlikely to be the chief in supplying the comparatively few marine engines left in any case inland and two-thirds of quick sea transport electrifies (my projection). Wärtsilä, Hyundai Heavy, and STX Heavy usually tend to persist. Cummins people have crossed my display screen ranting about my hatred of hydrogen and that I’m flawed as a result of if I (and lots of others like me) are proper, they don’t have any future.

Then there are the credulous followers, nearly completely devoid of STEM expertise. (Though there are additionally deluded individuals with good STEM backgrounds in there that produce other cognitive biases.) The credulous followers have a well-thumbed copy of Rifkin’s e-book on their bedside desk, they click on on each clickbait article on hydrogen that crosses their display screen, they usually watch hydrogen movies. They’re the helpful idiots, spoonfed hydrogen crack by those with fiscal oars within the water. Many are readers of CleanTechnica, and fill the feedback part with statements about how I’m the biased one who doesn’t perceive the science.

So, sure, the hydrogen foyer is a many-headed hydra. It’s a self-reinforcing circle of individuals whose livelihood is determined by hydrogen for vitality changing fossil fuels. There’s some tribalism happening. There are a bunch of apparent cognitive biases which are retaining them from accepting actuality, with the prospect idea being key amongst them. That idea was the one which gained psychologist Daniel Kahneman a Nobel Prize in economics in 2002 and is a cornerstone of behavioral economics.

At its easiest, all prospect idea says is that human beings worry potential loss greater than they worth potential achieve, and can make choices accordingly and solely considerably rationally. Affirmation bias (the tendency to disregard info that contradicts one thing you imagine and think about authoritative what does help your beliefs), availability bias (pondering that what your mind shortly gives as examples is statistically legitimate for the world), and familiarity bias (no matter you’ve heard or seen a couple of occasions being thought of higher and extra dependable than something novel) all play a component too.

As Liebreich says, it would take till 2030 for the hype to die down, as a result of that’s how lengthy it takes to deprogram a cult.