Investment in Turquoise Hydrogen Does Not Require CCS
The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.
Recently, turquoise hydrogen has emerged as a hot topic within the hydrogen industry, due to its low-carbon emission production method. As the main carbon by-product from the turquoise hydrogen production process is a form of solid carbon, not only is CCS unnecessary, but also the by-product is easy to utilize.
Investment in turquoise hydrogen does not require CCS
On Jun 3, a consortium consisting of SK Holdings and NextEra Energy, a US utility company, announced their investment in Monolith Materials (Monolith), a leader in turquoise hydrogen. Founded in 2012, Monolith became the world’s first company to succeed in commercializing turquoise hydrogen in Jun 2020.
Hydrogen produced from natural gas using molten metal pyrolysis technology is called ‘turquoise hydrogen’ or ‘low carbon hydrogen’. Natural gas is passed through a molten metal that releases hydrogen gas as well as solid carbon. As the carbon by-product from the process is in a solid form, turquoise hydrogen facilities do not require carbon capture and storage (CCS). In addition, though natural gas is used as a raw material, the pyrolysis process can be powered by renewable energy. We note that related technologies differ by company, depending on the type of catalyst and production method. Currently, BASF (Germany), Hazer Group (Australia), C-Zero (US), and Monolith (US) are engaged in the development of turquoise carbon technology, but Monolith is the only one to have succeeded in commercialization.
Monolith’s hydrogen production technology generates carbon black as a by-product, which it can sell to tire and rubber parts manufacturers. While tire makers can also use carbon black generated from coal, they are likely to favor that from hydrogen production for environmental reasons.
Green hydrogen (water electrolysis) vs turquoise hydrogen (methane pyrolysis)
Compared to green hydrogen facilities, turquoise hydrogen production facilities consume less electricity. They also involve lower construction costs, as precious metals are not required in the early phase of construction. Moreover, turquoise hydrogen plants can generate additional income by selling carbon by-products.
As turquoise hydrogen is produced from natural gas, its OPEX is higher than that for green hydrogen. Its economic feasibility should hinge on movements in natural gas prices. Of note, given that CO2 can be emitted depending on facility efficiency, turquoise hydrogen technology has yet to be recognized as a perfect carbon-free hydrogen production approach in Germany. But, turquoise hydrogen boasts strengths in various aspects compared to blue hydrogen (fossil fuel-based hydrogen produced with CCS). The significance of turquoise hydrogen should grow down the road, given the easy use of its carbon by-products and its compatibility with existing natural gas infrastructure.