How will the green hydrogen economy impact lubricants?
The International Energy Agency (IEA) anticipates less than 1% of worldwide hydrogen production in 2021 will come from green, or renewable, hydrogen. Globally, pure hydrogen demand is around 70 million tonnes (Mt) per year, primarily produced from natural gas and coal and emitting significant volumes of carbon dioxide. Carbon neutral hydrogen is generated via electrolysis of water, where the electricity is derived from renewable sources such as wind or solar.
Techno-commercial considerations, safety, and concerns about water scarcity are preventing widespread deployment of green hydrogen, says Sharbel Luzuriaga, project manager at market research and consulting company Kline. Luzuriaga provided insight into an emerging hydrogen economy in Europe during a Kline webinar on April 15, 2021entitled Green Hydrogen Economy: Impact on the Finished Lubricants Market in Europe.
Motivated European Union (EU) authorities are determined to fuel the growth of green hydrogen. On July 8, 2020, as the Covid-19 pandemic continued to rage, the EU issued its hydrogen strategy for a climate-neutral Europe. Lawmakers believe the strategy will play a vital role in Europe’s energy transition and Covid-19 pandemic recovery, providing the necessary regulatory framework and market conditions to drive hydrogen forward. Several companies have signalled their intention to participate in the hydrogen economy, says Luzuriaga.
European plans initially focus on hard-to-electrify sectors such as heavy-duty trucking, aircraft, buses, trains, and vessels. The strategy is targeting six gigawatts (GW) of renewable hydrogen electrolysers by 2024, and 2×40 GW by 2030, enabling the production of 10 million tons of green hydrogen.
To meet the EU’s long-term targets, new wind power generation capacity additions of around 50 GW will be required annually, says Luzuriaga. In the 10 years from 2009 to 2019, an average of 11 GW of onshore and 2 GW of offshore wind power capacity was installed in Europe. Kline’s base case scenario foresees 50 million tonnes of green hydrogen production in Europe by 2050, assuming the full implementation of current and future projects related to green hydrogen production within the EU energy transition framework.
The emergence of hydrogen is an encouraging step towards a sustainable economy and Europe’s ambition to become carbon neutral by 2050. It also has major implications for the European lubricant industry, Luzuriaga says. Consumption of finished lubricants is likely to diminish in several sectors, he says. The Kline representative shared results of the organisation’s recently completed research study which includes preliminary estimates of a 12-kilotonne (Kt) net loss of heavy-duty motor oil (HDMO) demand in Europe by 2040, through the deployment of hydrogen fuel cell trucks.
Luzuriaga highlighted a probable market contraction in early decarbonising sectors, including engine oils and industrial lubricants. Hydrogen-powered commercial vehicle fleets and fuel cell trucks will eliminate engine oil use in the automotive sector; and the transition to renewable power generation will accelerate a decline in lubricant demand in coal mining, coke sites, and thermal. However, it will take a lengthy period for green hydrogen technology to have a tangible impact, says Luzuriaga, with the strong market pull balanced out by technological barriers.
Even when green hydrogen eventually ramps up, there will be growth opportunities for lubricant manufacturers—both in terms of volume and value, says Luzuriaga. Lubricant companies will need to identify fluid market niches and adapt quickly to new operational practices. Quality shifts in lubricants will be required with the hydrogen economy—prompting a reformulation of lubricant additive packages, he says.
In the power generation sector, the deployment of green hydrogen is expected to be swift. Demand for natural gas engines is increasing, and hydrogen is already used in natural gas blends. Though, the unique combustion properties of hydrogen mean equipment are susceptible to corrosion. Adjustments to additive packages will be required to address corrosion issues, says Luzuriaga. The industrial sector will also require reformulated natural gas engine oils, multi-purpose greases, and synthetic lubricant products, he says.
Relative technological maturity and incentives indicate fuel cell trucks will be another early consumer of green hydrogen, says Luzuriaga. Though, trucks have high hydrogen requirements. Ten thousand fuel cell trucks would require roughly 100 Kt of hydrogen annually, he says. Kline projects an annual green hydrogen production of half a million tonnes will be required to displace a sizeable share of diesel trucks.
Luzuriaga cited a need for dedicated electric vehicle fluids to protect elements of the powertrain and new opportunities in thermal management. The hydrogen economy will also drive quality shifts in transmission fluids, greases, and coolants. New requirements for bio-lubricants will arise for off-highway and on-highway use—particularly in environmentally sensitive areas, says Luzuriaga. Kline estimates that between 10 and 50 Kt of heavy-duty motor oils could be lost as the penetration of hydrogen-powered fuel cell vehicles increases.
Substantial disruption to steel manufacturing is unlikely as ironmaking and steelmaking is less lubricant intensive. Luzuriaga anticipates a loss of high-temperature greases used in coke plants; and air compressor turbine oils, gas holder sealing oils, and high-temperature greases in blast furnaces. Still, there will be opportunities for hydraulic oils, circulating oils, and greases in electric furnaces, he says. Manufacturers will also require efficient products for optimised maintenance such as hydraulic oils, mineral or synthetic gear oils, and multi-purpose greases. Green hydrogen in direct reduced iron (DRI) and electric arc furnace (EAF) has a nearly emission-free character, but its deployment will only be possible in the long term because of technology complexities, says Luzuriaga.
Green hydrogen may play a considerable role in maritime applications. Though existing pilot programs are mostly limited to small coastal vessels and significant investment is required by OEMs to develop engines for what is a highly regulated market. Hydrogen eliminates emissions like sulphur and particulate matter but faces stiff competition from alternative fuels such as methanol and biofuels. A significant downside of hydrogen is its energy density—just a quarter of marine fuel— meaning more hydrogen is required for the same amount of energy. Storage space is a key barrier—as less cargo means less revenue for operators. Synthetic fuels based on hydrogen are the most viable alternative and may play a central role in the decarbonisation efforts of the marine sector, says Luzuriaga.
Wind turbine lubricants are the big winner in a hydrogen economy, he says. Kline’s preliminary calculations estimate incremental consumption of between one to two kilotonnes per year within the forecast period alongside rapid growth in wind energy. Initial fill will account for two-thirds of total consumption, he says. On the flip side, an increase in direct drive technology in offshore wind turbines will reduce the consumption of gear oils. Luzuriaga also noted a heightened requirement for bio-lubricants with an increasing number of offshore wind turbines operating in environmentally sensitive zones.