The Shift to Hydrogen (S2H2): Elemental Change

Since late 2017¹, a number of countries have released road-maps, plans and strategies outlining how their economies might transition from the use of fossil fuels as energy carriers, to the use of hydrogen (H2) as an energy carrier, and how government and business might work together to develop a hydrogen economy (being an economy in which clean hydrogen is used as an energy carrier, shifting to clean hydrogen produced from GHG free, or GHG sequestered, sources).

For the most part, these road-maps, plans and strategies are long on goals, and short on how those goals will be achieved. Given the magnitude of any shift to hydrogen, this is not surprising. It will however change.

This article outlines the background to the momentum that continues to build towards the use of H2 (current and possible) as an energy carrier across sectors of the economy, and the industries within them, including those industries that are regarded as difficult to decarbonise, and the current and possible future sources of H2.

There has been considerable commentary around the scale of the investment required. Rather than repeat the scale in investment dollars required (others far better qualified can, and are doing so), the second article in the series describes the possible timeframe and scale of production of H2 by reference to current, and to anticipated, policy settings.

In short, this article "sets the scene" from the vantage point of an international law firm that has long advised participants across each sector, and industry, of the economy. In setting the scene, it is acknowledged that the scene will change. We will track that change.

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This article is the first in a series titled The Shift to Hydrogen (S2H2): Elemental Change. The series is written by Ashurst's global team, which includes sector and industry specialists, experienced and literate across existing and developing supply chains, and projects and transactions.

The Shift to Hydrogen (S2H2): Elemental Change series will include articles on a range of topics² , and we will respond to the dynamics of this fast developing area. The second and third articles in the series will cover:

• A Guide to Hydrogen Road Maps, Plans & Strategies, and their sectorial focus (end of January 2021)
• The key legal issues arising on each aspect of the emerging H2 industry (end of March 2021).

In Q1 of 2021, we will publish a reference work providing a Technology Guide to the current means of production of H2 and an H2 Glossary. This will be updated overtime to reflect new developments.

Hydrogen For Industry (H2FI): Given the economy wide implications of any S2H2, and the resulting use of H2 as an energy carrier, our sector and industry specialists are writing pieces on the relevance of H2 to, and the use of H2 in, each sector and industry, including: the automotive industry (covering motor vehicle technology and use), the energy and power industry (including Green Power to produce Green Hydrogen and Green Ammonia), the difficult to decarbonise industries (including cement, chemical (including petrochemicals) and refining, and steel production), the freight delivery industry (both as user, and transporting H2 by road, rail and ship), the oil and gas industry, the ports and logistics industries (including use for business as usual activities and location for production hubs and trading), the travel and public transport sector (aviation, buses, ferries and rail), and the waste industry.

The first of the H2FI pieces will be published in Q1 of 2021 and will cover Hydrogen from Waste. It is anticipated that the second of the H2FI pieces will be published by the end of Q1 2021, and will cover Fuel Cell technology and use of it across industries.

Hydrogen Infrastructure: Ashurst infrastructure experts, working across sectors, will provide legal and commercial insights on infrastructure and system development, including fixed delivery systems, principally pipeline and pipeline systems (land and submarine), development, re-purposing and duplication along existing pipeline routes (as has been the case for natural gas and ethane pipelines), methanation facilities, interconnector developments (land and submarine), hydrogen and ammonia production, hydrogenation (and dehydrogenation) facilities, compression and liquefaction facilities, and hydrogen refuelling infrastructure (HRI) and systems, and related approval, environmental, health, safety and welfare considerations.

Low Carbon Pulse: More broadly, you can keep up to date with the latest major and significant developments across the many facets of progress towards net-zero carbon emissions and sustainability generally, through Ashurst's Low Carbon Pulse series. The Low Carbon Pulse is published every two weeks.

This level of engagement on each aspect of the progress towards net-zero carbon emissions, and sustainability generally, reflects Ashurst's capacity and commitment to help guide clients through the "renewal of industrialisation" of the world economy over the coming decades. 

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Section 1: Progress of the energy sector towards net-zero carbon emissions

1.1 Decarbonisation of the energy sector

Decarbonisation of the energy sector is core to its transition: fossil fuels, and all other energy carriers comprising carbon, on oxidisation (arising on combustion) produce energy and heat (much of it wasted) and carbon monoxide (CO) and carbon dioxide (CO2).

As the population of the world increases and the economic development and growth continues, the greater the need for energy³. Recognising current, and anticipating future, levels of energy use, to avoid the consequences of increased levels of CO2 (and other GHGs) in the atmosphere, transitioning from the use of carbon sourced energy to non-carbon sourced energy is the consistent key environmental policy setting globally. From a policy setting perspective, electrification of energisation needs to occur, based on reliance on non-carbon energy sources over time.

On a "business as usual" basis, the task is to respond to growth in demand, and removal of reliance on non-carbon energy sources. Add to this, the development of renewable energy capacity to generate electrical energy from renewable sources⁴  (Green Power) to produce hydrogen, and the scale of the required development becomes commensurately greater.

The possibilities: It is possible to produce and to use H2 as an energy carrier without the emission of any GHG at any stage, whether on sourcing, production, transmission or transportation of H2 to the point of use⁵. H2 (and oxygen) can be produced from the electrolysis of water (H2O) to split H2 from oxygen (O). If renewable energy (Green Power) is used to provide the electrical energy to split H2O, Green Hydrogen is produced. If the transmission or transportation system used to deliver Green Hydrogen uses Green Power or Green Hydrogen, no GHG is emitted.

As such, Green Hydrogen can result in zero carbon emissions⁶, and contribute to the achievement of net zero emissions (or carbon, or climate, neutrality).

By displacing fossil fuels, and other energy carriers comprising carbon, H2 reduces the GHG emissions that would have arisen, but for that displacement. It is possible to derive and to produce sufficient energy from H2 to satisfy most, if not all, global energy needs. The issue is cost and time.

The practicalities: While the S2H2, and ultimately the creation of hydrogen economies, is possible, the shift involves a broad range of connected issues that government and business, through policy settings and business strategies, need to address effectively over a prolonged period of time. In the broadest possible terms, if a sustainable H2 energy carrier industry is to develop, it needs to mature to allow certainty of supply and demand to be realised so as to provide clear cost of H2 production, and distribution on the supply side, and clear pricing of H2 on the demand side, over time.

In later articles in The Shift to Hydrogen (S2H2): Elemental Change series, these dynamics will be considered, applying economic, environmental and social assessment criteria. Also the hydrogen supply chain will be considered, comprising: 1. hydrogen production (including procuring feedstock, water and chemicals, and electrical energy), 2. hydrogen storage and transportation and 3. hydrogen delivery (including HRI), and ultimate sale and use.

Which came first, the supply or demand side? Rather like the chicken and the egg, neither, they grew together, and in the case of the chicken and egg there was a hatching, and in the case of H2 supply and demand, a matching, this time parented by government and business.

Supply and demand development is the key dynamic for a sustainable H2 energy carrier industry. For the supply side to commit to the investment necessary to develop production capacity to a level to achieve lower unit costs of production demand is needed, for demand side industries to invest to allow, and to commit to, the use of H2, they need to have certainty of the mass of H2 available and the unit price of it.

Given the possible uses of H2 as an energy carrier, it is possible for government and business to work together until the industry reaches a point of inflection when unit cost and unit prices are set by a market in equilibrium, with the best fix for any disequilibrium in supply or demand side being a market adjustment to increase or decrease capacity achievable over a relatively short period of time.

Starting now, this is a decade by decade proposition: The issue is not the chemistry or the physics⁷, it is the mathematics of developing technologies further to make them scalable, and unit cost of production that is realised on achievement of that scale.

While there is acceptance that the use of H2 as an energy carrier is complementary to the renewable energy sector, the development of sustainable (what some describe as "the need for robust") supply and demand side will take time. It is estimated that the mass of H2 produced needs to grow by between 8 to 10 times its current levels of production for H2 to play a meaningful role in abating GHGs. While the potential is far greater than this, this may be regarded as the base case. 

For this to be achieved, as noted above, there needs to be a commensurate increase in the availability of Green Power to produce clean hydrogen. This growth in the renewable energy sector is likely to dwarf the size of the sector at the moment. The renewable energy sector has grown at an increasing rate over the first two decades of the 21st century. By mid-century the scale of the sector is anticipated to increase by multiples of ten compared to its current size.

Attendant growth in demand for electrical energy: As the anticipated growth in electrical energy demand arises, the vast majority of the growth in the supply side to match the growth in this is almost certain to be satisfied by renewable energy at that same time as the prospective shift to Green Hydrogen production (and the use renewable energy). In this context, all indicators are that the development of renewable energy capacity is going to increase exponentially, thereby achieving ever great scale, and lower unit cost for the production of Green Hydrogen (indeed all colours of hydrogen). Wind-power is considered to be the most prospective renewable energy source for the production of Green Hydrogen. 

1.2 Renewable energy has paved the way to a super-highway

The good thing is that renewable energy has shown, and continues to show, that supply and demand can be developed and matched effectively on the pathway to sourcing electrical energy from renewable resources. The result of this is that, in historical terms, solar energy now provides some of the lowest cost, if not the lowest cost, electrical energy in history.

It is reasonable to expect, and for modelling purposes to assume, that the unit cost of renewable energy will continue to fall. As unit costs fall, the role of renewable electrical energy in the roles of electrical energy and H2 as energy carriers will become ever more central, and is fundamental to the S2H2.

1.3 Momentum – the natural energy carrier

It is difficult to disagree with many of the sentiments expressed, but sentiment needs to be tempered with the reality of the cost and the scale of achieving any S2H2, and the need for markets to develop, critically, to sell into markets in which H2 has no, or limited, current use, and on both supply and demand side investment is required.

"It won't take decades for the hydrogen industry to develop, like it took LNG [Liquified Natural Gas], but it won't happen overnight".

At a practical level, investment and technology development is required to develop new renewable energy capacity, and both H2 production and storage facilities and ammonia (NH3) production facilities, H2 and NH3 and transmission and transportation (including new fleets of buses, rollingstock and ships) delivery systems, on the supply side, and new facilities or repurposed facilities and fleets on the demand side.

But unlike LNG, for LHG (and other means of delivering H2) there is a clear, and world-wide, imperative to shift to hydrogen.

1.4 What might this momentum mean?

If the reduction in GHG emissions is accepted as the imperative for the S2H2, the Paris Agreement provides an existing framework, and attendant principles, that allows countries to recognise the need for the S2H2, and provide benchmarks by which each country is calibrating and implementing its own policy settings and laws and regulations. The imperative is accepted, and increasingly, it is accepted that the achievement of the goals set by the Paris Agreement are not going to be enough.

In this environment, developing a "world store" for H2 has become the focus. Without wishing to distract from the clear imperative, we do not have the time to wait and see, and the shelf-life has expired of any narrative prevalent in some countries about "exporting jobs" to countries with less stringent GHG commitments.

With the increasing alignment of GHG reductions and carbon neutrality a decade either side of 2050, the narrative is about the export and import of H2 and the creation of jobs, borrowing the phrase of the Prime Minister of the United Kingdom, the narrative is about a "Green Industrial Revolution", and the economic, environmental and social implications of it.

1.5 Exporters and importers

The circumstances of location and renewable resources mean that some industrialised countries such as Germany, Japan and Korea will continue to be net importers of energy carriers, although all three countries are looking to off-shore wind sources for a least some of their current and future demand for energy.

Some of the current energy and resources export power houses, including Saudi Arabia, UAE and Australia, have the opportunity to develop their world class renewable resources, and to S2H2 overtime while continuing to exploit oil and gas resources, including to produce Blue Hydrogen or Blue Ammonia, or both using CCS⁹  or CCUS¹⁰ . Given world class renewable resources, and location, both Saudi Arabia, UAE and Australia will be able to offer a perpetual supply of Green Hydrogen (and each other colour of hydrogen in the case of Australia). 

For countries with world class solar or wind resources, or both, and demand for hydrogen, a new industry will develop, as more than likely will be the case in North Africa (in particular Morocco) and the Iberian Peninsula (Spain and Portugal), and Chile and Peru, and Patagonia. The issue for some of these countries is the means of delivery of energy, whether as electrical energy through an interconnector or H2, through a pipeline or by ship. (The economic, environmental and social implications of the means of transportation will be considered in future articles in The Shift to Hydrogen (S2H2): Elemental Change series.)

For countries with less land mass, but that have good and viable off-shore renewable resources, those renewable resources are likely to be developed, at the very least providing diversity of energy supply, and in time, possibly, energy security. 

For four of the world's largest countries by land mass, the PRC, Canada, Russia and the US, the issue for each is its preferred colour, or colours, of H2. Each country is blessed with world class renewable resources (with the necessary scale). The issue with Canada, Russia and the USA is likely to be the effective transition of their oil and gas industries as they achieve energy transition.

These dynamics are good for bi-lateral relationships, and are good for world trade.

Section 2: Why H2? Why Now?

2.1 Paris Agreement

Goals: On November 4, 2016 the Paris Agreement¹¹  entered into force. The Paris Agreement recognises that to respond to the effects of increased GHG in the atmosphere, it is necessary to commit to hold: "the increase in global average temperature to well below 2OC above pre-industrial levels [Stabilisation Goal] and pursue efforts to limit the temperature increase to 1.5OC above pre-industrial levels [Stretch Goal] …" (Article 2).

Nationally Determined Contributions (NDCs): The Stabilisation Goal is to be achieved by Parties to the Paris Agreement committing to NDCs (Article 3). Parties have submitted (and committed to) initial NDCs progressively since the signature of the Paris Agreement. In many cases NDCs are reflected in policy settings introduced nationally^{12 13}.

Stocktakes: The Paris Agreement provides for taking-stock of the collective NDCs. The first stock-take occurred in 2018. The next stock-take is scheduled for 2023, and every five years after that. To achieve NDCs the focus has been on electrical energy, in particular continuing the development of renewable energy, and, in some countries and economic blocs, introducing a price on carbon, and other policy settings, to encourage the use of technologies that abate GHGs. The development of renewable energy and pricing carbon may be regarded as the "lower hanging fruit" of policy settings. As countries undertake stock-takes they assess whether they will be able to achieve their NDCs, and, if not, why not. As the stocks of H2 rise, we need to stock H2.

Inroads are not enough: It is fair to say that while renewable energy, and the electrification of human activities using renewable electrical energy is making, and is projected to continue to make, material and significant inroads in contributing to a reduction in GHG emissions on a country by country basis, it is not clear that it will be enough, to achieve the level of abatement of GHG emissions to achieve the Stabilisation Goal.

Better pathways and roads are needed: There is science that indicates that achieving the Stabilisation Goal, and achievement of the NDCs of many countries, is most unlikely to achieve the Stabilisation Goal at the current rate of electrification. In this context, increased electrification and the use of H2 as an energy carrier has come to the fore for many policy makers. As such, many countries are revisiting their policy settings to assess what more needs to be done, and what can be done, on a sustainable basis, to contribute to achieving the Stabilisation Goal. More than this, some countries are seizing the moment to renew their economies.

The simple answer: The simple answer to the question Why H2? Why Now? is that without H2 it is increasingly recognised that the Stabilisation Goal will not be achieved, with the attendant, and interlinked, economic, environmental and social consequences. Given the need for more to be done to achieve the Stabilisation Goal, the question Why H2? Why Now? may be re-characterised by some as If Not Now, When?¹⁴

EU is leading the way: The European Union (EU) is leading the way globally, critically, the EU has recognised the need to accelerate the reduction in GHG emissions to 2030, and appears to be stock-taking in a consistent and coherent basis so as to assess how to reduce GHG emmissions sustainably as quickly as possible.

2.2 Road-maps, highways, and super-highways - one ultimate destination zero GHG emissions by 2050

In this context (and ahead of the next United Nations Framework Convention on Climate Change, Conference of Parties (COP 26) in Glasgow in 2021), and the next scheduled stock-take in 2023, a good number of countries have concluded that they need to be doing more, many concluding that unless more is done it will not be possible to achieve their NDCs.

In addition, countries are recognising the need for alignment in reduction targets and zero net GHG outcomes.

While 2020 has been a challenging year on many fronts, it is been a positive year from a policy setting perspective increased activity in the publication of H2 goals and the announcement by the PRC, Japan and Korea of zero net GHG outcomes, and recently the US.

In addition to the publication of H2 goals, 2020 has been positive as goals are starting to be achieved.

It will be apparent from Table 1 that some of the world's largest GHG emission producers see a role of H2 as an energy carrier. It is fair to say that currently the majority of the policy settings to encourage the S2H2 is on decarbonising the transportation¹⁶  sector.

Most countries see a role for clean hydrogen (Blue, Green or Turquoise), many seeing the role as being key to meeting net-zero emissions targets. Other countries, at least for the time being, are agnostic as to the source, or means of production, of hydrogen (and whether it is clean or not).

It is fair to say that most countries with a published roadmap, plan or strategy, and those developing them (for example, the United Kingdom), are in the process of developing thinking around business models to support hydrogen production, some agnostic, some concentrating on clean hydrogen and others committed to green hydrogen. As a country taking a lead with the Green Industrial Revolution, the UK is expected to report on business models in 2021 and to publish a general strategy outlining the UK's Hydrogen Economy. The report and the strategy may be expected to detail goals and the models to achieve them. This may include the use of exhausted hydrocarbon fields and existing hydrocarbon extraction and processing infrastructure for CCS / CCUS and hydrogen production.

The second article in The Shift to Hydrogen (S2H2): Elemental Change series (to be published in late January 2021) will consider the road-maps, plans and strategies, and common and distinguishing elements will be identified.

Figure 1 (below) is taken from the Norwegian Government's Hydrogen Strategy. It provides a diagrammatic representation of the sectors of the economy that are most technologically advanced so as to be able to use H2 as an energy carrier.

 

The readiness of the transportation industry may be regarded as a good thing for the development of supply and demand of H2. In many countries, government policy settings are providing boundaries and timeframes within which the transport sector must decarbonise. For example, in the United Kingdom there is a policy setting that by 2030, new cars must no longer use motor spirit (gasoline or petrol).

As things currently stand, this provides customers with a choice of battery electric vehicles (BEVs) or fuel cell electric vehicles (FCEV). While the demand for FCEVs will be a function of many things, including availability of H2, the policy setting (both its impact and timing) allows the automotive industry time to develop motor vehicles and the H2 industry to develop the supply, and means of supply, of H2. The risks that each participant will assume are incremental, because the transition to BEVs (well underway) and FCEV (starting) technologies are anticipated to be widely used by 2030. It may be that one will prevail to dominate the passenger car market, but it appears increasingly likely that H2 will be key to the HGVT and the broader passenger vehicle market.

Section 3: Sign-posts and pathways

3.1 Different, but the same

Each country with a hydrogen road map, plan or strategy (and in some cases all of them) covers both subject matter that is distinct to it, and common subject matter, and anticipates policy settings to cover them. As noted above, the second article in The S2H2: Elemental Change series will consider each of them, and identify common and distinct themes of importance to our clients.

For present purposes, the following common themes arise from the various goals as being matters and settings that it is necessary for government and government agencies to have in mind so as to develop policy and settings and to achieve those goals by being as well-positioned as possible to work with business:

a) to undertake an assessment of the range of supply and demand outcomes that may arise across each sector of the economy that may use H2 to displace use of fossil fuels, and other carbon compounds, including any lag in supply or demand that may arise, and to consider whether and, if so, how to support market participants during any lag;

b) to provide approvals, licensing and permitting processes that allow the supply and demand side of the market to develop capacity in a timely fashion, and to allow the development, or even to promote the development, of integrated H2 production and renewable energy facilities;

c) to fund the development of some aspects of the supply chain either in whole or in part, including CCS / CCUS and HRI, and be prepared to operate these aspects of the supply chain until viable, and then recycle capital;

d) to send clear signals to the market as to the production capacity required, and be prepared to fund, in whole or in part, the development of that capacity: this "capacity signalling" will assist in matching anticipated demand, and in so doing facilitate a market for the required related development of renewable electrical energy (generation and energy storage) to supply H2 as well as the supply of H2 to the demand side of the H2 energy carrier market; and

e) to provide a clear staged timetable for the development of the supply and demand sides, setting clear timeframes for any mandated shift from any technology to another or, less likely, one energy carrier to another, including in respect of private vehicles, freight transport and public transportation. 

As is the case across all activities driven by economic, environmental and social outcomes, it is important that information is readily available, and there is transparency to allow the market to respond effectively, and to respond to changes.

3.2 Legal issues

While it is early days in respect of laws that apply to H2, it is clear from the roadmaps, plans and strategies that a number of issues are going to be key to the development of H2, key among these at least in the early stages of the development of the supply side of the H2 industry is safety. H2 is a hazardous good and in each application as an energy carrier there is some element of risk. It may be expected that this will feed into the basis upon which approvals are granted, and licencing and permitting is undertaken, and so far this appears to the case. There is work that can be done, and is being done in some instances, by those developing policy settings to develop streamlined but appropriate processes¹⁷.

More broadly, the legal issues that arise in respect of the production and supply of H2 for current uses are well known, as are the interface issues with electrical energy, including for compression and liquefaction. The prospect of increased supply and demand for H2 and renewable energy will magnify the legal issues, and give rise to new issues, including the commercial and legal basis of water rights, chemical feedstock supply (certainty and cost), CCS and CCUS (for Blue Hydrogen and Blue Ammonia) and energy storage development (for all colours of hydrogen), use and off-take of CCS / CCUS and energy storage services, pipeline development and repurposing (and "dual use", using methanation¹⁸), and interconnector development, safe transportation and storage of H2 to the point of sale or use, and retail of H2 as a utility.

The third article in The S2H2: Elemental Change series will cover the legal and related commercial issues in detail, including site selection (close to feedstock and load, or means to deliver to load), certainty of supply of feedstock and price of it (including catalysts and electrolytes), source certainty in the context of sale and purchase contracts (including certification), certainty of supply of electrical energy (base load (as part of integrated project or all or part from the grid), supported by energy storage) and intermittent / variable on "call-off basis", and hedging strategy, and transportation capacity. In providing this perspective, the functionality of the supply and demand side will be considered as a practical matter.

3.3 Renewable Pathways

The third article in The S2H2: Elemental Change series will also consider renewable pathways for all forms of activity (including projects) within the hydrogen supply chain¹⁹, including the environmental compliance (including standards and technical regulations) on extraction of feedstock, use of feedstock to produce the energy carrier, storage and transportation of the energy carrier, and on use of the energy carrier. Effectively placing each activity, project and transaction in its policy setting.

Section 4: GHG and H2

4.1 Current sources of GHGs

While facts and statistics are often rolled out, in the context of the S2H2 it is helpful to frame the extent to which H2 could displace the use of current energy carriers by industry. This is important to illustrate that H2 can be used to reduce GHG emissions across these industries. For the benefit of H2 as an energy carrier it needs to develop a market in industries in which it is not a participant currently.

Figure 2: Global Emission of GHG by Industry

While Ashurst has not verified the information in Figure 2, given other information that we have read and reviewed, it provides a good indication of GHG emissions, and is broadly consistent with that other available information (and fits well within the spread of that other information). Also Figure 2 has the benefit of granularity by sector and industry within each sector. This provides a good basis for more detailed analysis, including for the purposes of the second article in The S2H2: Elemental Change series.

4.2 Current feedstock sources for production of H2

Currently the vast majority of H2 is produced using fossil fuel feedstock: natural gas^{20 21}, oil and coal (black and brown²²), each of which comprise many hydrogen compounds. The technologies used to produce H2 are well established, and are described in Section 4.3.

The key cost in the production of Grey Hydrogen is the fossil fuel feedstock: the lower the cost of natural gas, oil and coal, the lower the cost of H2. While it is possible to produce H2 from water (H2O) and biomass and biogas / bio-methane, it is estimated that less than 1% of H2 is produce from these sources as the H2 production industry is currently configured. This said, it is becoming increasingly clear that this will change during the 2020s and beyond.

The cost of production of 1 kg / H2 depends on where in the world it is produced, the spread is USD 1.00 to 1.75 kg (without CCS / CCUS. The use of CCS / CCUS (to capture and store permanently CO2) is likely to result in a USD 0.50 to US 1.00 premium for the cost of Blue Hydrogen, rather than Grey Hydrogen.

Current means of production of H2

The means of production used to produce H2 depends on the feedstock.

Fossil fuel feedstocks: If the feedstock is:

a) natural gas - a reforming or partial oxidation process is used, most typically steam methane reforming (SMR)²³, including, as part of the process, CO is reacted with H2O to derive additional H2 – essentially reforming involves passing steam over a heated hydrocarbon containing methane (CH4);

b) oil - a reforming, partial oxidation or pyrolysis process is used, most typically lighter hydrocarbons derived on fractionalisation are used and reformed to produce H2; and

c) coal - a gasification process is used²⁴  (which technology can be applied both at the surface and underground²⁵).

Water as a feedstock: If the feedstock is H2O, electrolysis is used (currently the predominant technology uses a liquid alkaline electrolyte, typically, potassium or sodium hydroxides) to split H2O into H2 and O. Electrolysis involves the use of an electrolyser that uses an electrical current through the electrolyte²⁶. While alkaline electrolyte electrolysers predominate at the moment, it is anticipated that the number of solid polymer electrolyte membrane (PEM) and solid oxide (SOEC) electrolysers will increase²⁷.

Biomass and biogas as feedstocks: Biomass²⁸ and biogas²⁹ can be used as the feedstock for the production of H2. The technologies used for this purpose are either thermochemical (including pyrolysis and gasification) or biological. During Q1 of 2021, the Ashurst team will publish the first H2FI piece on Hydrogen from Waste.

Technologies in detail: All processes (and technologies) are considered in the second article in The S2H2: Elemental Change series. In addition, there are many other processes (applying many different technologies) about which a good deal is written. It is safe to assume that a number of these processes and technologies will be developed, and as they are developed we will cover them.

4.4 Current annual production of H2 and GHG and electrical energy footprint

Mass and energy: Currently, globally annually, the estimated mass of H2 produced is around 70 to 75 million tonnes H2 produced from the fossil fuel sources, with limited production from H2O³⁰. In contrast, the liquified natural gas (LNG) industry produces around 350 mtpa of LNG. In terms of mass produced, the LNG industry is approximately five times the size of the H2 production industry. In terms of the energy content of H2 and LNG, H2 has around 2.5 times the energy equivalent content of CH4 (the predominant compound in LNG).

While noting that the vast majority of H2 currently produced is used as a reactant rather than as an energy carrier, it does not take a great deal of imagination to contemplate that overtime H2 may complement, come alongside, and then overtake LNG as an energy carrier.

At the risk of repetition, H2 has the potential to provide energy for most, if not all, activities undertaken across the global economy.

GHG emissions: Given the use of fossil fuels to produce H2 and the technologies and energy sources used, the production of H2 results in between 830 and 850 million tonnes of CO2 emissions annually^{31 32}. Stated another way, for each tonne of H2 produced using current technologies, close to 8 to 18 tonnes of CO2 is emitted (depending on the feedstock used to derive or to produce the H2). This statistic provides a guide as to the CCU / CCUS capacity necessary to produce Blue Hydrogen given current levels of H2 production. If the production of H2 is increased (as is contemplated), the need for CCU / CCUS will increase to allow the production of Blue Hydrogen. Blue Hydrogen is not a zero carbon energy carrier if the electrical energy sourced to produce it is derived from a fossil fuel.

Based on 2019 numbers, the CO2 emissions arising from the production of H2 globally was equivalent to the combined annual CO2 emissions arising from all activities undertaken in the Republic of Indonesia and the United Kingdom. The level of CO2 emissions is a function of a number of things, but critically, the amount and the source of electrical energy needed and used to produce the H2.

At a high level it is helpful to understand the amount of electrical energy required to produce this mass of H2. Expressed in TWh³³, it takes 3,600 TWh to produce 70 million tonnes of H2. This amount of electrical energy is around 20% greater than the combined annual electrical energy production of the European Union³⁴. This statistic illustrates the level of electrical energy capacity necessary to produce H2 currently. If production of H2 is to increase, it will be necessary to install considerably more electrical energy capacity, renewable energy if Blue Hydrogen is to achieve low or zero carbon energy carrier status and Green Hydrogen is to be produced.

There are two challenges with the use of renewable energy to displace the use of fossil fuels in the production if H2: first, the cost of electrical energy from renewable sources, and secondly, given the use of fossil fuels in the production of refined petroleum products, ammonia (NH3), and the high temperatures required in the cement, chemical, glass and steel industries means that electrical energy is not able to displace fossil fuels currently used, only H2 or H2 and O is able to do that.

4.5 Current uses of H2

H2 is used in many industries, including chemical, petrochemical, refining, electronics, glass and metallurgical (including as an "O2 scavenger"). Predominantly in these industries H2 is used as a reactant³⁵  to produce another product, rather than as an energy carrier, but the potential for use of H2 as an energy carrier is clear.

Currently the key uses for H2 are in refining and in the production of fertiliser (predominantly ammonia (NH3)), oil refining (typically, at higher temperatures), and chemical production. This is Grey Hydrogen or Brown Hydrogen (or Black Hydrogen). While the technologies used to produce H2 are well established, they were established a considerable time ago, well before the identification of the increasing levels of GHG in the atmosphere, and the climatic consequences, and were not developed or improved upon necessarily to ensure that the absence of CO2.

4.6 Colour coding of H2 as an energy carrier (including Ammonia (NH3))

• Definition by source of feedstock (and technology): Those familiar with H2 will be familiar with the colour coding that is applied to it. At the highest level of the coding hierarchy are Grey Hydrogen and Green Hydrogen, connoting the feedstock as fossil fuel (in the case of Grey Hydrogen) or H2O (using electrolysis with electrical energy sourced from a renewable energy source).
  
  While Grey Hydrogen is used to connote H2 sourced from a fossil fuel feedstock it may be characterised as black or, more commonly, brown hydrogen if the fossil fuel feedstock is coal. If CCS / CCUS is used to capture and store permanently CO2 arising from the production of H2, the H2 is said to be Blue Hydrogen. The same colour coding applies to ammonia (NH3) derived or produced from fossil fuel or H2O.
  
  H2 can be derived from biogas (organic material derived from anaerobic digestion of biomass) (Bio H2). Neither biogas nor biomass is a fossil fuel, but each is derived from a source containing compounds of carbon and hydrogen. GHG emissions arise in production and on use of Bio H2, but it is possible to capture and to store them.

• Hydrogen: Given that this article is intended to set the scene, this Section 4.6(b) outlines in a little more detail the colour coding applying to H2.
  
  • Grey Hydrogen: H2 produced from natural gas (predominantly CH4) using a thermal process (almost certainly steam reform technology), or coal (almost certainly using gasification technology) or oil (using a partial oxidation technology).³⁶
  • Black and Brown Hydrogen: H2 produced from coal (black or brown) using a thermal process (typically gasification technology, resulting in partial oxidation) with electrical energy required to produce, compress or liquefy H2 ,with that electrical energy from fossil fuel or renewable energy (other than nuclear energy) or nuclear energy.³⁷
  • Blue Hydrogen: If the CO2 arising on the production of H2 using a steam reforming, gasification or partial oxidation technology is subject to CCS³⁸ or CCUS³⁹, the H2 will be Blue Hydrogen. Traditionally, CO2 has been captured and stored for the purposes of oil recovery⁴⁰. CCS / CCUS is a viable means of abating GHG emissions⁴¹. It has been noted that the blue in Blue Hydrogen "may range from pale to dark, or from, say, sky blue to navy blue". The GHG emissions arising from the from production of Blue Hydrogen are not uniform. Blue Hydrogen is distinct from green-blue or Turquoise Hydrogen.
  • Turquoise Hydrogen: H2 produced by the use of pyrolysis technology (thermal splitting of CH4⁴²) with the production of solid carbon rather than gaseous CO2 using renewable energy and solid carbon is in a form that is chemically bonded permanently. (Pyrolysis can be used to split the CH4 in biogas using biomass feedstock, waste or waste water.)
  • Green Hydrogen: H2 produced from H2O using electrolysis with the electrical energy required for electrolysis and compression or liquefaction of the H2 sourced from renewable energy.
  • Clean Hydrogen: is used to describe H2 that produced low or zero emission technologies, with Blue Hydrogen and Turquoise Hydrogen and Green Hydrogen technologies fitting this description.
• Ammonia: As noted above, the colour coding of ammonia follows that of H2.
  
  • Blue Ammonia: NH3 produced from a fossil fuel (typically, natural gas or lighter fractions of crude oil) with the CO and CO2 emissions arising on production being captured and stored or used rather than being emitted as GHG to atmosphere.
  • Turquoise Ammonia: NH3 produced from Turquoise Hydrogen.
  • Green Ammonia: NH3 produced from a renewable source (rather than from a fossil fuel) without the production of any CO or CO2, with electrical energy required for the production of the ammonia sourced from renewable energy.

It is clear that Turquoise Ammonia and Green Ammonia are real options: during October 2020, two plants were announced, one using methane pyrolysis⁴³ to produce Turquoise Ammonia, the other using an electrolyser to produce Green Ammonia⁴⁴. The technologies used are proven and well-established, and the electrical energy load of each plant is supplied from renewable energy sources.

4.7 Energy use and GHG intensity

As will be apparent, the production of H2 in gaseous form using established technologies is energy intensive. The compression or liquefaction of gaseous H2 to allow its transportation to the point of use is energy intensive as well. An electrolyser operating at 100% efficiency uses 39 kWh of electrical energy to produce 1 kg of H2O. 1 kg of H20 has 33 kWh of latent energy. As yet electrolyser technology does not achieve 100% efficiency, and as such it can take up to 48 KWh of electrical energy to produce 1 kg of H2O.

The energy use for the production of Grey Hydrogen using Steam Methane Reform (SMR) is comparable to the use of electrolyser technologies. The energy use of the production of Turquoise Hydrogen is considerably less, at around 7.5 times and 7 times less than electrical energy required to produce H2 using electrolyser technology and SMR technology respectively.

Current production of ammonia results in approximately 1% of GHG emissions globally. Or stated another way, GHG emissions equivalent to the total GHG emissions of the United Kingdom.

4.8 The forms of H2 as an energy carrier and H2 carriers

Forms of H2: As will be apparent, H2 which arises in gaseous form can be compressed or liquified⁴⁵. This is the case irrespective of the colour of hydrogen being produced. Compression and liquefaction of any gas is energy intensive, and (given the laws of thermodynamics) compression gives rise to heat. It is widely accepted that to allow liquified H2 to achieve scale of export and import it is necessary to develop technologies to allow loading, transportation, unloading, storage and effective send-out. Ammonia and hydrides can be loaded, transported, unloaded and stored using existing technologies, but to use hydrides it is accepted that hydrogenation and de-hydrogenation technologies need to be developed to achieve scale and to reduce unit costs.

H2 carriers: Japan's Basic Hydrogen Strategy (BHS), published in late December 2017, is agnostic as to the form or colour of H2. As is noted in Edition 2 of the Low Carbon Pulse, the BHS contemplates liquid hydrogen gas (LHG), ammonia (NH3)⁴⁶ and hydrides (such as methylcyclohexane (MCH)), all are identified as, prospective energy carriers). In addition, the BHS contemplates the use of materials based H2 storage and transportation through the use of metal hydrides⁴⁷.

Ammonia (NH3): By way of recap, NH3 is currently produced by deriving H2 from natural gas or from liquid petroleum gas (as feedstock): estimated to give rise to 1% of GHG emissions globally. NH3 can be Grey, Blue, Turquoise or Green Ammonia.

At room temperature NH3 takes gaseous form, and referred to as anhydrous ammonia (absent H2O). At -33^OC NH3 takes liquid form, but cooling to achieve and to maintain this is energy intensive. At – 196^OC NH3 takes solid form, but again this is energy intensive. By mass, H2 makes up 17% to 18% of NH3. Given its chemical composition, NH3 has the potential to be a zero carbon fuel, but not a zero GHG emission fuel.

Blue, Turquoise or Green Ammonia are all being touted as energy carriers. It is possible to combust NH3, and in doing, as with H2 no CO or CO2 arises. This has been demonstrated to work in coal fired power stations, and is likely to form a key part of plans in Japan to use Blue Ammonia for up to 10% of its energy carrier needs for power generation estimated to require 3 to 5 mtpa of Blue Ammonia. This said, the combustion of NH3 gives rise to another GHG, NOx. This is the case in its use to generate electrical energy and in its use to power and to propel vessels. As such, while Blue Ammonia is seen as a viable energy carrier by Japan, only Green Ammonia (or Green Hydrogen derived from it) will provide a zero GHG emission outcome⁴⁸.

Hydrides: As well as identifying H2 (in liquified form) as an energy carriers and NH3 (in gaseous form) as an H2 and energy carrier, the BHS also identified organic hydrides as H2 carriers. There are materials that absorb H2 at low / lower temperature and moderate pressure, on absorption forming hydrogen compounds referred to as hydrides. The absorption is reversible by dehydrogenation, a process that results in the de-absorption of pure H2. Japan and Brunei have established a hydride chain, specifically, using MCH. (MCH is in liquid form at room temperature, and is about 1/500th of the volume of H2 in its gaseous state.)

5. Introduction to the next article

In the second article of The Shift to Hydrogen (S2H2): Elemental Change series, by sector and industry, we consider the current scale of fossil fuel use, whether H2 can displace that use, and, if so, the extent to which the hydrogen industry will need develop to displace fossil fuels, including the key innovations and developments required.

In considering these commercial, and innovation and development issues, the frameworks provided by each hydrogen road-map, plan and strategy is outlined. While government can assist in the development of the hydrogen industry, given the potential scale of the industry, and the economy wide implications, ultimately the private sector will provide the innovation and know-how, and the development investment, to allow the industry to develop, and the economy to shift to hydrogen.

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1. In a number of cases before then, including in some instances going back to the 1990s and early to mid-2000s.
2. The topics currently planned include, 1. Blue Hydrogen, Blue Ammonia & MHC production and GHG permanent capture and storage, 2. Developing Policy Settings: the policy settings so far, and what policy settings are required, 3. All Green Energy Carrier: the production and use of Green Hydrogen, Renewable Resources: the need for scale of both on-shore and off-shore renewable energy production, 4. The key commercial and legal issues on H2 production projects, 5. Grey, Brown (and Black), Blue / Turquoise and Green, S2H2 is as much about Technology Transition as anything else and 6. the Sale of LHG (including compared to LNG) and source certification.
3. It is estimated that demand for electrical energy globally is going to increase by up to 180% of 2019 level by 2050, responding to increased economic prosperity and population growth. This is an Energy Information Administration (EIA) estimate. This estimate is consistent with other sources, including those from which trends have been extrapolated, and appears as good an estimate as any. It is important to recognise that to match this growth, while at the same time achieving abatement of GHG emissions arising from the current mix of electrical energy generation technologies, is going to require the installation of renewable energy at a rate and a scale that is unprecedented in more developed economies.
4. A Renewable Source is a source of fuel or feedstock that is constant (for example, solar and wind) or can be replenished. Renewable Energy is source of electrical energy from a Renewable Source.
5. In the context of decarbonisation, it helps to understand the use of carbon (including fossil fuels used in the manufacture of steel) in the manufacture and fabrication plant and equipment, and the facilities into which that plant and equipment is concorporated, including the source of the electrical energy used to manufacture and fabricate.
6. Zero carbon emissions, means that no GHG emissions arising from carbon compounds arise.
7. The underlying technologies work and have done so for many years: for example, in 1838 Christian Frederick Schoenbein discovered the fuel cell, made real by Sir William Grove in 1845, and then commercialised by Ludwig Mond and Charles Langer who developed the first fuel cell using air and coal gas in 1889.
8. Clean Hydrogen is a phrase used to refer to Blue Hydrogen and Green Hydrogen or no or low carbon hydrogen. 
9. The term CCS connotes carbon dioxide capture and storage.
10. The term CCUS, connoting Carbon Dioxide Capture Storage or Use, or both, was coined by the International Energy Agency, and is gaining increasing use.
11. The Paris Agreement is an agreement between the Parties to the United Nations Framework Convention in Climate Change (UNFCCC).
12. The convention is to express NDCs as a percentage reduction in GHG emissions to a stated percentage of 1990 (or later date, depending on the date of joining the UNFCCC) levels by 2030. In addition, because Article 4, Parties are committing to carbon neutrality / net-zero emissions by dates on and around the second half of the 21st century.
13. Commonly used phrases:
    
    • Carbon neutral / net zero - any GHG emitted is balanced by the removal of an equivalent mass of GHG. While these terms are used interchangeably, carbon neutrality can be achieved by use of carbon off-sets from overseas projects, net-zero emissions cannot.
    • Carbon negative - removal of more GHG than GHG emitted, both in real time and historically.
    • Net Negative Emissions - production of less GHG than is GHG removed from the environment.
    • Difficult to Decarbonise - activities challenging to make carbon neutral, including cement, chemical and steel production (requiring fossil fuels) and transport.
      
14. Acknowledging, Primo Levi, chemist, humanist, and author of, amongst other works, "If Not Now, When" and the "Periodic Table".
15. In addition to countries with road-maps, plans and strategies, a number of other countries accept and recognise the role of H2 in their economies, for example, Singapore.
16. In broad terms, private passenger vehicles, refuelling stations, buses, heavy vehicles / trucks and fleet vehicles.
17. All elements of the production chain will be subject to stringent safety standards. These standards will extend to vehicles used to distribute H2 to refuelling stations (delivery and storage), as well as the build standards for vehicles, in particular the H2 storage and delivery systems.
18. Methanation (being a chemical process that converts carbon oxides and H2 into to methane, H2O) undertaken such that allows H2 and methane can be combined to allow for haulage / transportation using existing methane pipelines.
19. A renewable pathways involve consideration of the means of achieving a renewable outcome in each of the stages of a project or an activity, including: 1. Feedstock; 2. Production of Energy Carrier (or other product), including the source of energy used in the production; and 3. Energy Carrier used to transport the produced Energy Carrier to the point of use.
20. Natural gas is comprised predominantly of the light and, in hydrocarbon compound terms, simple compound, methane (CH4).
21. It is estimated that the use of CH4 to produce grey hydrogen consumes between 5 and 6% of natural gas production globally.
22. It is estimated that the use of coal to produce black and brown hydrogen consumes a little under 2% of coal production globally.
23. In addition to SMR, partial oxidation and auto-thermal reforming may be used to derive H2 from natural gas. SMR is regarded as the least costly. SMR is a well-established process using high temperature steam (700OC to 1000OC) that is passed over methane feedstock (typically, natural gas, but also bio-gas), at pressure of between 3 and 25 bar using a catalyst to derive H2 and CO and CO2 (relatively small quantity of CO2). SMR is endothermic.
24. In most instances, coal (in pulverised form to increase area of contact) is gasified at high temperature to produce a gas compromising CO, CH4 and CO2, with purification to derive H2 of greater purity. Gasification is a phrase used to describe a number of processes, including pyrolysis to separate the hydrocarbon compounds present in the coal, the high temperature (highly exothermic) reforming and partial oxidation to produce synthetic gas comprising CH4 and CO2.
25. It is possible to derive synthetic gas from coal using underground coal gasification (as is proposed at Leigh Creek in South Australia) mentioned in Edition 3 of the Ashurst Publication, Low Carbon Pulse.
26. In simple terms, the liquid electrolyser uses an anode chamber to which hydroxyl ions migrate to derive O, and a cathode chamber from which H2 is derived.
27. A PEM electrolyser is a sub-set of Solid Polymer Electrolysers (in contrast to Liquid Electrolysers). In simple terms, in a Solid Polymer Electrolyser hydrogen ions pass through the membrane media into the anode chamber and H2 is derived, and in the water in the cathode chamber O accumulates and can be derived. A SOEC is a solid electrolyser using a hard, non-porous ceramic compound as the electrolyte and O as the charge carrier.
28. In its broadest (and most accurate) sense biomass describes the total mass of living organisms on earth, comprising human and marine life, animals, crops, forests and other vegetation. In any resource recovery sense, organic matter, wet and dry. In the context of waste, renewable energy, and the derivation or production of H2 it means any material that can be process or treated or used to derive or to produce energy or an energy carrier, or a stabilised organic material. H2 is present in all biomass.
29. A gas arises from the decomposition of organic material comprising carbon and hydrogen compounds, including natural and through derivation or production, typically using an anaerobic process / technology, which gas is comprises CH4 and CO2.
30. It is noted that some sources indicate that the mass of H2 production may be as high as 120 mtpa. For the purposes of the article given that most sources indicate 68 to 75 mtpa figure, we have included that estimate.
31. While there is no consistent data available on the CO2 intensity of H2 production, the range is 8 to 12 tonnes per tonne of H2 if the feedstock is natural gas, and up to 18 tonne per tonne of H2 if coal. Further, the GHG emissions footprint of each facility used to produce H2 will depend on the efficiency of that facility.
32. In contrast, and this really is an extrapolation assuming 0.5 mtpa of CO2 arising from the production of 1 mtpa of LNG, 175 million tonnes of CO2-e GHG emissions arise on the production of LNG. Caution is required here, because relatively little CO2 arises on the production of LNG, the vast majority of GHG emissions arise on the combustion of natural gas derived from the LNG.
33. A Watt is a unit of used to measure the rate of transfer over time expressed as 1 joule per second, 60 joules per minute, or 3,600 joules an hour. TWh is a terawatt hour, being a unit of energy equal to one trillion watts for one hour. A KWh is a kilowatt hour, being a unit of energy equal to one thousand watts per hour.
34. It is estimated that in 2018 the gross electricity production of the European Union was around 2,950 TWh.
35. H2 is used to facilitate a chemical reaction, including in the present context in the production of ammonia (NH3).
36. Grey Hydrogen to Blue Hydrogen: H2 produced from a fossil fuel with the CO and CO2 emissions arising on production being captured and stored or used rather than being emitted as GHG to the atmosphere. Most commonly, Blue Hydrogen is used to refer to Grey Hydrogen produced from natural gas.
37. Nuclear Energy gives rise to limited GHG emissions, but may be regarded as very clean H2 or nearly green H2.
38. The term CCS connotes carbon dioxide capture and storage.
39. The term CCUS, connoting Carbon Dioxide Capture Storage or Use, or both, was coined by the International Energy Agency, and is gaining increasing use.
40. Whether H2 of NH3 is being produced, CO2 can be used in facilities that produce both NH3 and urea, with the CO2 used in the production of urea (from NH3) being released to the atmosphere. Urea (also called carbamide, only occasionally) is a solid organic compound CO (NH2)2 / CH4N2^O produced used as a fertilizer and as a feedstock for the production of plastics and pharmaceuticals. Urea is produced from ammonia (NH3) and carbon dioxide (CO2) at high pressure and relatively high temperature.
41. Cedric Philibert, in his article "Methane splitting and turquoise ammonia" (May 14, 2020) uses this description.
42. Pyrolysis decomposes / disintegrates organic material (including carbon) at temperatures of between 420 to 700 OC in an atmosphere of limited oxygen (thereby avoiding / managing combustion, i.e., partial oxidation) or no oxygen (thereby avoiding combustion / oxidation), and as such under controlled pressure. Pyrolysis of organic material yields CO, CO2 and H2, with a char residue (depending on the source of the organic material, char or bio-char). As a general statement there are two kinds of pyrolysis: fast (used to optimise energy carrier production) and slow (used to optimise bio-char production). Char / bio-char is a means of sequestering carbon into solid form. The production of H2 using pyrolysis involves heating to a little above 800^OC.
43. The is the Monolith Minerals plant in Hallam, Nebraska (the "Cornhusker State"), using a methane pyrolysis technology, with 100% of its electrical energy load supplied from renewable energy, to produce anhydrous ammonia. The Monolith Minerals plant is reported as producing 14,000 tonnes of carbon-black annually. Given its location, the Monolith Minerals plant will displace fertiliser that would otherwise be imported into Nebraska.
44. This the Yara Sluiskil plant in The Netherlands, using electrolysis, with 100% of its electrical energy load supplied from renewable energy from off-shore wind, with estimated production of 70,000 tonnes a year.
45. The compression and liquefaction requires electrical energy: using highly efficient liquefaction, an additional 12 kWh / kg of electrical energy will be required to produce 1 kg of hydrogen. This additional electrical energy requirement increases the delivered cost of hydrogen to the bowser / pump at the re-fuelling / re-filling station or to the point of use (i.e., at the point of combustion). This additional energy cost for compression or liquefaction is the case whatever the colour of the hydrogen. As a result, it is often stated that it takes at least 55 kWh of electrical energy to deliver 1kg of hydrogen to the bowser or pump or, stated another way, 22 kWh more than or 1.7 times energy content of that 1 kg of hydrogen.
46. In December 2017, Kawasaki Heavy Industries has developed the world's first LHG carrier, the Suiso Frontier (launched in December 2019, Suiso being hydrogen in Japanese), Chiyoda Corporation as shipped its first cargo of MCH from Brunei to Japan (in June 2020), and Sabic and Mitsubishi Corp have shipped the world's first cargo of Blue Ammonia from the Kingdome of Saudi Arabia to Japan (late September 2020).
47. Metal Hydrides and use of chemical hydrogen storage and sorbent materials allows H2 to be stored and transported in solid form.
48. Although NH3 contains no carbon, it is only GHG emission free if no carbon is used to produce it, and on combustion no other GHG arises.