SPECIAL REPORT | Why shipping pure hydrogen around the world might already be dead in the water

The world’s first shipment of liquid hydrogen — which left southern Australia on Monday on its way to Japan as part of a $350m international project — may have made headlines around the globe, but it might also prove to be a colossal waste of money.

Putting aside the fact that the Hydrogen Energy Supply Chain (HESC) project is ruthlessly dirty — sourcing its H2 from unabated brown coal and using polluting diesel to power the Suiso Frontier vessel on its 20-day journey — the notion that any commercial operator would choose to export pure hydrogen by ship is looking increasingly unlikely.

This is not because of greenhouse gas emissions, or the lack of vessels or suitable port facilities, but purely on the grounds of physics and cost.

According to the International Renewable Energy Agency, German think-tank Agora Energiewende and energy analyst Wood Mackenzie, it would make economic sense to ship ammonia (NH3), a hydrogen derivative, rather than pure H2.

On the surface, this might seem odd. After all, hydrogen is the lightest and most energy-dense substance (by weight) in the universe. So why would you want to make something else out of the H2 and transport that instead?

As Noel Tomnay, WoodMac’s global head of hydrogen consulting, wrote in a recent article published by Recharge, there are three reasons why ammonia is preferable to pure H2 for long-distance exports — “its energy density; its proven synthesis technology and existing supply chains; and its potential to drive decarbonisation in its own right”.

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Energy density

The truth is that hydrogen’s unsurpassable energy density by weight is irrelevant. When being transported in giant metal tanks, what really matters is its energy density by volume.

“Hydrogen transport by ship is technically possible for larger distances where pipelines are not an option. Because of its low energy density by volume, gaseous hydrogen is best converted into a more energy-dense liquid before being loaded onto a ship,” says Irena’s recent report, Geopolitics of the Energy Transformation: The Hydrogen Factor. “There are several vectors for hydrogen transport via ship, but ammonia is the most promising.”

At normal atmospheric pressure, hydrogen contains just 3kWh of energy per cubic metre, so it either has to be compressed or liquefied to increase its energy density — to 1,411kWh/m3 (at a pressure of 700 bar), or 2,350kWh/m3 when super-cooled to a liquid at a balmy minus 253°C.

The volumetric energy density of ammonia is 59% higher — at 3,730kWh/m3 when stored in its standard liquid form at minus 33.3°C.

So, assuming same-sized vessels, it would theoretically take more than three shipments of liquid hydrogen (LH2) to transport the same amount of energy as two shipments of liquid ammonia (LNH3).

Production costs/trade

But isn’t it easier and cheaper to stick to hydrogen, rather than using it to produce ammonia? After all, the Haber-Bosch process, which combines nitrogen from the air with H2 to form NH3, is notoriously energy-intensive.

Well, according to the EU-funded hydrogen liquefaction technology project, IDEALHY, state-of-the-art technology today requires 12kWh per kilo of liquid hydrogen (IDEALHY wants to reduce that to about 6kWh/kg).

And the traditional Haber-Bosch process, which is usually powered by fossil fuels, requires 9-11kWh/kg, according to multiple sources. However, powering Haber-Bosch via renewable electricity could cut this to 6.41kWh/kg, say researchers at the UK’s Cranfield University.

While that might sound like a win for ammonia, LH2 actually contains a lot more energy per kilogram than ammonia — 33.6kWh/kg versus 5.2kWh/kg. So while conversion to LH2 requires the equivalent of 36% of the energy that the hydrogen contains, producing ammonia requires more energy than that held by the produced NH3.

[The cost of] liquid H2 based on green hydrogen would [be]… almost 15 times higher than green ammonia

So why on earth would it make more sense to ship ammonia, rather than LH2?

First of all, we need to look at costs.

According to a 2019 report by the US Department of Energy, a new H2 liquefaction plant with a capacity of 27 tonnes per day would cost $150m, a capital contribution of roughly $1.40 per kilo. Levelised running costs would add up to a further $2.75/kg — and that’s not including the price of producing the H2 in the first place.

According to Bunro Shiowaza, a senior associate at the Sumitomo Chemical Company in Japan, writing in the Japanese-language International Environment and Economy Institute Journal, producing zero-carbon ammonia from green hydrogen (priced at $3/kg) would cost $480 per tonne, or $0.48/kg (note: ammonia is only 17.65% hydrogen by mass).

LH2 based on green hydrogen at the same price would cost $7.15/kg — almost 15 times higher than green NH3.

According to Recharge calculations (see panel below), this means that a 160,000m3 cargo (a standard LNG vessel size) of liquid hydrogen would cost about $200 per MWh to produce, in terms of the energy it contains, compared to just under $88/MWh of liquid ammonia.

There are other advantages for ammonia, not least because NH3 is already being transported commercially on ships.

According to Tomnay, the seaborne trade in ammonia amounts to about 20 million tonnes of liquid ammonia each year.

By contrast, the commercial operation of high-capacity LH2 ships is not targeted until the 2030s, at least, not by HESC, according to its website.

Tomnay adds that a world-scale ammonia plant produces about two million tonnes per year, but the largest LH2 plants being proposed are in the range of 15,000-30,000 tonnes annually, so scaling up the latter would be much harder.

Boil-off and shipping costs

Another significant reason to transport ammonia rather than liquid hydrogen, is their boiling points — ie, the temperature at which the liquid reverts to a gas.

Because LH2 needs to be stored at a far colder temperature than ammonia (minus 253°C vs minus 33°C), it is far more difficult to maintain that temperature over long voyages — especially when vessels rely on insulation to keep these liquids cold, rather than on-board refrigeration, such as the Suiso Frontier.

Inevitably, a proportion of these sub-zero liquids will warm up enough to turn into gas — what is known in the industry as “boil-off”.

According to figures from a November 2020 study by academics at the Hamad Bin Khalifa University in Qatar, published in the journal Energy Reports, transporting 160,000m3 of LH2 from Qatar to Japan would result in an annual boil-off rate of 13.77%. This means that 13.77% of its cargo weight would be lost over the course of a year (24 voyages).

By contrast, a same-sized vessel transporting 160,000m3 of liquid ammonia on the same route would lose only 0.325% of its cargo weight to boil-off. (This low rate could be due to the fact that existing ammonia carriers are often fully refrigerated to keep the NH3 in its liquid state — something that isn’t possible with far-colder LH2.)

Using the aforementioned liquid-hydrogen production price of $7.15/kg, that would translate as a $270.5m loss from boil-off every year. By contrast, the annual losses from LNH3 boil-off along the same route, based on the production price of $0.48/kg, would be just $4.1m.

It is important to point out, however, that the LH2 figures would be redundant if the carrier vessels had on-board reliquefaction systems, which captured the boil-off, cooled it back to a liquid and pumped it back into the storage tank.

A fully refrigerated liquid-ammonia carrier built by US shipbuilder Vigor Industrial. Photo: Vigor Industrial

Such systems — which would add considerable capital costs — are available for carriers of liquefied natural gas (LNG, a liquid at minus 162°C). However, they are rare as LNG boil-off is usually used to fuel the engines of the ship itself — a possibility for future LH2– and ammonia-powered vessels.

According to the Qatari study, the capital cost of a vessel (without reliquefaction facilities) carrying 160,000m3 of LH2 would be significantly higher than one holding the same volume of LNH3 — $216m vs $162m — although those figures are attributed by authors Mohammed Al-Breiki and Yusuf Bicer to an earlier study from 2006.

While the paper points out that bunker fuel costs would be a lot more for the ammonia vessel due to the heavier weight of its cargo, when factoring in maintenance and other expenses, the total ship operating costs for the year would only be 25.9% higher — $24.3m compared to $19.3m. No calculations are made for future vessels powered by their own cargo.

Taking all these elements into account, it is clear that ammonia would be far less expensive to transport by sea than liquid hydrogen.

Agora calculates it would be cheaper to produce green hydrogen in the EU than to import renewable H2 by ship from places such as Chile and Australia, where high solar irradiation and strong winds means hydrogen can be produced extremely cheaply.

However, as the think-tank explains in its recent report, 12 Insights on Hydrogen, the opposite would be true for hydrogen derivatives such as ammonia, methanol or synthetic fuel.

Convert the ammonia back to hydrogen? Why would you want to?

“When the end-use molecule is hydrogen, shipping from faraway lands such as Chile or Australia works out to be more expensive than if the hydrogen was produced locally in Germany, even with average renewables,” the study says.

“However, instead of cracking [ie, converting] shipped ammonia back to hydrogen, using ammonia directly as a fuel could be cheaper than the local production of hydrogen, even in 2050.”

Use ammonia, not H2

You might be asking yourself at this point, “We’ll still need lots of pure hydrogen to decarbonise industry and heavy transport, so what about the cost of converting the ammonia back to hydrogen?” To which Recharge’s answer is this: “Why would you want to?”

The global market for ammonia is enormous, at about 176 million tonnes per year, according to the UK’s Royal Society. And as the IEA pointed out in its 2019 The Future of Hydrogen report, an estimated 31.5 million tonnes of hydrogen — roughly 42% of the annual global production, almost all of which is derived from unabated fossil fuels — was used to produce ammonia in 2018.

As the Royal Society policy briefing note points out, ammonia production currently results in about 500 million tonnes of CO2 being released into the atmosphere each year, about 1.8% of annual global carbon emissions.

Replacing that dirty ammonia — most of which supports food production — with green NH3 will be vital if the planet is to reach net-zero emissions by 2050.

And, assuming an electrolyser efficiency of 50kWh/kgH2, the green hydrogen required to do that would need 1,575 terawatt hours of green energy — equivalent to 20% of today’s annual global renewables production (8,300TWh, according to the IEA’s Global Energy Review 2021).

On top of that, more renewable energy would be needed to power the Haber-Bosch process.

Developers moving to ammonia

Export-focused green-hydrogen project developers have begun to take notice of the advantages of shipping ammonia.

According to Wood Mackenzie, the majority of export-oriented low-carbon (blue and green) hydrogen projects plan to ship ammonia, rather than pure H2.

“More than 85% of the proposed capacity integrates ammonia and hydrogen to some degree, with ammonia intended for export markets and the remainder, hydrogen, largely aimed at domestic markets,” wrote Tomnay.

He explains that ammonia could become the marine fuel of choice, and is also being planned for use in power generation, particularly in Japan, South Korea and Germany, so demand for NH3 could well grow substantially in the coming years.

Tomnay agrees that it does make sense to convert ammonia back into hydrogen. “While ammonia is a potential carrier of hydrogen that can be unlocked by cracking or a reversal of the synthesis reaction, progressing this route at a large scale faces technical and commercial challenges,” he wrote.

But don’t we still need to trade pure hydrogen?

Yes, the world will still need a lot of pure hydrogen, probably to decarbonise heavy industry and heavy transport, rather than for use cases such as heating and cars, where electric options will be far cheaper.

And countries such as Germany, Japan and South Korea — as well as the EU — believe that they will not be able to produce enough clean hydrogen locally to meet demand. So international trade in H2 is very much still needed.

The liquid hydrogen storage tank in Kobe, Japan, which is awaiting the shipment of LH2 aboard the Suiso Frontier. Photo: AFP/Getty

Agora’s recent hydrogen report says that the markets for pure H2 will become regional, as transporting the element by long-distance pipeline will be roughly half the price of shipping it to Europe.

“In practice, then, opportunities for ship-based hydrogen trade will be limited to instances where pipelines are not ready or unfeasible due to, say, public opposition or distance (as in Japan) or politics,” it says.

While European nations could theoretically receive its H2 supply by pipes from the Middle East or North Africa, more isolated countries such as South Korea and Japan, will not be able to — even though they are both planning to import huge amounts of hydrogen in their respective bids to reach net-zero emissions.

For these nations, something more radical might be needed.

Relocating industry

In its hydrogen geopolitics report, Irena makes the point that it would actually be cheaper, in some cases, to move industrial facilities to sun- or wind-rich parts of the world where green hydrogen would be very cheap to produce and then to transport the final product made using that H2, rather than transporting the hydrogen itself.

“The cost of transporting renewable energy, whether in the form of electricity or hydrogen, remains relatively high,” it says. “The cheapest way to transport energy is in materials and products. Thus, renewable potentials create a significant competitive advantage for regions with surplus renewable resources to become sites of green industrialisation.

“Relocating industry makes sense where the energy cost reduction exceeds the additional shipping cost. Relocation may benefit commodities such as aluminium, ammonia, iron, jet fuel and methanol.”

So even exporting ammonia around the world may not be the lowest-cost option for some companies.

“Some energy-intensive industries may relocate to countries with low-cost renewable surpluses, exporting commodities or semi-finished products (direct reduced iron, etc.) for finishing in other countries,” the report adds.

The report does add the caveat that choosing industrial facility locations depends on more than just cheap energy.

“Existing industrial clusters and agglomerations are likely to be resistant to change and exhibit path dependency. Most low-carbon steel plants in Europe, for example, are located within existing industrial clusters. Moreover, countries will want to retain their industrial base while looking for ways to decarbonise polluting industries.”

But it adds: “Setting up new production facilities in renewables-rich countries does not necessarily imply the closure of plants elsewhere. On the contrary, in many industries, there is scope for growth. By 2050, around 200 million tonnes per year of expected global steel demand cannot be met by retrofitting existing production sites. New opportunities will exist to set up additional clean production facilities in countries with iron ore and cheap renewables.”

And it cites previous examples of such industrial relocations based on access to cheap energy.

“Following the oil crises in the 1970s, Japan phased out aluminium smelters and switched to imports. Aluminium smelters are typically situated close to hydropower dams with large amounts of low-cost electricity, in places as diverse as Canada, Iceland, Mozambique, Norway, Russia, Suriname, Tajikistan and Venezuela. Ammonia plants have been located close to sources of low-cost natural gas, in Norway, the Middle East and Russia, for example.”

So perhaps the high cost of shipping pure hydrogen will lead to a new era of industrial development in sparsely populated coastal desert regions, where winds and sunshine are both strong — places such as Chile, Australia, Namibia, Saudi Arabia and Oman, all of which are planning gigawatt-scale green hydrogen projects, coupled with ammonia production.

How Recharge calculated the cost of shipfuls of ammonia and liquid hydrogen

A full 160,000-cubic-metre cryogenic liquid tank (a standard size on LNG vessels where liquefied natural gas needs to be kept at minus 162°C) would contain 109,248 tonnes of liquid ammonia, which, using Shiowaza’s costings of $0.48/kg, would cost $52.44m to produce.

The same tank would only be able to hold 11,376 tonnes of liquid hydrogen, which would cost $81.34m to produce at a price of $7.15/kg.

The ammonia shipment would therefore contain 596.8GWh of energy, at a cost of $87.87/MWh, whereas the hydrogen tankful would contain 404.8GWh at a cost of $200.94/MWh.