Russia Strives Toward Position as Hydrogen Leader

Russia’s new plan for the development of the hydrogen economy reinforces the country’s ambition to gain a share of the new market, even though it is not clear how big the market will ultimately be. The country is also still weighing which types of production and transportation technology to rely on. The plan -- outlined in a "concept document" approved by the Russian government this month -- follows the country’s 2035 energy strategy and a hydrogen development road map leading up to 2024, both approved last year (NE Oct.29'20). Russia may export up to 200,000 metric tons per year by 2024, between 2 million-12 million tons/yr by 2035 and 15 million-50 million tons/yr by 2050, the document says. The outcome depends on the pace of development of the global low-carbon economy and the growth in hydrogen demand, it adds (NE Apr.22'21). Russia is weighing the prospects of the nascent hydrogen market at a time when more and more oil and gas importing countries are adopting hydrogen strategies. Russian leaders also believe they need to start formulating targets and draft measures to secure their desired 20% global market share and mitigate the risks of lower demand for oil and gas in the long term. Moscow sees hydrogen as an opportunity to diversify exports, increase exports of added-value products, and decarbonize industrial products exported to countries with possible carbon border adjustment mechanisms. The country also sees the fuel as a way to maintain the competitiveness of the energy industry in the long run, develop domestic technology that could be potentially exported, all while creating high-tech jobs and reaping environmental benefits. Plans and Priorities What is increasingly important for Russia, which sits on vast hydrocarbon resources, is that hydrogen should help retain the role of natural gas in export markets. This can be done thanks to low-carbon technologies for the production of hydrogen from Russian gas in close proximity to foreign consumers, the document says. The concept document lists various technologies for production and transportation of hydrogen. This reflects the early stage of Moscow’s studies to pick the most promising ones. But for the next 15 years, a key focus is understood to be hydrogen made from natural gas, either via steam methane reforming with carbon capture and storage or via pyrolysis of methane. Russia plans state support for projects that could help the hydrogen industry decarbonize, build up an export market, and build out transportation and infrastructure. It plans to create at least three hydrogen clusters focused on different target markets and technological advances, in northwestern Russia, Russia’s Far East and the Arctic. LNG export champion Novatek is already considering producing ammonia in the Arctic, which is widely seen as a promising means to transport hydrogen, primarily to Asia. Eye on Europe Europe is obviously a key target market. It accounts for more than 80% of Russia’s total pipeline gas exports and 25% of the country’s total natural gas production, and Moscow doesn’t want to lose it. The EU’s strategy relies largely on “green” hydrogen produced through electrolysis of water powered by renewable energy. But Gazprom, Russia’s sole pipeline gas exporter, says the strategy only mentions “renewable hydrogen” and “low-carbon hydrogen” rather than “green,” “blue,” or “turquoise" (NE Jun.18'20). This means that there should be room for natural gas as a hydrogen feedstock -- provided emissions are low enough to comply with EU standards. “The criteria are wide enough ... as long as certification and monitoring is done properly and acceptably, in a single European market, the individual member countries won’t be able to exclude one sort of hydrogen or another,” Simon Blakey, senior adviser at IHS Markit, told a recent webinar. Gazprom, which took part in drafting the concept document, suggests producing hydrogen via pyrolysis of methane in Central Europe. It argues this will reduce the carbon footprint by 55%, compared with traditional natural gas exports and consumption, if powered by grid electricity and by 80% if using renewable energy. By comparison, producing hydrogen in Russia and exporting it in a 10% blend with natural gas via the Nord Stream and Nord Stream 2 pipelines to Germany would reduce the carbon footprint by 1%, while producing hydrogen at the end of the pipes and shipping it further in a 10% blend via the German gas grid would reduce it by 2%, Konstantin Romanov, CEO of the Gazprom Hydrogen company, told the same webinar. Moreover, large investments might be needed to upgrade pipes for transportation of methane-hydrogen blends -- on top of the extra cost of splitting the blend back into hydrogen and methane at the end of the pipes (NE Dec.3'20). Vitaly Sokolov, Moscow