Universität zu Köln

Schönfisch, Max (2024). Essays on the Economics of Low-Carbon Hydrogen. PhD thesis, Universität zu Köln.

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Abstract

Hydrogen is increasingly seen as one of the key building blocks of a low-emission energy system. This thesis aims to provide insights into potential development pathways and structures of the emerging market for low- carbon hydrogen, as well as impacts on the adjacent markets for natural gas and electricity. Chapter 2 presents a comprehensive approach for estimating the development of global production and supply costs of low-carbon hydrogen from renewable energy sources (RES) (onshore wind, offshore wind and solar photovoltaics) and natural gas (natural gas reforming (NGR) with carbon capture, utilisation and/or storage (CCUS) and natural gas pyrolysis) until 2050. The analysis also assesses the costs associated with the transportation of hydrogen by ship or pipeline. The combination of production and transportation costs yields a ranking of cost-optimal supply sources for individual countries. Estimation results suggest that NGR with CCUS will be the most cost-efficient low-carbon hydrogen production pathway in the medium term (2020- 2030). Production of hydrogen from RES could become competitive in the long run (2030-2050) if capital costs decrease significantly. The cost-optimal long-term hydrogen supply depends on regional characteristics, such as renewable energy potentials and gas prices. Imports of hydrogen from RES are cost-effective where the domestic RES-based hydrogen production potential is small or cost-intensive. Additionally, good import conditions exist for countries which are connected to prospective low-cost exporters via existing natural gas pipelines that can be retrofitted to transport hydrogen. Due to the high cost of seaborne transport, it can be concluded that hydrogen trade will most likely develop regionally along pipeline networks. Chapter 3 analyses the impact of supply technology choices and costs on structures and prices on the emerging low-carbon hydrogen market using a novel, integrated natural gas and hydrogen market model, integrating the global low-carbon hydrogen supply cost and supply potential projections derived through the analysis presented in Chapter 2. The model-based analysis shows that natural gas-based low-carbon hydrogen production pathways predominate in technology-neutral scenarios in 2050. In scenarios where hydrogen production is gas- based, hydrogen is produced close to the point of consumption. Natural gas prices determine local hydrogen prices. In scenarios characterised by high shares of RES-based low-carbon hydrogen production, long-distance, cross-border trade in pure hydrogen becomes an economically viable proposition due to the heterogeneous distribution of low-cost RES potentials and significant hydrogen price spreads between countries with high hydrogen demand but poor RES potentials, and countries that are well endowed with cost-competitive RES. Trade is conducted almost exclusively via pipeline. The analysis finds the most significant potential for cross- border trade in and around Europe. It suggests that it would be economical for Europe to import substantial quantities of low-carbon hydrogen from North Africa. Chapter 4 examines synergies and linkages between the hydrogen and LNG values chains and quantifies the impact of increased low-carbon hydrogen production and consumption on global natural gas demand and LNG flows. The analysis is conducted through interviews with LNG industry stakeholders, a review of secondary literature on the LNG/hydrogen nexus and a scenario-based analysis of the potential development of global low-carbon hydrogen production, natural gas consumption and LNG trade until 2050 using the natural gas and hydrogen market model presented in Chapter 3. The model-based analysis shows that low-carbon hydrogen production could become a major user of natural gas and thus stabilise global LNG demand. Only in scenarios where RES-based hydrogen becomes the dominant pathway globally, LNG demand starts to decline significantly after 2040. Furthermore, commercial and operational links exist that could provide the LNG industry with a competitive edge in developing a value chain around natural gas-based low-carbon hydrogen. Chapter 5 assesses impact of a renewable hydrogen quota on EU gas and electricity markets through a model- based analysis. By comparing a scenario in which a renewable hydrogen quota with tradable certificates is imposed on final gas consumption in the sectors of the economy outside the EU emissions trading system with a reference scenario without a quota, price, quantity and welfare effects are analysed. The model simulations show that the hydrogen quota leads to a significant expansion in renewable electricity generating capacity to produce renewable hydrogen and synthetic methane with power-to-gas technologies. On the electricity market, the price increases substantially, leading to a higher surplus for power producers. The quota’s primary beneficiaries in the power sector are renewable energy producers. On the gas market, the quota leads to a small decrease in prices and gas producer surpluses. Quota obliged gas consumers, mainly households, commercial and small industrial consumers, carry the largest part of the burden associated with the obligation. Overall, the quota leads to the redistribution of welfare from these consumers to renewable electricity generators and power- to-gas producers and a significant decline in total welfare.

Item Type:	Thesis (PhD thesis)
Translated title:	Title Language Essays on the Economics of Low-Carbon Hydrogen English
Creators:	Creators Email ORCID ORCID Put Code Schönfisch, Max mschoe21@smail.uni-koeln.de UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-750952
Date:	2024
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Externe Einrichtungen > An-Institute > Associated Institutes of the Faculty of Management, Economics and Social Sciences > Institute for Energy Economics
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language low-carbon hydrogen English natural gas English renewables English energy economics English techno-economic analysis English
Date of oral exam:	31 October 2024
Referee:	Name Academic Title Bettzüge, Marc Oliver Prof. Dr. Ruhnau, Oliver Jun. Prof.
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/75095