September 22, 2021
The Government of the Russian Federation approved the concept of the development of hydrogen energy in Russia, which assumes the esablishmet of a high-tech export-oriented industry with an export volume of up to 50 million tons of hydrogen by 2050 (Decree of the Government of the Russian Federation No. 2162-R dated 05.08.2021). According to the Decree, the current global hydrogen demand is about 116 million tons per year, of which pure hydrogen accounts for 74 million tons per year. Additional 42 million tons of hydrogen is used in mixtures with other gases as a raw material or fuel for the generation of heat and electricity. Over 95% of the world's hydrogen consumption is accounted for by the oil refining and chemical industries, which produce it themselves. In the structure of the world pure hydrogen production, 75% is accounted for by natural gas, almost the entire remaining volume (23%) - by coal. Currently, only 2% of hydrogen is produced via electrolysis.
Currently, there is no global market for hydrogen as an energy source material. The future development of technologies and the scaling of hydrogen energy may facilitate the formation of a fairly large market. The Russian concept is based on the assumption that in the future, the world market of large-tonnage hydrogen will develop like the oil and LNG market with transportation from production centres to consumption centres. At the same time, there will be local markets, where small production facilities and consumption of hydrogen will be concentrated within the same countries or small regions.
The forecasts for the development of the world hydrogen energy and the global hydrogen market are very uncertain with a very large spread in production and consumption estimates. Thus, by 2050 subject to the pace of development of the global low-carbon economy and the speed of introduction of hydrogen technologies, the global demand for hydrogen can vary from 40 to 170 million tons per year.
As noted in the document, the most cost-effective methods of hydrogen production are the methods of steam methane reformation, coal gasification with CO2 capture and water electrolysis based on the energy of nuclear and hydro power plants. The method of renewable energy based water electrolysis is the most environmentally friendly method of hydrogen production, but it is significantly more expensive than other methods.
Cost reduction of such production is possible by reducing the costs of electrolytic units (including through the development of new types), as well as the cost of electricity from renewable energy sources and nuclear power plants. Using this approach, the cost of hydrogen production on renewable energy sources may be decreased to $ 2 per kilogram by 2050 and become quite comparable to the price of hydrogen generated from fossil sources.
The concept is based on the idea that the production of hydrogen and hydrogen technologies in Russia will primarily be focused on export. The potential volumes of hydrogen exports can reach up to 0.2 million tons in 2024, up to 2-12 million tons in 2035, and 15-50 million tons in 2050, subject to the rate of development of the world low-carbon economy and the rise of demand for hydrogen in the world market.
Russia has a number of advantages for the development of hydrogen energy. These include: 1) a large volume of gas and coal resources, as well as a significant potential of nuclear power plants, wind and solar power plants for the production of cheap low-carbon hydrogen; 2) the availability of underutilized generation capacities, 3) developed oil refining and chemical industry, which use steam methane reformation and electrolysis technologies 4) developed scientific and technical base and 5) favourable geographical location to make it possible to export hydrogen to the largest forecasted hydrogen consumption centres in Europe and the Asia-Pacific region.
At the same time, there are a number of system-related restrictions that hinder the development of hydrogen energy. These are 1) the high cost of low-carbon hydrogen production compared to traditional energy carriers; 2) the lack of technologies for capturing, storing, transporting, and using CO2; 3) the lack of transport infrastructure; 4) the current lack of wide demand for hydrogen as an energy carrier; 5) an insufficiently developed regulatory framework, including in the field of safety; 6) higher cost of capital for implementation of projects compared to key competing countries; 7) limited state support programs and low level of investments in research and development in the hydrogen technologies field; 8) an imperfect national system of standardization and certification of hydrogen energy sector 9) a high degree of uncertainty regarding the prospects for the development of hydrogen energy in the world.
According to the concept, three scientific-industrial clusters will be created in Russia for the production of hydrogen: the North-Western cluster with export orientation to Europe, the Eastern cluster with export orientation to Asia, and the Arctic cluster with energy supply orientation to the Arctic territories, also the export of hydrogen and energy mixtures to the EU and Asia-Pacific markets.
A Southern cluster may additionally be established to focus on the use of renewable energy in the production of hydrogen. The advantage of the Southern Cluster will be its proximity to major export sea ports.
The following is proposed for the development of the domestic hydrogen market 1) to increase the production of hydrogen at the facilities that produce it in limited volumes for their own needs, for the purpose of exporting H2 2) to develop test prototypes of buses, trucks and trains and launch them in large cities, 3) to create the necessary networks of hydrogen filling stations; 4) to use hydrogen as an energy storage media in local power systems with its subsequent use for power generation; 5) to launch pilots projects on the use of hydrogen in the housing and utilities sector, provided that its safety and economic efficiency are confirmed.
At the same time, it is proposed to develop measures to promote the use of hydrogen and increase its competitiveness in relation to other energy resources that are popular in the country.
The document offers very modest measures of government support for the development of hydrogen energy in Russia. In particular, it is proposed to compensate for part of the costs of scientific-technical research, to apply an increasing coefficient to the costs of such scientific research to reduce the taxable profit of organizations, to issue subsidies for the development of hydrogen technologies, and to create special-purpose funds from the state budget and extra-budgetary sources.
For the purposes of the promotion of the creation of infrastructure, it is planned to use mechanisms of state-private partnership, state financing and co-financing of infrastructure projects, including within the framework of agreements on the protection and encouragement of capital investments. The budgets of the constituent territories of the Russian Federation must also be involved in this work.
The development of hydrogen energy in Russia is planned in three stages. The first stage (2021-2024) assumes the establishment of hydrogen clusters and the implementation of pilot projects to achieve the export of hydrogen to 0.2 million tons by 2024, as well as the use of hydrogen energy carriers in the domestic market.
At this stage, the necessary legislative and regulatory framework must be put in place, as well as measures of state support for hydrogen energy should be developed. During this period, it is assumed to launch the first pilot projects for the hydrogen production from fossil fuels, including using the technology of capture, storage, and use of carbon dioxide, as well as water electrolysis using various types of low-carbon generation. At the same time, it is planned to create world-class scientific-technological centres and facilities for the development of domestic hydrogen energy technologies
The second stage (2025-2035) assumes the launch of the first commercial hydrogen production projects to achieve export volumes of up to 2 million tons, and in an optimistic scenario up to 12 million tons per year by 2035.
At this stage, it is planned to create large export-oriented hydrogen production facilities, and the implementation of pilot projects for the use of hydrogen in the domestic market. During this period, the full-scale and mass application of hydrogen technologies will be launched in various sectors of the Russian economy, large-scale production of equipment, electrolysers, fuel cells, gas turbines, hydrogen power plants, hydrogen filling stations, hydrogen transport, and robotics will be created.
It is expected that world hydrogen demand to rise during this very period .
The third stage (2036 - 2050) assumes the large-scale development of the global hydrogen energy market. By 2050, the volume of hydrogen supplies to the world market can reach 15 million tons, and in an optimistic scenario - 50 million tons.
The cost of producing renewable energy source based hydrogen will approach the cost of producing hydrogen from fossil raw materials, which will allow the implementation of large projects for the production and export of low-carbon hydrogen produced using renewable energy sources. During the third stage, Russia plans to become a largest exporter of hydrogen and hydrogen based energy mixtures, and of industrial products for hydrogen energy to the countries of the Asia-Pacific region and Europe. In the domestic market, it is expected to commence a wide commercial application of hydrogen technologies in the fields of transport, energy and industry.
Translated in English by Muhiddin Ganiev