IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v358y2024ics0306261923018494.html
   My bibliography  Save this article

The industry transformation from fossil fuels to hydrogen will reorganize value chains: Big picture and case studies for Germany

Author

Listed:
  • Egerer, Jonas
  • Farhang-Damghani, Nima
  • Grimm, Veronika
  • Runge, Philipp

Abstract

In many industries, low-carbon hydrogen will substitute fossil fuels in the course of the transformation to climate neutrality. This paper contributes to understanding this transformation. This paper provides an overview of energy- and emission-intensive industry sectors with great potential to defossilize their production processes with hydrogen. An assessment of future hydrogen demand for various defossilization strategies in Germany that rely on hydrogen as a feedstock or as an energy carrier to a different extent in the sectors steel, chemicals, cement, lime, glass, as well as pulp and paper is carried out. Results indicate that aggregate industrial hydrogen demand in those industries would range between 197 TWh and 298 TWh if production did not relocate abroad for any industry sector. The range for hydrogen demand is mainly due to differences in the extent of hydrogen utilization as compared to alternative transformation paths for example based on electrification. The attractiveness of production abroad is then assessed based on the prospective comparative cost advantage of relocating parts of the value chain to excellent production sites for low-carbon hydrogen. Case studies are provided for the steel industry, as well as the chemical industry with ethylene production through methanol and the production of urea on the basis of ammonia. The energy cost of the respective value chains in Germany is then compared to the case of value chains partly located in regions with excellent conditions for renewable energies and hydrogen production. The results illustrate, that at least for some processes – as ammonia production – relocation to those favorable regions may occur due to substantial comparative cost advantages.

Suggested Citation

  • Egerer, Jonas & Farhang-Damghani, Nima & Grimm, Veronika & Runge, Philipp, 2024. "The industry transformation from fossil fuels to hydrogen will reorganize value chains: Big picture and case studies for Germany," Applied Energy, Elsevier, vol. 358(C).
    • Handle: RePEc:eee:appene:v:358:y:2024:i:c:s0306261923018494
    DOI: 10.1016/j.apenergy.2023.122485
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261923018494
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2023.122485?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lopez, Gabriel & Galimova, Tansu & Fasihi, Mahdi & Bogdanov, Dmitrii & Breyer, Christian, 2023. "Towards defossilised steel: Supply chain options for a green European steel industry," Energy, Elsevier, vol. 273(C).
    2. Zhang, Hanfei & Wang, Ligang & Van herle, Jan & Maréchal, François & Desideri, Umberto, 2021. "Techno-economic comparison of 100% renewable urea production processes," Applied Energy, Elsevier, vol. 284(C).
    3. Pfenninger, Stefan & Staffell, Iain, 2016. "Long-term patterns of European PV output using 30 years of validated hourly reanalysis and satellite data," Energy, Elsevier, vol. 114(C), pages 1251-1265.
    4. Sens, Lucas & Neuling, Ulf & Kaltschmitt, Martin, 2022. "Capital expenditure and levelized cost of electricity of photovoltaic plants and wind turbines – Development by 2050," Renewable Energy, Elsevier, vol. 185(C), pages 525-537.
    5. Egerer, Jonas & Grimm, Veronika & Niazmand, Kiana & Runge, Philipp, 2023. "The economics of global green ammonia trade – “Shipping Australian wind and sunshine to Germany”," Applied Energy, Elsevier, vol. 334(C).
    6. Küster-Simic, André & Knigge, Malte & Schönfeldt, Janek, 2020. "Struktur, Entwicklung und Zukunft der deutschen Stahlindustrie: Eine Branchenanalyse," Working Paper Forschungsförderung 187, Hans-Böckler-Stiftung, Düsseldorf.
    7. Hunt, Julian David & Nascimento, Andreas & Nascimento, Nazem & Vieira, Lara Werncke & Romero, Oldrich Joel, 2022. "Possible pathways for oil and gas companies in a sustainable future: From the perspective of a hydrogen economy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    8. Rissman, Jeffrey & Bataille, Chris & Masanet, Eric & Aden, Nate & Morrow, William R. & Zhou, Nan & Elliott, Neal & Dell, Rebecca & Heeren, Niko & Huckestein, Brigitta & Cresko, Joe & Miller, Sabbie A., 2020. "Technologies and policies to decarbonize global industry: Review and assessment of mitigation drivers through 2070," Applied Energy, Elsevier, vol. 266(C).
    9. Staffell, Iain & Pfenninger, Stefan, 2016. "Using bias-corrected reanalysis to simulate current and future wind power output," Energy, Elsevier, vol. 114(C), pages 1224-1239.
    10. Ikonnikova, Svetlana A. & Scanlon, Bridget R. & Berdysheva, Sofia A., 2023. "A global energy system perspective on hydrogen Trade: A framework for the market color and the size analysis," Applied Energy, Elsevier, vol. 330(PA).
    11. Vögele, Stefan & Grajewski, Matthias & Govorukha, Kristina & Rübbelke, Dirk, 2020. "Challenges for the European steel industry: Analysis, possible consequences and impacts on sustainable development," Applied Energy, Elsevier, vol. 264(C).
    12. Simoni, Marco & Wilkes, Mathew D. & Brown, Solomon & Provis, John L. & Kinoshita, Hajime & Hanein, Theodore, 2022. "Decarbonising the lime industry: State-of-the-art," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    13. Brynolf, Selma & Taljegard, Maria & Grahn, Maria & Hansson, Julia, 2018. "Electrofuels for the transport sector: A review of production costs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 1887-1905.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gong, Yu & Liu, Tingxi & Liu, Pan & Duan, Limin, 2024. "Deriving joint operating rule curves for hydro–hydrogen–wind–photovoltaic hybrid power systems," Applied Energy, Elsevier, vol. 375(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fonder, Michaël & Counotte, Pierre & Dachet, Victor & de Séjournet, Jehan & Ernst, Damien, 2024. "Synthetic methane for closing the carbon loop: Comparative study of three carbon sources for remote carbon-neutral fuel synthetization," Applied Energy, Elsevier, vol. 358(C).
    2. Morgenthaler, Simon & Kuckshinrichs, Wilhelm & Witthaut, Dirk, 2020. "Optimal system layout and locations for fully renewable high temperature co-electrolysis," Applied Energy, Elsevier, vol. 260(C).
    3. Qi, Meng & Kim, Minsu & Dat Vo, Nguyen & Yin, Liang & Liu, Yi & Park, Jinwoo & Moon, Il, 2022. "Proposal and surrogate-based cost-optimal design of an innovative green ammonia and electricity co-production system via liquid air energy storage," Applied Energy, Elsevier, vol. 314(C).
    4. van Beuzekom, Iris & Hodge, Bri-Mathias & Slootweg, Han, 2021. "Framework for optimization of long-term, multi-period investment planning of integrated urban energy systems," Applied Energy, Elsevier, vol. 292(C).
    5. Qi, Meng & Lee, Jaewon & Hong, Seokyoung & Kim, Jeongdong & Liu, Yi & Park, Jinwoo & Moon, Il, 2022. "Flexible and efficient renewable-power-to-methane concept enabled by liquid CO2 energy storage: Optimization with power allocation and storage sizing," Energy, Elsevier, vol. 256(C).
    6. de Guibert, Paul & Shirizadeh, Behrang & Quirion, Philippe, 2020. "Variable time-step: A method for improving computational tractability for energy system models with long-term storage," Energy, Elsevier, vol. 213(C).
    7. Marko Hočevar & Lovrenc Novak & Primož Drešar & Gašper Rak, 2022. "The Status Quo and Future of Hydropower in Slovenia," Energies, MDPI, vol. 15(19), pages 1-13, September.
    8. Lukas Kriechbaum & Philipp Gradl & Romeo Reichenhauser & Thomas Kienberger, 2020. "Modelling Grid Constraints in a Multi-Energy Municipal Energy System Using Cumulative Exergy Consumption Minimisation," Energies, MDPI, vol. 13(15), pages 1-23, July.
    9. Steinegger, Josef & Hammer, Andreas & Wallner, Stefan & Kienberger, Thomas, 2024. "Revolutionizing heat distribution: A method for harnessing industrial waste heat with supra-regional district heating networks," Applied Energy, Elsevier, vol. 372(C).
    10. Østergaard, P.A. & Lund, H. & Thellufsen, J.Z. & Sorknæs, P. & Mathiesen, B.V., 2022. "Review and validation of EnergyPLAN," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    11. Behrang Shirizadeh, Quentin Perrier, and Philippe Quirion, 2022. "How Sensitive are Optimal Fully Renewable Power Systems to Technology Cost Uncertainty?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    12. Omoyele, Olalekan & Hoffmann, Maximilian & Koivisto, Matti & Larrañeta, Miguel & Weinand, Jann Michael & Linßen, Jochen & Stolten, Detlef, 2024. "Increasing the resolution of solar and wind time series for energy system modeling: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 189(PB).
    13. Liu, Hailiang & Andresen, Gorm Bruun & Greiner, Martin, 2018. "Cost-optimal design of a simplified highly renewable Chinese electricity network," Energy, Elsevier, vol. 147(C), pages 534-546.
    14. Géremi Gilson Dranka & Paula Ferreira, 2020. "Electric Vehicles and Biofuels Synergies in the Brazilian Energy System," Energies, MDPI, vol. 13(17), pages 1-22, August.
    15. Shirizadeh, Behrang & Quirion, Philippe, 2022. "The importance of renewable gas in achieving carbon-neutrality: Insights from an energy system optimization model," Energy, Elsevier, vol. 255(C).
    16. Liu, Hailiang & Brown, Tom & Andresen, Gorm Bruun & Schlachtberger, David P. & Greiner, Martin, 2019. "The role of hydro power, storage and transmission in the decarbonization of the Chinese power system," Applied Energy, Elsevier, vol. 239(C), pages 1308-1321.
    17. Andrés Henao-Muñoz & Andrés Saavedra-Montes & Carlos Ramos-Paja, 2018. "Optimal Power Dispatch of Small-Scale Standalone Microgrid Located in Colombian Territory," Energies, MDPI, vol. 11(7), pages 1-20, July.
    18. Laura Canale & Anna Rita Di Fazio & Mario Russo & Andrea Frattolillo & Marco Dell’Isola, 2021. "An Overview on Functional Integration of Hybrid Renewable Energy Systems in Multi-Energy Buildings," Energies, MDPI, vol. 14(4), pages 1-33, February.
    19. Stamatios K. Chrysikopoulos & Panos T. Chountalas & Dimitrios A. Georgakellos & Athanasios G. Lagodimos, 2024. "Decarbonization in the Oil and Gas Sector: The Role of Power Purchase Agreements and Renewable Energy Certificates," Sustainability, MDPI, vol. 16(15), pages 1-24, July.
    20. Gorre, Jachin & Ortloff, Felix & van Leeuwen, Charlotte, 2019. "Production costs for synthetic methane in 2030 and 2050 of an optimized Power-to-Gas plant with intermediate hydrogen storage," Applied Energy, Elsevier, vol. 253(C), pages 1-1.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:358:y:2024:i:c:s0306261923018494. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.