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Hydrogen and its colors: changes in the Energy Sector and their importance for businesses


In the energy sector, especially considering the commitments of countries to zero greenhouse gas emissions and to decarbonize fossil fuels, there is a lot of talk about hydrogen as an alternative and clean energy source.

Hydrogen (H2) is found almost everywhere, but it is difficult to find in nature as a separate element, instead it is chemically bonded to oxygen in water and to carbon in hydrocarbons.

Why is hydrogen a powerful solution in the energy sector?

The advantage of hydrogen is that when it is "burned", it produces energy in the form of heat and the only by-product is water. This means that the energy created from hydrogen does not produce carbon dioxide (CO2) or other greenhouse gases that heat the atmosphere, making it one of many potential energy sources that could help reduce carbon emissions, slow global warming and address the climate crisis.


In addition to reducing greenhouse gas emissions, hydrogen is a promising fuel in terms of efficiency compared to oil and other green energy sources. Hydrogen fuel cell technology provides a high-density energy source with good energy efficiency. Hydrogen has the highest energy content than any common fuel by weight. High pressure gas and liquid hydrogen have about three times the gravimetric energy density (about 120 MJ/kg) of diesel and LNG and a similar volumetric energy density to natural gas. Hydrogen fuel thus allows more energy to be produced per kilogram of fuel.


But producing hydrogen and converting it into useful form requires energy - and that energy is not necessarily renewable. Hydrogen is produced to a large extent by the electrolysis of water, a process in which water is decomposed using electricity into hydrogen and oxygen.


The types of hydrogen

There are different types of hydrogen, categorized by the production process and the resulting greenhouse gas emissions. This separation is achieved by a series of colors given as an abbreviation for how it is created.


Green

Green is called hydrogen when the energy used for electrolysis comes entirely from renewable sources such as wind, water or solar energy.


Blue

The production of blue hydrogen begins with the conversion of methane to hydrogen and carbon dioxide using heat, steam and pressure to create the gray hydrogen, followed by the concentration of some of the carbon dioxide produced to reduce emissions. Once the by-product carbon dioxide and other impurities are isolated, it becomes blue hydrogen.


Gray

Grey hydrogen is produced from natural gas that is reformed like blue hydrogen, but without any attempt to capture carbon dioxide by-products.


Pink

Pink hydrogen is produced by electrolysis powered by nuclear energy, which does not produce carbon dioxide emissions. (Although nuclear power does create radioactive waste which must be safely stored for thousands of years.)


Yellow

Yellow is hydrogen produced by electrolysis from the energy grid. Carbon emissions vary considerably depending on the sources feeding the grid.


Turquoise or light blue

Turquoise or blue is hydrogen produced by the pyrolysis of methane, or the decomposition of methane into hydrogen and solid carbon by heat in reactors or blast furnaces. Turquoise hydrogen is still in the nascent stages of commercialization and its value for climate change depends on supplying the cracking process with clean energy and storing the natural carbon.


The future in the energy sector and the importance for businesses

Hydrogen is expected to gain a significant share of the energy market over the coming decades if its production, distribution and end-use costs are significantly reduced, and if effective policies are put in place to increase efficiency, reduce CO2 emissions and improve energy supply and related security.


For businesses, the continued volatility of the socio-political and regulatory environment creates concerns and areas that can create financial risks. These are among others:

  • The need and cost of transition to cleaner / greener technologies,

  • Changes in the legislation on pollutant gas emissions through the imposition of fines and limits,

  • The imposition of the "Carbon tax",

  • Increased operating costs for compliance with energy efficiency and fuel use legislation,

  • Impairment of assets and / or early withdrawal of existing assets due to changes in Energy policy,

  • Inappropriate capital investments in technologies for energy production and use.


Assessment of risks and opportunities due to the climate and energy crisis with RiskClima


RiskClima quantifies the risks and opportunities arising from the energy and climate crisis using data from internal and external databases. Risks include, physical risks, i.e. the potential impacts on the infrastructure and services of the business and transition risks, i.e. the indirect impacts of the climate crisis from changes in the social, political and regulatory environment.

RiskClima provides an assessment of the economic impact of these risks/opportunities as well as a clear image of the resilience of the business model and strategy of the stakeholder, based on future climate scenarios.

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