SAN DIEGO — The effort to limit global warming to 1.5 degrees Celsius will require a nearly half-and-half energy mix of renewable electricity and “clean molecules” such as hydrogen, according to Yuri Freedman, senior director of business development at Southern California Gas.

Drawing on research by BloombergNEF, Freedman spoke last week on a “Transforming the Gas System with Hydrogen” panel at the National Association of Regulatory Utility Commissioners’ Summer Policy Summit. Notably, the panel lacked any skeptics about a big role for natural gas companies — or hydrogen — in the decarbonization of the U.S. energy system.

“Molecules are as critical” as electrons in getting to a zero-emissions world, Freedman said.

“Today, we consume 80% of our energy as molecules, so 80/20 is the makeup today,” he said. “One implication of that: Think about what needs to happen if the share of electricity is going to go from 20% to 50%” — an increase of 250%.

“But the molecules we’ll need tomorrow are different [from those used today], so you actually need to find a way to phase out the molecules that produce carbon emissions and introduce at scale those molecules by 2050 that are going to have no emissions,” Freedman said.

Compared with other potential substitutes for natural gas (such as biomethane), hydrogen has the greatest potential to be adopted at scale in the next few years and can do most of what natural gas does today, Freedman said, including being used to power fuel cell electric vehicles.

“When I hear the debate, ‘Should it be battery or fuel cell’ … well fuel cell [vehicles] are electric vehicles. In fact, they often can be assembled at the same factory as the battery electric vehicles,” Freedman said.

SoCalGas foresees hydrogen being used in three different sectors in Southern California.

The first is power generation, based on plans by the Los Angeles Department of Water and Power to convert a number of its generation stations to a blend of natural gas and green hydrogen, followed by a full conversion to hydrogen to meet California’s emissions targets.

The second is transportation, with Freedman noting that about 20,000 trucks haul goods between the ports of Long Beach and Los Angeles.

“These trucks go through neighborhoods which are often low-income neighborhoods, so [it’s] not just the greenhouse gas emissions, but the air quality impact is very heavy. And we can be a significant director of environmental and social justice with the replacement of these diesel trucks with fuel cells,” Freedman said.

The third sector is manufacturing. “Los Angeles happens to be the largest manufacturing area in the country. That’s not typically what L.A. is associated with, but that’s the reality,” he said.

‘Not an Aspiration’

Panelist Jeff Reed is chief scientist for renewable fuels and energy storage at the Advanced Power and Energy Program at University of California, Irvine. He also previously worked at SoCalGas parent company Sempra Energy.

“From 2010 until I left Sempra in 2018, I was focusing on the leading edge of what Yuri is talking about: How do you decarbonize a gas utility? And in the state of California, that’s not an aspiration; that’s statute; that’s law; we must do that. So it’s really increased our efforts in this area,” Reed said.

Reed’s work initially focused on replacing natural gas with biomethane, which he called a “very important resource for the leading edge of the decarbonization process.”

But the evolving science around producing hydrogen means that fuel can potentially be produced at the price and quantities needed to replace fossil fuels, he said.

Around $6/kg — or $40/MMBtu — electrolytic hydrogen produced from renewables (green) is still expensive compared with hydrogen produced by the steam methane reformation (blue), which requires the resulting carbon emissions to be captured in order to be considered emissions-free.

But technological advancements also mean that green hydrogen “really does have the potential to have a rather steep cost-reduction curve, similar to what we’ve seen with wind and solar energy.”

Reed thinks the U.S. Department of Energy’s “Earthshot” goal of achieving $1/kg green hydrogen is a “stretch, but not impossible.”

“Once you get to a certain cost point, you can envision using hydrogen or renewable methane, for everything we currently use natural gas for. If we’re using hydrogen, we can also add a substantial additional demand for mobility and transport, which isn’t currently served by the natural gas system,” Reed said.

He noted that California policy currently assumes electric air-source heat pumps are the most efficient way to heat buildings.

“If we get near these Earthshot goals, that’s actually not the case. You can provide heating in the same way we do with natural gas, and be very cost-competitive,” he said.

Question of Cost

New Jersey Board of Public Utilities Commissioner Upendra Chivukula said his state is excited to be part of an effort to win part of $8 billion in DOE funding to become a national hydrogen hub, in partnership with New York, Connecticut and Massachusetts. (See DOE Hydrogen HUB Funding Program Announced.)

“The [New Jersey] legislature and governor are excited about hydrogen, and, of course, utilities have reached out to the commission, and they already started blending hydrogen into natural gas,” Chivukula said. “But the question is the cost, I think. Who’s going to pay for the cost?

“We look at hydrogen as promising, but it is going to take some time. The costs have to come down, and some of the technological advancements have to take place,” he said. “So we are looking forward to more on hydrogen, because I don’t know whether we’ll be able to get 100% clean energy with electrification alone.”

“What would allow those costs to come down,” Massachusetts Department of Public Utilities Commissioner Robert Hayden, co-moderator of the discussion, asked panelists.

Tricia Pridemore, Georgia Public Service Commission | © RTO Insider LLC

Reed responded that natural gas-derived hydrogen can already be produced fairly cheaply at less than $2/kg, but it requires pipelines for the transportation and sequestration of carbon emissions. Regarding green hydrogen, he reiterated his comparison to solar development, where a high “demonstrated learning rate” has significantly reduced costs in the past decade. “So what we need is production volumes and global expansion in the market,” he said.

For Freedman, cost reductions will come down to building pipelines dedicated to transporting hydrogen.

“The majority of that cost is not production; the vast majority comes from the fact that they have to put it in a truck and haul it in cylinders, and that’s not cheap. So a pipeline is an absolute must to that low cost of hydrogen,” Freedman said.

Speaking from the audience, North Carolina Utilities Commissioner Floyd McKissick Jr. asked about the impact of DOE’s hydrogen hubs once they become operational.

“You can view these as a very exciting opportunity for us to catch up and maybe surpass where we think Europe is,” Freedman said.

Freedman envisions hub developments playing out “region by region,” given that some will be producing hydrogen from natural gas, while others will rely on renewables or nuclear power to generate hydrogen from water. But he does foresee the hubs becoming clusters of decarbonized industrial activity to overcome the issue of supplying hydrogen to multiple sectors.

The panel’s other moderator, Georgia Public Service Commissioner Tricia Pridemore, asked whether the “hydrogen rainbow” — using colors to refer to how the gas is produced — is still relevant.

“Within the trade groups that I work with, we really think we should be talking about carbon intensity, as our objective to a large extent is just to reduce carbon content in the gas system,” Reed said.