Cheap, abundant ‘clear’ hydrogen – too good to be true?
Plus: Carbon border taxes, nuclear-to-gas, Oz coal & solar woes + MORE
LEAD STORY: What if carbon-negative hydrogen could be produced at scale around the world for less than the wholesale price of natural gas in Texas? That’s the audacious claim being made by an Alberta-based start-up that’s making waves in the hydrogen world. Energy Flux takes a critical look at the technology.
FIRST UP: There’s a big ugly moral dilemma at the heart of carbon border taxes, Europe’s flagship tool for exerting climate leverage. Now the US is getting in on the act. The energy transition has never been so geopolitically fraught. That’s today’s breakout story (7 minute read):
IN THIS EMAIL:
💥‘Clear’ hydrogen promises to undercut grey, green and blue H2
💥Belgium’s hasty nuclear exit prompts dash for gas
💥Australian grid threatened by failing coal plants *and* soaring solar
🌎GLOBAL HEADLINES by key topic (20+ links)
🧠ENERGISED MINDS: ‘There's a massive chasm between government policy and our energy reality’
💥‘Clear’ hydrogen promises to undercut grey, green and blue H2
If something sounds too good to be true, it usually is. Calgary-based Proton Technologies, a disruptive new player in the hydrogen space, is making bold claims about its ability to produce immense volumes of dirt-cheap carbon-negative H2 using old oil wells.
The concept is simple: acquire ageing wells for nothing from companies that are happy to rid themselves of the abandonment liabilities. These reservoirs contain large volumes of unrecoverable petroleum and can be used as reactor vessels. Pump oxygen into the well bore to react with the oil in place, and you produce hydrogen.
The hydrogen is brought to the surface via a second wellbore equipped with a special membrane that separates the H2 from waste gases such as CO2, which remain locked deep underground.
The reservoirs can even be used to sequester CO2 captured from other sources, hence Proton’s claims to be carbon negative. The CO2 would be co-injected with the oxygen and wastewater streams to trigger another chemical reaction that creates carbonates, i.e. CO2 is trapped in rock formed in the reservoir. This eliminates the tail risk of seepage that’s associated with conventional carbon capture.
Proton CEO and chairman Grant Strem told Energy Flux via email:
“We purchased our oil facility in 2017 and have been producing hydrogen ever since. Most of it has been incinerated but we began separating small volumes of hydrogen in 2018. Next we plan to ramp up to commercial production for offload by truck and clean electricity sales to the grid are expected to begin roughly 1 year from now. We have been loading small volumes into a tube trailer this year.”
Proton made headlines by claiming it can produce hydrogen for as little as $0.25 per kilogram of hydrogen. That’s significantly less than the cheapest, dirtiest form of production: unabated steam methane reformation (SMR) using natural gas as a feedstock, even before carbon tax is factored in:
Hydrogen at the price and volumes envisaged by Proton could revolutionise the entire energy industry, let alone the niche space of H2. Power generation, mobility and industrial processes could all be decarbonised using clear hydrogen and even save money in the process.
Sounds too good to be true, right? Well, here’s an alternative perspective…
In a nutshell, Proton is at a low technology readiness level. The company has performed field tests but is yet to demonstrate its technology and processes at scale over a prolonged timeframe, so there is a host of technical de-risking to do.
Paul Martin, a chemical engineer and hydrogen expert at consultancy Spitfire Research, says keeping the membrane clean in “filthy” underground conditions poses a huge challenge. Recovering the membrane from the subsurface for cleaning without releasing waste gases contained in the reservoir will also be tricky.
Speaking with Energy Flux via phone interview this week, he said:
“Let’s assume your magic membrane works. You are going to be producing decreasing volumes of hydrogen from an increasing background of waste gas. Production might be very good initially but recovery is going to drop, and drop fast, until the point where you have to shut it off.
“If there are mineralisation reactions going on, you are taking a gas [CO2] and reacting it to make a rock that will occupy space. It seems logical that this is going to make the reactor vessel – the formation – less conductive.
“The process requires a supply of oxygen. Compressing oxygen takes energy, and [most grids don’t] run on renewables. There is also potential for migration of materials [unless] the reaction is done under the right conditions.
“And even if they overcame those barriers previously mentioned, they'd have the enormous problem of getting their hydrogen to market. No, you can't just stuff it into the local natural gas network.”
Proton boss Grant Strem believes none of these obstacles are insurmountable. In an email, Strem said:
“Our site is in Saskatchewan near Kerrobert. We plan to be selling electricity to SaskPower through our 20-year power purchase agreement using hydrogen as fuel, we hope to blend into existing natural gas pipelines, we expect to truck some out (initially as a compressed gas and later as liquid H2, and we plan to make ammonia on site). There is also a pipeline nearby that appears able to handle pure hydrogen.”
Keeping the membrane clean might not be such a challenge, as Proton expects to separate hydrogen at the surface “using industrially common technologies including non-membrane techniques”. This implies pumping the CO2 and other waste gases back down the borehole.
Regarding production declines, Strem said there are technical options to boost output:
“We can use waste streams such as desalination brine, steam boiler blowdown, municipal raw sewage and other triggering agents which enable/accelerate the transformation of CO2 into solid carbonate, mainly within the pore space of the associated bottom water (below the oil zone). Hydrogen production rate is mainly determined by the rates of oxygen injection and carbonate formation.”
Much of this needs to be approved by regulators and proven in the field. But if Proton produces hydrogen to match the hyperbole, ‘clear’ H2 might be worth keeping an eye on. 👀
💥Belgium’s hasty nuclear exit prompts dash for gas
Regular readers of Energy Flux will recall that Belgium is facing an energy crunch as its 2025 nuclear exit looms. A recent capacity auction, which procured 4.5 GW of capacity in 2025-26, confirmed speculation that the 3.6 GW hole in the grid would be filled by natural gas.
The auction was dominated by combined-cycle gas turbines (CCGTs), which accounted for 81% of awarded capacity. This was split across 1.2 GW of existing CCGTs, 1.6 GW of new plants and 0.8 GW of capacity upgrades. Timera Energy said the overall volume weighted average price for newbuilds was €37.20/kW/year.
“[This] is an interesting benchmark for the capacity price required to deliver new CCGTs. It suggests an increasing premium required to incentivise CCGT investment given rising decarbonisation risks.
“Belgium’s reliance on gas to plug the nuclear gap partly reflects constraints as to how much low carbon energy can be realistically delivered over a 4 year horizon. Belgium has increased its offshore wind target, but this does not go close to replacing the lost output from retiring nuclear plants.” – Timera Energy
Germany’s new coalition will be watching events in Belgium closely. Germany is facing a gargantuan 41 GW deficit of its own by 2030 due to planned closures of coal and nuclear plants. New interconnector projects, demand response and storage could help a bit, but “the pipeline of committed projects falls well short of closing the gap,” Timera says. It is notable that Green negotiators in the coalition talks now acknowledge Germany will burn more gas to fill the power gap created by the Energiewende.
💥Australian grid threatened by failing coal, soaring solar
Australia is facing “quickly increasing” operational risks arising from its reliance on coal-fired power stations – and skyrocketing rooftop solar PV is making matters worse.
The Australian Energy Market Operator (AEMO) says potential outages pose a “key risk to reliability” for the national electricity market (NEM) this summer. EnergyAustralia’s 1.5 GW Yallourn coal power station in New South Wales “is particularly at risk of a “catastrophic rainfall event”.
AEMO is contending with accelerated coal and gas plant closures as well as sudden and prolonged outages at operational units. Last summer, coal generation operated at historically low levels of reliability and this trend will only get worse as plants age, AEMO said in a grid reliability report (PDF).
You might think surging rooftop solar generation would be a boon to the grid, but sadly this brings its own challenges. AEMO said distributed PV systems alone could supply up to 77% of total electricity demand by 2026, “at times challenging the ability to provide secure and reliable electricity” as minimum demand levels are pulled ever lower.
“The power system and the NEM market weren’t designed to operate with this much energy coming from sources that AEMO can’t see and adjust at every minute of every day… During periods of minimum demand, as consumers draw less and less electricity from the grid, it becomes technically and economically harder for thermal generators to keep operating. However, today the NEM needs the essential system services from these generators to operate.” – AEMO
Think I’ll just leave this here…
🌎Global headlines by key topic
Hydrogen, ammonia, e-fuels
Electrolyser shortage looming even in low-demand scenario – RCHG
Trafigura calls for accelerated H2 uptake in heavy-duty trucking – PR
TotalEnergies and Daimler to create ‘hydrogen ecosystem’ for EU freight - PR
Natural gas, LNG, methane, flaring
UK asks Qatar to become gas ‘supplier of last resort’ – FT ($)
US methane fee could cost operators $1 billion in 2025 – RSTD
Wind, solar, energy storage, DSR, grids
Space-based solar power takes small step forward – CMS
Global solar PV projects delayed by soaring material and shipping costs – RSTD
Soaring metal prices may delay energy transition – IMF
Nuclear, geothermal, hydro
Macron relaunches France’s ailing nuclear power programme – RFI, RTRS
Eden project drills longest geothermal well in the UK – PR
Fossil fuel production, ESG
Poland planning massive fossil fuel expansion – EMBR
North Sea oil trade bodies collaborate on net zero transition – PR
Shell and Baker Hughes collaborate to decarbonise global sites - PR
National oil companies (NOCs)
Aramco warns of oil supply crunch from underinvestment as jet demand returns - SP
International oil companies (IOCs)
ExxonMobil outlines $15 billion low carbon spending plan – PR
BP, Aker explore potential sale of stake in Aker BP – PR
(Geo)politics, net zero and ‘the big picture’
Caribbean offers model for energy resilience and justice – RMI
US House passes Infrastructure Bill, awaits Build Back Better Bill – CNRY, PR
Iran's gas production growing steadily despite sanctions – EIA
Carbon capture, utilisation, storage and removal
Chevron to buy carbon credits to replace failed Gorgon CCS project – RTRS
Digitalisation, crypto, bitcoin
Major bitcoin miners set sights on nuclear energy to decarbonise – CNTEL, DMN
Bitfarms acquires 24 MW US hydro plant, eyes 99 MW expansion – PR
Rate today’s issue: 😄Excellent | 😐Average | 😩Poor
🧠Energised minds
Critical thinking on crucial energy issues
‘There's a massive chasm between government policy and our energy reality’ – The fear of peak demand is leading to the reality of peak supply, writes Eric Nuttall of investment house Ninepoint Partners. “If oil companies are not willing to sufficiently invest today in order to maintain productive capacity, what will be their willingness a decade from now when the visibility for peak oil demand becomes increasingly clear?”
🙃And finally...
I always loved ‘spot the difference’ cartoons as a kid. Look, here’s one about the energy transition!
(For balance, I should mention that recycled EV batteries are now thankfully coming to market.)
That’s all for now. Energy Flux returns to your inbox in two weeks’ time.
Until then, please spread the word about the publication if you can. It always makes a huge difference.
Thanks for reading!
Seb
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