Benchmarking costs for a clean fuel competition

We’d like to get as much input as possible from our valuable community of experts on how to evaluate an appropriate cost target for new clean fuels. Of the options below, what, in your opinion, is the best approach to account for green fuels to achieve desired levels of market penetration and accelerated adoption in the next 5 years?

Secondly, do you agree or disagree with our estimated pricing of each option? If not please explain or suggest other options on cost not considered below.

Approach 1: FULLY CONSIDERED COST OF OIL
Calculated Price: $4.478/kg

    Includes full lifecycle cost (Total Cost Assessment) + carbon cost. Please note, this number is informed by independent reviews of “real cost.” For example, instead of the common carbon tax of $40-50/ton, we’ve used $417/ton;
    Sources for calculation: Litman, 2012 + Ricke et al., 2018 + BP Statistical Review of World Energy 2020

Approach 2: TIPPING POINT COST OF HYDROGEN
Calculated Price: $2/kg

  • Based on Hydrogen council assessment 2021 for production at scale trajectory (2026-2030) to make green hydrogen and its derivative fuels competitive across multiple hard-to-abate sectors.

Approach 3: TIPPING POINT COMPETITIVE WITH LNGs
Calculated Price: $1 for production + up to $1.5 added in transfer

Approach 4: WHAT LNG COMPANIES WILL CONSIDER PROFITABLE
Calculated Price: $8-12 per million BTU

Edit: the calculated price has been updated from original post.

Hi @akb, @b0bbybaldi, @Jesse_Nyokabi, @agval, @gyyang, @RegenTower, @Magneto, @carlbozzuto - Among the above listed approaches for cost target for new clean fuels, in your opinion - which is the best approach to account for green fuels to achieve desired levels of market penetration. Have we missed anything?

Hi Shashi, I personally believe that Approach 1. To account for a real penetration, we would be talking about developing economies as well, which might not have the infrastructure for LNG. Thus, at a larger scale, if Oil is still well-better in terms of economics, alternative fuels will have a very difficult time trying to convince stakeholders in most parts of the world.

Hi @Shashi and @JessicaYoon
Those options seem reasonable approaches.

Thinking about the relevant infrastructure and devices for each new clean fuel type: is it compatible with existing infrastructure, manufacturing/refining plant, transport and end use devices; or if not what will the additional cost be to develop and deploy new infrastructure, plant, devices, etc? For a five year timescale we might want to consider such potential upfront capital costs, in addition to the usual operational costs per unit of energy.

Fuel types that are compatible with existing systems might have a lower upfront capital cost and promote rapid deployment.

Dr. Ray Winter.
Hydrogen is highly acidic, and the gas is so light it can find its way to escape through many metals, so it is unlikely that exisiting pipeline infrastructures can be utilised for green Hydrogen. The EU has recognised this and has decided that adding 20% Green hydrogen to existing gas supplies could enable current infrastructures to be utilised, but for how long has not been quantified…
Hydrogen derived from Natural Gas does not cure the emissions problems but simply reduces their volumns. Currently most Hydrogen productions use copious amounts of electricity so obtaining competitive pricing to today’s fossil fuels is unlikely.
To achieve low cost production of hydrogen without using any electricity requires water being separated from it’s constituent elements using only a Catalyst. As far as I am aware H2 Corp/ Gaia Projects is the only group to have achieved this. The projected cost of production are calculated to be sub $1.00 per KG.
With respect to the dangers of transporting the highly volatile Hydrogen gas, we decided to eliminate the danger and costs of delivering the gas by moving its production to where it is needed.
So we have planned standard container sized production units which can be initiated once they are at the point of consumption, be that on a gas station forecourt or where a company uses the gas in its manufacturing processes. This totally eliminates the gas transportation danger and insurance problems.

Thanks @agval and @akb for sharing your perspective.

Welcome @rayw to the XPRIZE Community!
Thank you for sharing insights into low cost production of hydrogen.

@Shashi, I agree with what discussed here. It will be essential to consider industry dynamics, trends and capital investments, which brings me to the central issue in the transition from fossil fuels, Finance.

Oil & Gas Futures make up 98% of the transactions in the market. Without a competitive dynamic demand for trading other fuels, it will be tough for them to take off without governmental push and support (such as a carbon tax).

Previous attempts like the California electricity future markets have failed. A creative business model will be of utmost importance beyond a technological solution.

Hi @PhilDeLuna, @marcelschreier, @clabeaux, @SPSBadwal, @bernardsaw, @pjaffeva, @erinnvw, @railman, @Wangari - What is your views on the above mentioned four approaches to evaluate the cost of new clean fuels?

Hi @tedsargent, @nate_hausman, @CO2Cap_SysEng, @MarianoMM, @zhangx, @fusuntut, @CeProSARD, @Access600, @nibizijeanmarie - Curious to know if you have views on the above mentioned four approaches to evaluate the cost of new clean fuels?

Clean, Green emissions free H2 production system delivered in standard transporation containers is the only cost we have to deliver it to where the gas is required. LNG’s spend millions constructing the special ships to transport Compressed gas which costs a lot to compress and just as much again to de-compress when it gets to its storage tanks, so Fossil Fuel Hydrogen is far more expensive than the companies let on. That is why their selling price is over $8 per kg. and the gas is still full of noxious emissions.
Additional features for our H2 Gas production system. Seawater is virtually free except for transporting it to where we need it. Our primary mineral in our catalyst is a waste product from another industry which nobody wants so we could get paid to take it away. Our system qualifies to earn Carbon Credits which are currently muted to become $160 per tonne which is a great deal of money considering our catalyst cost will probably be $0.35 cents per 50 Kgs of gas produced.
Container based systems can be towed on barges and moored offshore to where the Gas can be easily piped to its storage tank for local use. Amortising our production system is which can easily last many years means each Kg premium will only be a few cents.

Dear all,
I wish to note a change to our original post – the fully considered cost of oil is $4.478/kg or $16.93/gallon. The value of $64/kg initially offered as the fully considered cost of oil, is incorrect. Please accept our sincere apologies.

@rayw @b0bbybaldi @akb @agval
Thank you very much for your comments; they are all extremely helpful.
You all bring up a topic which we’ve been thinking hard about from rather a different angle, and I would appreciate any advice you can share about the following:

Regarding potential competitors in this field, we’ve been evaluating whether to include renewable carbon fuels (incl. Biofuels) in the competition? Here we were thinking of the additional infrastructure and/or modification to conversion technologies that may be needed for nitrogen-based fuels. Is it possible to include all options in the competition? And if so, how would you go about balancing sustainability, scale, and cost considerations?
** We intend to have strong sustainability measures for production and throughout the lifecycle, including LCA, cradle-to-grave, measuring of land, water use, and GWP.

We are a green hydrogen producer. We leave no carbon footprint. We use available resources, water, and seperate it into its component parts of hydrogen and oxygen gas. We store the hydrogen gas, and convert back to electricity when needed. We prototyped on salt water. We have high effeciency 88%, patents in USA and EU granted in 2019. Presently involved in products commercialization. Imagine the economic, and green effect of having renewable energy available 66% more of the time, and changing the world at the same time. Sonya Davidson, CEO H2 Energy Now

Hi @Dave2021, @Blauadler2, @adventureashr, @grhoffman7, @anis, @Benoit, @Febbie, @Ebou, @mounir, @tsamo - What are your thoughts on the above mentioned four approaches to evaluate the cost of new clean fuels?

@Eti you asked about “renewable carbon fuels (incl. Biofuels) in the competition”.

It sounds reasonable to include renewable carbon fuels - provided the full life-cycle impact is evaluated [as you propose]. Fuels, including carbon fuels, have a high energy density and so they could well have a significant role to play [preferably in a fuel cell, instead of polluting combustion processes].

In terms of bio-fuels, it might be better to avoid using [agricultural] land for growing crops dedicated to bio-fuels. (Comments have been made about the potential mistake the EU made when it mandated a proportion of fuel should come from bio-fuel - because of the potential impact on agricultural land. Similarly, wood pellets used by a UK based electricity generator raise other concerns.) Agricultural land should probably be preserved for growing food, not bio-fuels. However, agricultural and food waste could be used to generate bio-fuel.

Thinking out of the box, if a potential solution were able to grow plants or organisms on non-arable land (e.g. in the desert), or in the sea, then these might be acceptable - as it has no impact on existing agricultural resources.

My views ofn your four points.
Approach 1: FULLY CONSIDERED COST OF OIL
Calculated Price: $4.478/kg*
The actual cost of OIL as detailed here ignores the world’s population demands to eliminate it as a souce of Noxious Emissions that are seriously affecting the respiratory health of people and causing planetary weather disasters. Result: it should not be considered at all.
Approach 2: TIPPING POINT COST OF HYDROGEN
Calculated Price: $2/kg
The EU current cost of Green hydrogen per KG varies from $4.10 - $5.50 . Transportation costs and transit dangers are significant. Compression of Hydrogen Gas for transportation purposes are a significant cost as are on-arrival decompression costs which are frequently overlooked, or separately charged.
Our Container based systems are inert for transportation, containing only water and our Catalyst, which are not mixed until the system is installed on-site for the production of H2 gas.
Approach 3: TIPPING POINT COMPETITIVE WITH LNGs
Calculated Price: $1 for production + up to $1.5 added in transfer
This is a fair appraisal, especially if the gas is transferred as Gas to the user, or if converted to electricity which is then transhipped via the Electricity Grid. Capex Costs from well Head , processing, and transportation to the storage systems can also be extremely high.
H2 Corp’s method of delivering a complete on-site Gas production system is available at sub $1.00 per Kg. If fuel cells are added to generate electricity the integration proces will probaby add $0.25 cents per KG. The hardware capex amortisation costs are likely to be a few cents per Kg as the equipment has a long life, estmated at 15 years.
Approach 4: WHAT LNG COMPANIES WILL CONSIDER PROFITABLE
Calculated Price: $8-12 per million BTU
See approach 1 above. The Fossil Fuel industry will significantly shrink by approximately 80% by 2050 but will still likely be needed for supplying machinery Oils, and for the few people still using Internal Combustion Engines in their vehicles.
My Additional Approach 5.
Wind and PV renewables only operate intermittently and are very expensive to install and generate much CO2 in ther manufacture. They also festoon the world with ugly equipment.
Biomass reduces the best CO2 absorber … TREES… and should be totally banned.
Ammonia based Hydrgen generates a lethal gas which draws-in oxygen when exposed to the air. Any person close to an ammonia based Gas leak has seconds to live. Frankly Green Hydrogen is the ONLY Gas to be deployed and if handled with care, due to its potential volatility, is the totally safe Gas to be on the market to protect our world and all peoples health.

Thank you Adam, absolutely agree re the resources. To the end, is the LCA’s land size sufficient? or should we also consider the net impact of resource (e.g., carbon sequestration as an added value)? re carbon-based and nitrogen based fuels? are there any potential tradeoffs and risks in your view when it comes to present-day maturity and cost?

@SonyaD @rayw Thank you for your comments and thoughts about the transformative potential of green hydrogen. This competition intends to evaluate to fuel lifecycle, in consideration of this - do you think then that leaving the pool open to fuels other than hydrogen will risk the potential is carries? is cost (and production at scale) the main barrier? With regards to CapEx, can this be mitigated through a LCOE analysis?

What is very interesting is the Fossil fuel industry is tryng to stay alive but the industry is destined for oblivion due to the noxious fuels they sell are causing major chest illnesses around the world, just like the tobacco smokers industry. They also affect the world’s weather causing major problems especially to low lying land masses. To ensure the world and its peoples continue to be productive we need to clean our enviroment and only validated Green hydrgen systems can achieve that.

The only way forward is low cost , emission free, hydrogen available to where it is needed without excessive costs of transportation for delivering production systems to where they are needed.
It should also be appreciated that very small hydrogen Gas sytems are available for individual use. Totally flexible systems are one of our key design objectives. Our pre-producion order book exceeds $670Million and the USA orders ccount for 66% of the demand.