FEBRUARY 28, 2024

Good day!

In today’s edition: Out with her first story for Cipher, Cat gives us a definitive guide to hydrogen, while Bill takes stock of China’s solar supply and demand imbalance in the latest Data Dive. Plus, we have a Voices article calling for a new energy target.

 
Was this email forwarded to you? Sign up here.

Send your energy photos, story tips and more to news@ciphernews.com.

Illustration by Nadya Nickels.

Your definitive guide to understanding hydrogen

BY: CAT CLIFFORD

The cleantech space is positively buzzing about hydrogen.

So, what is hydrogen and why is everybody talking about it now?

Here are the highlights of your cheat sheet on hydrogen; and check out the full article on our website.

Hydrogen is the simplest, most abundant element in the universe. It's a colorless and odorless gas. Stars, including our sun, are fiery balls of hydrogen. Hydrogen is very light — so light Earth’s gravitational field cannot hold it and individual molecules float away into space.

There are atoms of hydrogen on Earth contained in other liquids, gases and solids. Hydrogen smushed together with oxygen makes water. Hydrogen smushed together with carbon makes hydrocarbons, like natural gas, coal and oil. Reservoirs of hydrogen gas also lurk under Earth’s surface, trapped in the pores of rocks.

Hydrogen is already a big business unrelated to cleantech. Estimates for the current size of the global hydrogen market range from $163 billion to $207 billion.

The world produces and uses about 95 million metric tons of hydrogen, according to a 2023 International Energy Agency report, devoting more than 43% of that to refine petroleum. The remaining hydrogen is used in industrial processes to make a range of things our society depends on, including iron, steel and ammonia, a key component in fertilizer.

Burning hydrogen generates only water and heat and no greenhouse gases. Because some of the energy in hydrogen is lost as heat when you burn it, a more efficient way to get the chemical energy out of hydrogen is with a fuel cell, a device that converts hydrogen into electricity with water as the only byproduct.

Hydrogen is light weight, has a high energy content and burns clean making it a leading candidate for decarbonizing carbon-intensive and otherwise hard-to-abate sectors like cargo shipping and long-haul trucking. Hydrogen can also be used to store energy, serving as an essential partner for variable wind and solar energy.

But here’s the rub.

Current hydrogen production methods generate significant greenhouse gas emissions and require a lot of energy. For these reasons, hydrogen hasn’t, up until recently, been considered part of the playbook of climate solutions.

Low carbon ways to produce the gas are in the early stages of development and use. But globally, these methods represent just 0.7% of hydrogen production today, according to the IEA.

From a climate perspective, the impetus to generate hydrogen in low-carbon ways has been twofold: To replace the dirty hydrogen humanity already depends on for industrial processes, like making fertilizer, and as a solution in otherwise hard to decarbonize cases where there aren’t other low carbon solutions at scale.

The newest potential piece of this puzzle is the search for hydrogen in the rocks under our feet. If we can find and excavate significant quantities of this naturally occurring hydrogen, it could be a game-changer.

That’s the topic of a U.S. Senate hearing set for today, and an upcoming story at Cipher, so stay tuned.

Read our full hydrogen explainer on Cipher’s website.

Lunchtime Reads and Hot Takes

Biden administration taps $366M to fund clean energy for Native American tribes and rural areas — AP News

Amena’s take: The projects range from installing microgrids at rural community health clinics, revitalizing a hydroelectric dam in Alaska and powering rural Hopi and Navajo communities with clean solar power.

This Colorado community is already living in the all-electric future — Canary Media

Cat’s take: The homes in the Geos neighborhood are designed using the passive house system, with ultra-tight seals and insulation, solar power and electric building equipment.

Qatar has Eyes on More Long-Term Deals as It Bets Big on LNG — Bloomberg
Bill’s take: As with oil, the long-term outlook for the gas industry is up for debate, with producers projecting big growth while others see demand fading after five years or so.

Exelon CEO Warns Cleaning the Grid Needs Higher Power Bills — Bloomberg
Cat’s take: Key quote: “We’re trying to move to a 21st century grid with 19th century rules,” said Calvin Butler, the CEO of Exelon. “You cannot build a grid of the future playing the same old playbook.”

EU carbon border tax will do little to cut emissions, ADB study says — Reuters
Anca’s take: The study from the Asian Development Bank is yet another warning from the international community that the EU's carbon border tax won't necessarily meet the intended goal.

Is Biden’s Climate Law Actually Working? — Shift Key by Heatmap News
Amy’s take: The hosts expressed surprise at how well hybrid cars are doing and emphasized how much better even traditional hybrids are doing compared to traditional combustion engines.

Biden Has Just a Few Months to Lock In His Climate Legacy — Bloomberg
Amena’s take: Any climate initiatives that aren't finalized by January 20, 2025 are "toast" because a Republican-controlled Congress and White House can and have undone Democratic initiatives in the past.

China, India may miss emission goals despite green energy push: report — Nikkei Asia
Bill’s take: They are adding clean energy fast and not aiming to reduce absolute emissions by 2030, just to cut the amount of CO2 emitted per unit of economic growth. They’re falling behind even on that.

Bears, cars and angry farmers fuel green backlash — POLITICO
Anca’s take: Main trend: Hard-right and center-right politicians are seeking to drive wedges between voters and the champions of green policy — fueling and feeding on a sense of grievance.

More of what we're reading:

• Record year for wind farms raises hope for EU green energy goals — Reuters

• Democrats pushed climate action. Then utility bills skyrocketed. — POLITICO
• Smart tech could help fix the biggest barrier to building clean energy — Canary Media

Why we need a more ambitious global energy target

Illustration by Nadya Nickels. 

BY: TODD MODD

Todd Moss is the executive director of the Energy for Growth Hub and writes the Eat More Electrons Substack. He can be reached at todd@energyforgrowth.org.

Everyone needs modern energy to reach their full potential. Every economy needs low-cost reliable energy at scale to be competitive and to create well-paying jobs. That’s why the world has committed to achieving universal energy access. But this laudable global goal won’t deliver the expected benefits if we don’t update the way we track progress.

Without a new approach, we will leave billions of people behind — and drive an even bigger wedge between rich and poor nations over climate policy. That’s why we need to embrace what my colleagues and I call the Modern Energy Minimum.

Imagine for a moment that the world set a goal of building an educated global workforce for the digital economy, but chose to measure success as everyone being able to read a complete sentence. Basic literacy is essential of course, but completely insufficient.

We’re making a similar mistake with energy.

Read the full article on Cipher’s website. 

Chinese solar panel manufacturing outpaces global demand

Source: Wood Mackenzie • Gigawatts represent DC voltage.

BY: BILL SPINDLE

China is producing far more solar panel modules than the world is on track to use. The implications of the mismatch are set to reach far beyond the country’s borders.

This dynamic also underscores how differently China — the world’s leader in clean energy manufacturing — operates its economy compared with what we see in free-market countries, where prices fluctuate to balance out supply and demand.

As China’s property and construction industries went into reverse last year, a government desperate for economic growth turned to the clean energy industry. The industry responded with massive manufacturing increases, boosting production of solar panels (as well as batteries, electric vehicles and wind turbines). Producers cut prices as demand grew more slowly than supply.

Yet producers have not slowed down. They will likely produce fully a quarter more solar panel modules this year than they did last year, according to recent data from industry analyst Wood Mackenzie. Meanwhile demand for those modules, the packages in which solar panels are purchased by solar developers, will remain basically flat this year, Wood Mackenzie estimated. The gap between how many modules the world wants and how many Chinese manufacturers’ output alone will provide could balloon by more than two-thirds.

In theory, the world should have a voracious appetite for more modules, considering ambitious climate goals. But many countries, from the U.S. to Europe to India and Japan, are trying to build their own clean energy manufacturing after years of China dominating that market.

Countries have responded with industry subsidies and penalties on Chinese products designed to support their local solar panel manufacturing industries. But even the biggest of these efforts — the Biden administration’s 2022 Inflation Reduction Act — won’t be enough to compete with Chinese module makers if those makers cut prices to the point where they earn no profit or even lose money for a time in an effort to keep their factories operating.

“That seems an increasingly likely outcome this year,” wrote Wood Mackenzie’s Asia renewable industry watcher Alex Whitworth in the recent report.

Some of China’s excess production could be absorbed by the country itself, which keeps surpassing its own solar installation targets.

Lower module prices from China could also spur more demand in low- and medium-income countries in Africa and Southeast Asia, though even rapid growth would build on a tiny base.

Wealthy countries will have to decide to what extent they will allow inexpensive Chinese panels to help them achieve their climate goals. Their transition to clean energy could be slower and more expensive without products from China.

AND FINALLY...
Hawaiian wind

Cipher reader and Nike program manager Cerissa McFarlane took this photo of wind turbines on the island of Maui in Hawaii while on vacation with her family in December. The turbines are part of the Kaheawa Wind Power facilities.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.