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The construction site of a hydrogen production plant in Germany.
A growing number of large corporations, spanning from mining to energy sectors, are joining the excitement surrounding natural hydrogen.
This surge follows increasing discussions about the potential of this resource to transform the global energy market fundamentally.
Natural hydrogen, often referred to as white or geologic hydrogen, is found naturally beneath the Earth’s surface. Discovered by chance in Mali nearly four decades ago, this resource is entirely carbon-free and emits only water vapor when burned.
Recently, investor interest in the emerging natural hydrogen industry has surged, sparked initially by startups and smaller exploration firms.
Prominent investors backing this sector include major players like Rio Tinto, Fortescue, Russia’s Gazprom, BP’s venture capital division, and Bill Gates’ Breakthrough Energy Ventures.
With applications ranging from metal production to fuel generation and even food creation, natural hydrogen offers the promise of significantly reduced emissions compared to traditional methods.
— Eric Toone, Chief Technology Officer at Breakthrough Energy
Exploratory activities are currently taking place in multiple countries, with Canada and the U.S. leading in the number of projects initiated over the past year, as reported by Rystad Energy.
Industry analysts are optimistic that the coming year will be crucial, as stakeholders expect to uncover viable natural hydrogen deposits through ongoing exploration efforts.
Despite the promising developments, skepticism remains about the resource’s potential for clean energy. Critics raise environmental concerns and point out distribution obstacles. The International Energy Agency has cautioned that the resource might be “too scattered to capture economically.”
A global scramble for ‘white gold’
Minh Khoi Le, Rystad Energy’s head of hydrogen research, stated that predicting the natural hydrogen sector’s viability by 2025 is challenging.
“Last year marked a turning point for the natural hydrogen field, as several companies initiated drilling plans and extraction tests, leading to significant industry interest,” Le explained during a video call with CNBC. “However, the progress has been somewhat slow, with only a handful of companies moving forward with drilling,” he added.
Rystad’s Le, who referred to the race for natural hydrogen as a “white gold rush” last year, noted that although there hasn’t been substantial progress in the past year, a rise in investment could yield meaningful advancements.
“Now, companies are securing funding to support their drilling initiatives. If we are to determine the feasibility of this resource, we should reach a conclusion more promptly this year,” Le highlighted.
Hydrogen has long been touted as a key player in the energy transition. However, the majority is produced through fossil fuel methods which contribute significantly to greenhouse gas emissions. Green hydrogen, produced by splitting water into hydrogen and oxygen with renewable electricity, stands out but has faced setbacks due to high costs and economic hurdles.
Clean, homegrown energy
In August of last year, Australia’s HyTerra secured a $21.9 million investment from Fortescue, aimed at fully funding expansive exploration efforts.
A Fortescue spokesperson indicated that their entry into natural hydrogen aligns with a “strategic commitment to zero-emission fuels.”
The spokesperson acknowledged the need for more comprehensive evaluations of natural hydrogen’s emissions but identified it as a worthwhile opportunity for accelerating industrial decarbonization.
Recently, BP Ventures led a Series A funding round for the U.K.-based natural hydrogen startup Snowfox Discovery, while Mantle8, a French startup, raised 3.4 million euros (approximately $3.9 million) in seed funding to expand its operations, supported by Backthrough Energy Ventures.
Eric Toone from Breakthrough Energy remarked that the promise of natural hydrogen could herald a new age of sustainable energy. “Hydrogen represents pure reactive energy. With enough abundant and affordable hydrogen, we can potentially accomplish various tasks — from manufacturing metals to producing fuels and even food, all while significantly reducing emissions compared to traditional methods,” Toone elaborated.
“Early exploration has indicated the existence of natural hydrogen across six continents. Our current challenge is to determine feasible extraction methods, ensure safe transportation, and establish the necessary infrastructure,” he concluded.
In search of the ‘eureka moment’
Aurian Durbuis, chief of staff at Mantle8, noted a surge in venture capital interest, possibly driven by recent developments in green hydrogen.
“Interest is indeed growing,” Durbuis stated. “As other solutions gain attention, it puts us in a favorable position.” He compared the situation to the evolution of U.S. shale gas, noting that even significant discoveries could take decades to translate into commercial production.
Situated in Grenoble, Mantle8 aims to locate 10 million tons of natural hydrogen by 2030, complementing the European Union’s energy goals.
“The quest is to identify producible reservoirs, a critical element for our industry,” Durbuis added. “Our goal is to commence drilling by 2028. That could be a pivotal moment; a successful find could shift the landscape dramatically.”
What’s next for natural hydrogen?
The Hydrogen Science Coalition, comprised of specialists and engineers, emphasizes that exploration for natural hydrogen is still in its “embryonic stage.” However, the chances of discovering large-scale, nearly pure hydrogen deposits appear “relatively slim.”
The only operational hydrogen well, located in Mali, provides merely a fraction of the energy output of a single wind turbine, explained Arnout Everts, a geoscientist with the Coalition.
As exploratory teams continue gathering samples, like those taken from Indonesia’s Morowali Regency in late October 2023, the challenges ahead are significant.
“Even with potential discoveries, history suggests it may take decades to scale production sustainably,” Everts cautioned.
Ultimately, the Hydrogen Science Coalition warns that the pursuit of natural hydrogen could detract attention from the urgent need for renewable hydrogen solutions necessary for decarbonizing current industries.
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www.cnbc.com