Cobas AM: Nueva Gestora de Francisco García Paramés

 We are making a terrible mistake when it comes to future energy policies. In previous letters, we have touched upon the challenges of the so-called “energy transition.” Today, we will explain in detail the imminent harm awaiting investors and policy makers who fail to acknowledge certain realities. Every green energy proposal we have examined relies on the trifecta of wind, solar, and electric vehicles combined with various battery technologies. In recent months, a renewed “hydrogen mania” has broken out as well, which adds a fourth leg to the green energy stool. Unfortunately, based upon our extensive research, these plans, including the current hydrogen craze, are bound to at best severely disappoint and, at worst, outright fail in what they attempt to accomplish.

Clearly a major part of the problem is the energy-intensive lithium-ion battery used in EVs and for grid-level renewable storage. To address this issue, hydrogen fuel cell technology is once again being put forward as a possible solution. This marks the second investment mania in hydrogen fuel cells in 30 years. In the late 1990s, fuel cells went through an impressive bull market that saw Ballard rise 1400% over three years before crashing 99%. Even after its recent 600% advance it is still 70% below its prior peak. Unfortunately, many of the technical issues that led to the previous hydrogen bust remain.

We will dedicate an upcoming podcast to hydrogen. In the meantime, it is important to realize that while the fuel cell does not need an energy-intensive battery, it is nevertheless an extremely inefficient technology. To make hydrogen, electricity is used to electrolyze water resulting in oxygen and hydrogen gas. The gas is then compressed or liquefied for transport to the end user. In the fuel cell, hydrogen is reformed back into water producing an electrical current used to power a motor. Not having to manufacture an energy-intensive battery saves on upfront energy dramatically.

Unfortunately, any savings are “spent” on the extremely poor overall energy efficiency of thesystem. Powering an electrolyzer to produce hydrogen gas loses upwards of 30% of the embedded energy. Compressing or liquefying the gas for transportation loses another 15% of the energy. Generating an electric current in the fuel cell loses yet another 30% of the contained energy. In total, we estimate that 70% of the electricity used to power the system is wasted. Even though there is no energy-intensive battery to manufacture, we believe hydrogen fuel cells requires more total energy to power a car than standard EVs despite their lithium-ion battery. When wind or solar is used to manufacture the hydrogen (i.e., “green” hydrogen), the overall energy efficiency become even worse. To achieve a reduction in net emissions requires the original electricity be nearly four times less carbon intensive to make
up for the 70% energy lost in the system. Solar and wind powered “green hydrogen” vehicles would not generate any net carbon savings compared with gasoline or diesel and would likely be much worse.

As we discussed, moving away from coal toward natural gas would be a great first step in reducing carbon. We believe there is an even better solution that would reduce emissions much further. Any serious proposal to reduce the carbon intensity of energy needs to have several characteristics: it must be very energy efficient as measured by EROEI; it must be able to supply baseload power and avoid intermittency; it must be scalable to meet ongoing global energy demand growth; and it must be low-carbon or carbon-free. The only source that meets these criteria is nuclear fission.