The common thread among the disparate things in the title is hydrogen, whether green, gray or pitch black. What, you might ask does hydrogen have to do with forklifts,
cryptocurrency and green fertilizer? Read on. Let’s start with forklifts. Recently they splashed across screens again, as
Amazon installed a hydrogen electrolyzer from Plug Power at one of its
Colorado distribution centers to make hydrogen for 225 hydrogen forklifts that it’s oddly using. It’s worth unpacking this a bit. Are hydrogen forklifts a thing? Well, not really. There are about 50,000 of them in operation globally since the first was built 64 years ago. That’s about eight a year, so they really aren’t flying off the shelves. Meanwhile, 1.2 million battery electric forklifts were purchased in 2021 alone. That’s a homeopathic solution of hydrogen forklifts. Where are these 50,000 forklifts? Almost entirely in the USA, with handfuls in Europe and
Japan and one in
South Korea. Why does the
USA have virtually all of them, or in fact more than a handful of the dead end technology? Well, as I was unsurprised to find when digging through Ballard’s history of losing an average of $55 million a year since 2000 with its governmentally funded and failed trials of various hydrogen vehicles, it goes back to the US Department of Energy. The DOE gave a bunch of warehouse operators including Amazon a lot of money to install hydrogen refueling and buy forklifts. The US DOE continues to count this as a win in recent publications, saying that it’s been a commercial success since almost half were bought without governmental largesse, but analysis makes it clear that it’s almost entirely firms which had subsidized hydrogen refueling and forklifts that bothered to buy more of them. Nothing like inertia, even with one of the lightest molecules in the world. The other thing that was obvious from looking at the history of hydrogen vehicles including forklifts is that they virtually all are running on gray or even black hydrogen, with 11 to 35 kg of CO2e per kg of hydrogen fuel. Nothing virtuous about that, it just meant that diesel wasn’t stinking up the inside of warehouses, something that the rest of the world quietly achieves with batteries and no massive handouts of taxpayer money. But the Amazon warehouse is going to be running on green hydrogen, isn’t it? No, not at all. It’s going to be running the electrolyzer off Colorado grid electricity , which has a carbon intensity of 512 grams of CO2e per kWh. That turns into 23 kilograms of CO2e per kilogram of hydrogen. That’s not green, that’s pitch black, with a carbon intensity twice that of gray hydrogen and of course three to four times more than just using the electricity directly in battery electric forklifts. Oh, and there is no pathway from hydrogen forklifts to hydrogen freight trucks as some headlines insisted. Hydrogen forklifts have tanks that are pressurized to 350 atmospheres of pressure, not the 700 to 800 required for big trucks. Having a one MW electrolyzer on site will mean that instead of paying likely US$11 per kilogram for delivered hydrogen, they’ll pay about $6.00 per kilogram just for the energy at Colorado electricity rates. That electrolyzer probably cost well north of the cheapest alkaline electrolyzer it’s possible to buy, with the IEA indicates currently costs US$400 per MW. At a more likely $800 per MW, that’s $800,000 for that bit of kit in the warehouse. The 225 forklifts require about 300 kg of hydrogen a year each, and the electrolyzer can make about 22 kg an hour at peak production. That tells us they are planning to run it about 35% of the time. Assuming it lasts 10 years — I know, generous — that would add about $1.20 to every kilogram of hydrogen. Add a bit for other bits of kit like the dehumidifier and it’s perhaps $8-$9 per kilogram hydrogen instead of $11 hydrogen. There’s no evidence that the US DOE or other governmental agency is funding this in any of the press, but frankly it wouldn’t surprise me. Regardless, not an indication that we’ll be bowing to our hydrogen-powered overlords, just a weird US legacy cruft use case that’s remarkably even less green than what it was before. Which brings us to
Bitcoin and fertilizer. Late last year someone pointed out that a green hydrogen play for Shawinigan, Quebec, hometown of a former Canadian Prime Minister and a string of deeply suspicious hotel fires, wasn’t for anything useful, but was actually being promoted by a hydrogen van company, First Hydrogen. I assessed that and arrived at a fairly fully burdened cost of manufacturing hydrogen at Quebec industrial rates, including balance of plant, electricity rates and some financing and profits, of about US$3.24 per kilogram. That’s very good, likely close to the best possible price for manufacturing green hydrogen anywhere in the world. That’s undelivered, just sitting in a tank at the facility a long way from any off takers, as there’s nothing in the steadily declining retirement community that needs hydrogen. The plans to build 25,000 hydrogen vans in Shawinigan to create demand for the stuff make absolutely no sense, and in any event First Hydrogen is deeply undercapitalized, has three CEOs in a 16 person firm and a
UK case study that makes it clear that their van is economically dead in the water. The hydrogen was also very low carbon, around 0.08 kilograms of CO2e debt per kilogram of hydrogen, well under the Hydrogen Science Coalition clip level of a kilogram of CO2e per kilogram of hydrogen. Cheap and low-carbon hydrogen is definitely required. But it begged the question of me: if it were cheap and green, what’s an actually useful use case for the stuff in Quebec, even if not in Shawinigan. That led me to work out the cost implications of manufacturing green ammonia for fertilizer in Quebec , and it was only 66% more expensive — roughly — than gray hydrogen manufactured elsewhere in
Canada per ton. Too high, but actually quite close once Canada’s 2030 carbon price is added to the gray hydrogen, still below the cost of importing ammonia from the USA and definitely in the money in 2030 with the EU’s carbon border adjustment mechanism. Fertilizer and commodity manufacturing and distribution giants Yara and Trammo are already operating in Quebec, and there is a detailed set of plans for a gray hydrogen ammonia fertilizer plant in Becancour that can be dusted off and reprinted on actually green paper. All that required was about 400 MW of electricity 24/7/365. I acknowledged that there was a problem of additionality without getting into it much, and was promptly called on it by a couple of people. After all, as I noted around the inane hydrogen tourist train three month trial in the province, the low carbon electricity was fully subscribed already. The Minister responsible had rejected 9 GW of green hydrogen requests for electricity, so there’s none left over for green ammonia. Here’s where bitcoin enters into the picture. All of that lovely, stable, dirt cheap and (besides the point for them) green electricity had attracted a lot of bitcoin miners. Part of the oversubscription of Quebec’s power meant that they had very publicly decided to stop providing electricity to bitcoin miners. But not really. What they really did was stop permitting new commercial crypto mining operations for substantial electricity draws. They didn’t shut down the old ones. And given that bitcoin mining in the province dates back to at least 2018 and the mining operation I could find data on was pulling 98 MW, a quarter of what would be required for a 1,000 ton a day green ammonia plant, there’s an obvious solution. Hence, my updated recommendation to Quebec. Get Yara and Trammo on board, turn Yara’s terminal on the St. Lawrence into an ammonia export terminal, set up an integrated green hydrogen and ammonia manufacturing facility at Becancour, and remove electricity rights from 400 or more MW of bitcoin miners to power it. LinkedIn
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