Week 8
Source
Problem
The challenge is to transition to hydrogen heating to reduce greenhouse gas emissions. while suffering from high startup costs. Infrastructure limitations and energy efficiency problems It involves balancing economic sustainability with environmental objectives. To reduce the negative externalities of traditional fossil fuels. and support the transition to a sustainable, low-carbon energy system.
Summary
In this article, we take a look at the new state of the art home just east of Edmonton. This home aims to show how hydrogen gas can be safely used for heating buildings to help the environmental impact of fossil fuels. The joint project between Atco and Qualico aims to have 37,000 homes in Sherwood Park powered by pure hydrogen. Hydrogen is light, storable, and energy-dense, which makes it a no brainer replacement for fossil fuels. Alberta, for example, already has high pressure on its electricity grid due to the rapid phaseout of coal generation, especially during peak demand times like the middle of winter, and with more people switching to electric cars and other electricity-heavy appliances, the grid is bound to have more demand in the coming years. This is where the possibility of hydrogen home heating has come into play. Hydrogen can be transported on existing pipelines for natural gas, so there isn't much need to build new infrastructure to support it, making it far less expensive than wind or solar farms to handle a few days a year when extreme cold hits the province. The biggest drawback right now with hydrogen is the current cost; it's almost double that of natural gas.
Prof: Whenever anything seems like a 'no brainer', it probably is too good to be true. The article mentions that results were mixed elsewhere, but doesn't explain why. It also mentions that hydrogen from fossil fuels is different from sustainably produced hydrogen, but also doesn't go into the details.
Economic concepts
- Externalities and Social Costs (Environmental Economics) The article discusses the use of hydrogen as a clean alternative to natural gas, with the aim of reducing greenhouse gas emissions. This directly addresses negative externalities, where conventional and consumption of fossil fuels costs of living (e.g., air pollution, climate change) Switching to hydrogen can has reduced these external costs in line with the principles of externalization to achieve the best outcome in life. Governments can provide subsidies or incentives for such technologies to ensure their adoption, reflecting a Pigouvian approach to correcting market failures
- Cost-Benefit Analysis (CBA) The use of hydrogen heating promotes upfront investment in technology and infrastructure. as well as the potential for higher operating costs compared to traditional energy sources. A detailed cost-benefit analysis compares these costs with long-term benefits. Including reducing carbon emissions. Health improvements due to cleaner air and adapting to climate goals This concept is used to assess whether the transition to hydrogen heating has a net benefit to society.
Application of concepts
- Externalities and Social Costs (Environmental Economics) In Alberta the province's electrical grid is already under pressure due to the phase out of coal powerplants. This is due to the smog that affects the air quality of communities surrounding them. They do not have control once a coal plant is put in place next to them of how smog is put into the air that they breathe from. This causes negative externalities and social costs leading to health issues, decreased quality of life which will make the residents have to pay extra medical bills. The government is struggling to find a way to find a way to replace the power that coal plants provided. They had two options: Hydrogen which is a cleaner option (almost no negative externalities and social cost), but is double the price or natural gas which has less negative consequences than coal and is less expensive. Prof: While there is the potential for local pollution effects from coal burning, I did not see this being a significant issue discussed in the article. The externality that was being dealt with by using hydrogen instead of natural gas was the contribution to climate change caused by the emissions from burning natural gas. Hydrogen, where it is burned, doesn't contribute. However, how hydrogen is produced can contribute to GHG emissions.
- Cost Benefit Analysis Hydrogen fuel that is used for home powering has been experimented in the Netherlands and has come up with some mixed results. There are some concerns about explosions or leaks when heating is done incorrectly, however the largest drawback is cost. From an individual perspective, a person might now care or realize the air quality change from switching from natural gas to hydrogen, but they will notice the change in their power bill since hydrogen power is roughly double the price of natural gas. Currently doing a cost benefit analysis hydrogen power is not yet viable as a day to day power source and still needs development. Prof: A cost-benefit analysis would be an appropriate exploration, and the article suggests that the net benefit of developing hydrogen for home heating would have a better outcome from such an analysis. This rests not on the direct cost of the hydrogen, but on the cost of the infrastructure needed to support home heating. The argument is that the infrastructure to supply hydrogen is already in place, and the infrastructure to supply electricity would need to be built - generation plants, battery storage, etc. However, the cost of the hydrogen production infrastructure is not mentioned. That would also not be free. It may be lower cost. It does utilize production from the fossil fuel sector that is already happening.
Conclusion
The shift to hydrogen heating presents a promising solution for reducing greenhouse gas emissions and addressing the external costs of fossil fuel consumption. The initial high-costs and infrastructure challenges pose significant barriers, however, the long-term benefits of cleaner air, energy efficiency, and reduced carbon footprints, support a positive cost-benefit analysis. With continued innovation and government incentives, hydrogen heating could play a vital role in Alberta's transition to a low-carbon future, balancing economic and environmental goals for sustainable energy development.