1. Natural gas is widely seen as a substitute for the use of petroleum in our economy.
One reason is the relative abundance of natural gas around the world, in a variety of locations. In some ways, natural gas enriches the availability of hydrocarbons to society, and contributes to overall energy security. There are other factors at play as well. Peak oil and peak gas are two important ideas.
As time goes on, it will become increasingly difficult to find new, easily recoverable (conventional) fossil fuel reserves. At a certain point, we will have reached a peak. At that point, we will have used half of all available resources for a given fossil fuel source. After the peak, it will become much more expensive and time consuming to get the energy out of the ground. We will have to develop more technologically sophisticated methods to get the energy.
Peak resource theory and the idea of diminishing fossil fuel reserves go back to Marion King Hubbert. Hubbert developed the idea of Hubbert’s Peak Theory. The idea applies to oil reserves, but it also applies to natural gas reserves. We will not have reached peak gas before the end of this decade, probably much later. But we will have reached peak oil in conventional oil reserves.
Logistics also play a role. Natural gas often occurs as a byproduct of oil production. In many cases, natural gas deposits are found in relative proximity to oil deposits. Iran is a good example, as is Bahrain. There are advantages due to economies of scale. Considering that we have accumulated considerable experience in hydrocarbon production, it would be a shame to let this knowledge go unused.
2. Hydrogen is largely produced from natural gas. In the future, hydrogen could be produced from renewable energies, but that is still a long way off.
Renewable energies are not a good source to produce hydrogen from. The energy yield is simply not sufficient. Moreover, renewables are not energy stores like hydrocarbons, which bundle millions of years of carbon-rich, dense matter in compact form. Converting renewable energy to hydrogen involves significant energy losses. In fact, hydrogen fuel is usually produced from natural gas. This removes one of the main incentives to produce hydrogen in the first place.
3. Hydrogen use is very limited right now.
We have not yet built the supply chains we need for a hydrogen economy. The logistics and transportation behind hydrogen are of great importance. We need to have a whole infrastructure built for hydrogen distribution. We need to do that before we sell hydrogen on the open market. Few people will be willing to buy a hydrogen-powered car if the infrastructure isn’t there. This has always been a major advantage of the petroleum business. This has made petroleum competitive with alternative energy sources.
Buyers could fill up with diesel in so many places. We also don’t have enough buyers of hydrogen fuel to justify scaling hydrogen fuel production in the economy. This makes it prohibitively expensive to produce hydrogen fuel in large quantities and distribute that hydrogen fuel in the economy.
Hydrogen also competes with electric vehicles and more efficient internal combustion engines. Every year we improve the efficiency of internal combustion engines. We have to keep an eye on that, too.
Hydrogen will not be able to compete with natural gas in the foreseeable future without incentives in one form or another. This could change with significant breakthroughs to solve innovation bottlenecks. Innovation bottlenecks include more energy-efficient production of hydrogen fuel and an effective way to distribute hydrogen in the economy.
The fact that hydrogen is largely produced from natural gas shows that hydrogen is largely an energy source that is just being developed and is still far from commercial implementation.
Renewable energy, in and of itself, is not a good energy source from which to produce hydrogen. We generate electricity through a turbine generator, transport electricity to store it, transport it from storage back to the grid, and then use electricity to produce hydrogen. Energy losses occur at each step. This shows that hydrogen has a low EROI.
Deffeyes, K S 2006, Beyond Oil: The view from Hubbert’s Peak, Hill and Wang, ISBN 0-8090-2957-X, United States.