Hydrogen’s decade

Source details

Canonical URL

Hydrogen’s decade

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: THIJS VAN DE GRAAF
• Published: December 1, 2022

The hydrogen promise

• Hydrogen is a gas that can be burned in an engine or used in a fuel cell to power vehicles, produce electricity, or provide heat.
• It can serve as a feedstock and as a building block for other chemical products, such as ammonia (a key fertilizer input) and methanol (used in plastics production).
• Hydrogen and its derivatives can be stored indefinitely in tanks and salt caverns, which means they might be one of the key solutions for long-term energy storage.
• Crucially, hydrogen can replace fossil fuels for these purposes without emitting carbon dioxide; it is a zero-carbon energy carrier, like electricity.
• Hydrogen has an edge in decarbonizing sectors that are hard to electrify (heavy industry, long-haul transportation, seasonal storage).
• Most decarbonization scenarios anticipate a key role for hydrogen in achieving net-zero emissions by mid-century.
• The International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) expect hydrogen to meet 12–13 percent of final energy demand by 2050, up from virtually zero today.
• Current hydrogen market traits poised for radical transformation:
  • Made largely from unabated fossil fuels.
  • Used almost exclusively as a feedstock.
  • Produced and consumed mostly on-site.

Hydrogen battles (production and deployment debates)

• Two primary fault lines:
  • How to produce hydrogen: “green” hydrogen from renewable electricity versus “blue” hydrogen from natural gas with carbon capture.
  • In which sectors to deploy hydrogen.
• Cost and trajectory:
  • Green hydrogen was once two to three times more expensive than blue hydrogen, but that was before the current gas price crunch.
  • A growing number of projections now foresee green hydrogen that is cheaper than both blue and “gray” hydrogen before the end of the decade.
• Production concerns:
  • Green hydrogen could divert renewable electricity from other end uses, prompting debate about “additionality” criteria.
  • Green hydrogen production could exacerbate water stress in some regions.
  • Blue hydrogen raises concerns over methane leakage, insufficient carbon dioxide capture, and lock-in of fossil gas infrastructure.
  • Other pathways (nuclear, biomass) are equally controversial.
• Consumption concerns:
  • Hydrogen is sometimes called the Swiss army knife of the energy transition, but it might not always be the best tool.
  • Using hydrogen is often a less energy-efficient route than direct electrification; e.g., to drive the same distance with a hydrogen car, you need two to three times more wind farms than for an electric vehicle (Transport & Environment 2020).
  • Certain hard-to-abate sectors (steel, shipping, aviation) are “no-regrets” sectors where hydrogen or derivatives will be needed; indiscriminate use could slow the energy transition.

Technology leadership and geo-economic competition

• Policy support for clean hydrogen has grown, bolstered by post–COVID-19 recovery spending and Russia’s invasion of Ukraine.
• Annual investment in clean hydrogen now stands at half a billion dollars a year, according to the IEA.
• Countries are jockeying for mastery over what could become a multibillion-dollar international industry.
• Electrolyzers may be the biggest prize in the hydrogen value chain:
  • Electrolyzers are modular and subject to a steep learning curve; they may be where solar PV was 10–15 years ago.
  • Electrolyzers made in China are 75 percent cheaper than those manufactured in the West, according to Bloomberg New Energy Finance.
• The United States’ Inflation Reduction Act includes tax credits ($3/kg) that will make US renewable hydrogen the cheapest form of hydrogen in the world.
• The US law probably influenced the European Parliament’s decision in September to relax rules on additionality for green hydrogen.

Export dreams and geopolitical implications

• Hydrogen and derivatives could reconfigure energy trade relations: some regions (Europe, northeast Asia) preparing to import; others aim to export or become renewable energy superpowers.
• Fossil fuel exporters (Australia, Middle East and North Africa) have advantages: existing energy trade relations, skilled workforce, established infrastructure.
• Hydrogen is a manufactured product; it can be produced wherever there is electricity and water and is not a zero-carbon version of oil.
• Hydrogen could be more geopolitically transformative for fossil fuel importers with ample renewables potential (Chile, Morocco, Namibia).
• Specific projects and figures:
  • A German consortium is developing a green hydrogen project in Namibia worth $9.4 billion, roughly equivalent to the country’s GDP.
  • Egypt has attracted investment pledges of more than $40 billion this year alone for green hydrogen and green ammonia projects.
• No continent has better technical potential for producing cheap green hydrogen than Africa.

Governing hydrogen — obstacles and policy recommendations

• Three highlighted governance priorities:

1. Costs must come down and production must ramp up.

• Governments can de-risk investment in clean hydrogen supply by creating durable demand in no-regret sectors through policy instruments such as public procurement and carbon “contracts for difference.”

2. Establish harmonized standards, certification, and monitoring for safety, interoperability, and sustainability along the entire clean hydrogen value chain.

• Standards should address hydrogen leakage, emissions, and impacts on water security.

3. Ensure developing economies receive financial and technological assistance so they can benefit from the green hydrogen boom.

• Avoid treating developing economies solely as suppliers of green energy molecules rather than as potential sites of green industrialization.

Outlook

• In the 2020s hydrogen could move from a touted “fuel of the future” to a fuel of the present.
• If managed well, the clean hydrogen revolution could unlock a triple prize: more climate stability, energy security, and global equity.

F&D Magazine — Hydrogen’s Decade, Thijs Van de Graaf, December 2022

Content in this bundle

• Hydrogen's Decade
  • Hydrogen's Decade (Markdown version)
  • Hydrogen's Decade (PDF)