Green hydrogen has been put at the centre of many net-zero initiatives for good reason. Also known, on account of its versatility, as the Swiss army knife of long-term decarbonisation, it can provide turnkey solutions for those industries where greenhouse gas emissions are harder to suppress – solutions which can be seen as critical if climate goals are to be met. Edward Lees and Ulrik Fugmann explain.
On the back of green hydrogen’s across-the-board functionality, the Hydrogen Council has forecast that annual demand could increase sevenfold by 2050.
In 2022, green hydrogen, made using renewable energy sources to electrolyse water and separate hydrogen from oxygen, made up less than 1% of US hydrogen production. While it has been criticised for being expensive compared with fossil fuels and brown hydrogen, the plummeting cost of renewable energy should help make emissions-free hydrogen more commercially viable over the coming decade.
The green hydrogen industry stands to benefit from major government and private funding to expand production – the Hydrogen Council expects USD 300 billion to be invested globally over the next decade. And it is a key pillar of the US Inflation Reduction Act with a new tax credit for clean hydrogen.
Cleaning up heavy industry
As a cleaner alternative to fossil fuels, green hydrogen has become the leading candidate for cleaning up the awkward squad of industries such as steel and cement which are responsible for vast quantities of carbon emissions – currently, these industries each account for around 8% of global emissions.
Several companies are already piloting green steel initiatives, but the higher price of clean hydrogen and the electrification of the steel-making process means these greener products can currently only be produced at a greater cost, with some estimates pricing it at 20-30% more per tonne.
Other potential industrial adopters include chemical companies. Hydrogen is often a by-product of existing manufacturing processes and could be captured and used to power chemical plants.
Reinforcing the energy grid
The intermittent nature of renewable sources, notably wind and solar, means they are not always able to cope with 24/7 demand, especially during peak hours. Moreover, batteries do not yet have the capacity to provide the necessary backup.
Hydrogen can be used to store clean electricity during times of excess generation that can later be used when demand peaks. As a form of stored energy, hydrogen can provide flexibility and stability to power grids, reinforcing their reliability and resilience.
Storage can be centralised, but it can equally be done local through microgrids serviced by pipelines. In fact, such pipelines are fast becoming a reality. In Austria, Germany and Italy, a consortium of gas companies is already planning a 3 300 km pipeline that would transport green hydrogen from the sunshine-rich areas of north Africa and southern Italy to regions further north.
Planes, trains and automobiles
Transport’s reliance on fossil fuels means it contributes a staggering 20% of carbon emissions globally.
Hydrogen fuel cells are already being used to power zero-emission long-haul, high-payload vehicles where batteries are not an option due to the weight needed to provide the required power.
Arguably, the future for zero-emission domestic transport resides in hybrid electric/hydrogen fuel cell vehicles, leveraging the attributes of both batteries and fuel cells. Such a solution could be convenient for drivers: rather than waiting at least 15 minutes at a high-speed electric charging station, hydrogen refuelling should be a matter of minutes.
The world’s first hydrogen train journeyed through Germany in 2018. It is scheduled for roll out in France this year. Carbon-free flying has taken off, with successful short-range flights. In the hard-to-decarbonise airline industry, though, many established players favour innovations around bio-based and sustainable fuels, although questions around their commercial viability remain unanswered.
In shipping, the prospect of using hydrogen has also generated debate. Pilot projects have shown that hydrogen can be successfully used on a small scale, but concerns remain around how liquid hydrogen can be stored at temperatures below -253C without using up too much precious cargo space.
Tomorrow’s hydrogen economy
Given its alignment with governments’ net-zero commitments and the need for clean energy solutions, green hydrogen can play a big role in a more sustainable economic future. According to McKinsey, the hydrogen economy could support global revenues of more than USD 2.5 trillion per year by 2050, with jobs for more than 30 million people, and would help avoid 6 Gigatonnes of CO2 emissions.
When it comes to providing large-scale green hydrogen cost-effectively, governments, regulators and investors need to step in. As well as broad-scale public and private investment, BloombergNEF has suggested a higher carbon price will help green carbon become more cost-competitive.
We believe the investment case for green hydrogen is clear even though the pivot towards green hydrogen is still in its infancy.