Green hydrogen could drive the energy transition—but investment and infrastructure are lacking, say experts

Often touted as the missing piece in the renewables puzzle, green hydrogen is enjoying unprecedented political and business momentum, and experts say it will take off faster than previously thought.

Hydrogen, IRENA
Panelists discuss the role of green hydrogen in a decarbonised economy at the tenth assembly of the International Renewable Energy Agency in Abu Dhabi. Image: IRENA, CC BY-NC-ND 2.0 via Flickr

Every four years, the Summer Olympics see the world’s greatest athletes perform historical feats, but at the Tokyo Games this year, a different kind of history will be made.

Since the Fukushima nuclear disaster, Japan has worked hard to predominantly power its society with hydrogen by 2050, and the nation intends to use the occasion to showcase the unprecedented progress made, with plans to roll out a fleet of hydrogen fuel cell vehicles, a network of filling stations and a hydrogen-fuelled athletes’ village.

The rest of the world could soon follow. Policymakers across the globe have pinned their hopes on green hydrogen—hydrogen produced with renewable energy—as the missing piece in the renewables puzzle, and they say if countries remove regulatory barriers, adopt international standards and build the supply infrastructure needed to scale up the technology and bring down costs, it could soon take off globally as a viable clean energy solution.

This was the main takeaway from a ministerial roundtable on the role of green hydrogen in a decarbonised global economy at the tenth assembly of the International Renewable Energy Agency (IRENA) in Abu Dhabi last week.

Green hydrogen is a key technology in a decarbonised economy.

Yasuhiro Matsuyama, director-general, Energy Conservation and Renewable Energy Department, Ministry of Economy, Trade and Industry, Japan

“Green hydrogen is a key technology in a decarbonised economy, but governments need to adopt a solid strategy and install the transmission infrastructure now to gain investors’ confidence,” said Yasuhiro Matsuyama, director-general at the Energy Conservation and Renewable Energy Department of the Ministry of Economy, Trade and Industry in Japan.

While technically viable today, green hydrogen generation and storage are still costly, with shipping adding to expenses due to losses that occur when the gas is liquefied or converted into other carriers, such as ammonia. Scale-up and technological improvements are needed, but that will require better supply infrastructure, which will require investment, the experts said.

“It is not a technical challenge; it is a challenge of collective action,” noted Johanna Christensen, managing director at Global Maritime Forum, urging governments and industries to collaborate in developing adequate infrastructure and conducive policies. “We must make hydrogen available in large enough quantities and at the right cost. We need to ramp up production,” she said.

Tapping renewables’ full potential

Efforts to scale up green hydrogen production are increasing worldwide. A recent study by energy consultancy Wood Mackenzie estimates that US$365 million has already been invested in the green hydrogen sector and over US$3.5 billion worth of projects are in the pipeline.

The hype built up around green hydrogen is not surprising. Amid growing urgency to slash climate-wrecking emissions, the demand for renewables has skyrocketed, although their intermittent and volatile output has put increasing stress on electricity grids. Where power grids are underdeveloped, surges in wind and solar energy cause overloads, while dips in electricity production lead to power outages if countries lack a backup plan.

“This is a problem facing the entire world, and as the share of renewables increases, it is starting to give countries headaches,” Dr Fatih Birol, executive director at the International Energy Agency (IEA), told the policymakers and energy experts in attendance from Asia, North America, Europe and Africa. “If we want renewables, we need flexibility in the grid,” he added.

This is where green hydrogen comes in. Surplus renewable energy can be converted to hydrogen in a process called electrolysis, where an electrical current is run through water to split it into hydrogen and oxygen. The hydrogen created can be stored and later fed to a fuel cell to produce electricity.

That way, hydrogen provides a means to harness excess clean energy that would otherwise be wasted, while buffering intermittent daily and seasonal power generation. With intermittency hampering clean energy deployment worldwide, green hydrogen could boost the global commitment to renewables, Birol noted.

The fuel is also attractive due to its many other potential applications. Birol said it could help decarbonise several hard-to-abate sectors where meaningfully reducing emissions was proving difficult. These include steel production, aviation, trucking and shipping.

Christensen of the Global Maritime Forum said: “The shipping industry must halve its emissions by 2050, and this does not happen with energy efficiency. New fuels are required.”

The case is urgent, she said: “Fossil fuel-based vessels that enter the fleet in 2030 are those that will still be around in 2050. So, driving hydrogen development before will make a significant difference.”

“For a shipowner to order a new vessel powered by hydrogen, they need certainty that those fuels are going to be available. For financiers to finance that vessel, they need certainty around the cost of those fuels,” she observed.

“Green hydrogen has a timeline issue,” said Franz-Michael Mellbin, ambassador of Denmark to the United Arab Emirates and Qatar. “Electrification is moving at the speed of light, hydrogen prices are dropping and it is already permeating some sectors like electric vehicles. If we do not create a market for hydrogen, the timeline will defeat it.”

Nearing competitiveness

Today, around 120 million tonnes of hydrogen are generated each year, albeit almost entirely from natural gas and coal. This means dedicated hydrogen pipelines already span some countries, while others could explore ways to upgrade and leverage existing natural gas infrastructure to reduce investment needs, IRENA says.

Even when hydrogen is produced with excess clean power, it is at present uncompetitively priced, but this is set to change. With electrolysers—the units used to decompose water—rapidly growing bigger—from megawatt- to gigawatt-scale—IRENA predicts their costs will halve by 2040 to 2050. At the same time, the costs of renewable energy continue to fall. In 2018 alone, the average cost of solar and onshore wind dropped 14 per cent globally.

By 2030, the study by Wood Mackenzie suggests, green hydrogen will reach cost parity with fossil fuels in Australia, Germany and Japan.

The Hydrogen Council envisages that by 2050 green hydrogen could provide almost a fifth of total power consumed globally, and avoid six billion tonnes of greenhouse gas emissions per year—roughly the equivalent of the carbon emitted by the United States annually.

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