Renewables can make hydrogen green
Hydrogen ought to be key in the transition to a low-carbon world. It can be converted into electricity with only clean water and heat emitted. The colourless, odourless, non-toxic gas can be easily stored and shipped.
But today 98 per cent of pure hydrogen production involves carbon-intensive methods using natural gas or coal.
That is changing, however. Rising emphasis on decarbonisation is driving renewed interest in carbon-free hydrogen produced using electricity from renewables. Mass production can cut the cost of the electrolysers used in producing ‘green’ hydrogen.
Hydrogen is an established fuel in the oil refining and chemical industries, which consume over 95 per cent of pure hydrogen production globally. But a lack of infrastructure has restricted its use elsewhere.
Sales of hydrogen could rise sevenfold by 2050
Demand for hydrogen-based passenger electric vehicles has been far outstripped by battery-powered vehicles, thanks to rapidly falling battery costs and the roll-out of home and public charging points. In contrast hydrogen refuelling infrastructure remains scarce and has seen limited political backing.
But for buses and trains, plus long-haul trucks, hydrogen can be more economic than batteries. There were nearly 13,000 hydrogen-powered vehicles in use globally at the start of 2019. Japan has taken an early lead but may soon be eclipsed by China, which already has over 2,000 hydrogen buses and is rolling out hydrogen-powered commercial transport to reduce emissions.
Technology improvements, economies of scale and government environmental policies should drive down the cost of using hydrogen over the next decade.
Global hydrogen (duration 3:04)
But hydrogen’s potential can be realised only if its production becomes carbon-free. The 98 per cent generated using carbon-intensive methods is known as ‘grey hydrogen’ The other 2 per cent is produced via electrolysis, a chemical reaction that cracks water into its constituent parts of hydrogen and oxygen. But only a small proportion of this is currently powered by zero-carbon renewable energy, making it ‘green hydrogen’.
Green hydrogen costs are currently three to four times higher than traditional, carbon-intense production. But rapidly falling generation costs from new wind and solar plants, as well as falling costs of the equipment needed to produce green hydrogen, can help close the gap.
We see the runaway growth of wind and solar creating a rising excess of power over the next decade that could be used to produce clean hydrogen for zero power cost.
As solar and wind installations grow, power capacity will exceed average loads or even peak power demand and thus increasingly face the risk of being effectively switched off for limited periods. Rather than curbing this generation, business and governments should explore ways to use the excess clean power to crack water with electrolysers and generate clean hydrogen, thus dramatically reducing the unit costs of hydrogen production.
We estimate that up to 2.2 million tonnes of pure hydrogen could be produced by 2030 in Germany, Italy, Spain and the UK alone from renewable power that would otherwise go unused. Assuming a price of USD1.75 per kilogram, this would translate into a USD3.8 billion annual market for hydrogen gas sales in 2030.
Sales of hydrogen gas could rise sevenfold by 2050 on our estimates, spread across chemicals, transport, industry, power, buildings and transport. Some suggest the market for hydrogen and hydrogen technologies by then could exceed USD2,500 billion a year and provide more than 30 million jobs globally.
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