If we are serious about hydrogen’s potential, greater investment across the many shades of hydrogen is required to ensure its scalability, writes David Czupryna, head of ESG development, Candriam.
We need to increase our global electricity production, but in a sustainable way, drawing upon the spectrum of low carbon energy sources at our disposal.
Hydrogen is one of the most common chemical elements on Earth. It makes up water, which forms 65% of the human body and is one of the two components which create methane, commonly known as natural gas. And yet, despite its abundance, it requires energy to extract the element to use it as an alternative energy source.
There are many ways to make hydrogen, yet currently 96% of the hydrogen produced on Earth comes from methane, through a process called steam gas reforming. Using high temperature, steam hydrogen is extracted from methane, a potent greenhouse gas. Hydrogen produced this way is known as ‘brown’ hydrogen.
Using the same process as brown hydrogen but incorporating carbon capture and storage (CCS) for the CO2 produced as a by-product, creates ‘blue’ hydrogen. Hydrogen can also be produced from water through a technique called electrolysis. It uses electricity to separate the hydrogen atoms that make up water. If that electricity comes from renewable sources, it is referred to as ‘green’ hydrogen. If it comes from nuclear, we call it ‘pink’ hydrogen.
From paints to fertilizers, hydrogen already plays a vital role across a range of industries including manufacturing and farming. This versatility of hydrogen has meant that it has been regularly touted by governments and businesses as the ultimate green energy source.
In the UK’s 10-point plan for a Green Industrial Revolution, hydrogen is mentioned 56 times; with wind receiving only 28 mentions while nuclear received 16 mentions. Prime minister Boris Johnson’s pledge to invest £12bn of public money also estimates that three times as much will be invested by the private sector over the next nine years to achieve a green transition. The UK plan assumes that hydrogen will be a core component of the future alternative energy mix.
One of hydrogen’s greatest strengths is its potential to act as an alternative to coal in the production of steel, which accounts for 7% of global emissions. Several of the largest steel manufacturers in Europe have expressed their intention to use hydrogen to reduce CO2 emissions. This could encourage other high emitters, such as shipping, to consider the role of hydrogen in reducing their carbon footprint.
Challenges and barriers
However, the mass adoption of hydrogen faces several barriers. First, the challenges to scale up electricity production from renewables. In order to lower greenhouse gas emissions, we need to shift our dependency away from fossil fuel sources to renewable-based electricity. Currently just 29% of global electricity production is made from renewable energy sources. To deliver the volume of ‘green’ hydrogen required for global green energy transition would need as much electricity production than 4/5 of total global production in 2020, according to the International Energy Agency’s recent Net Zero by 2050 roadmap. Failing to address this obstacle raises the risk of creating a ‘double warming’: failing to produce sufficient hydrogen to meet emissions targets and greater reliance on fossil fuels to power electrolysers or run steam gas reforming.
As we transition to a net-zero economy, demand for electricity consumption will only increase, driven by new products such as electric cars. Meeting this demand, in a sustainable way, will be challenging as our current renewable energy sources are already under pressure.
In Europe, renewable energy is needed to replace aging nuclear plants along with decommissioned coal and gas plants. In other countries, such as China or India, population pressures are exacerbating demand for reliable and clean energy. Unlike Europe, these countries are investing in new nuclear power generation that will provide an essential stabilising factor in the low carbon power grid especially given energy demand in these countries continues at pace.
Considering the challenges we face to produce sufficient low carbon electricity to make hydrogen, it is not surprising the biggest supporters of hydrogen can be found within the oil and gas sector. Companies with the largest carbon footprint have quickly realised that hydrogen has the potential to generate new commercial opportunities, in particular for natural gas. As a consequence they are pivoting their old business models towards blue hydrogen, in combination with ambitious carbon and capture development plans. But by betting on blue hydrogen, are we at risk of ending up with more brown hydrogen?
CCS, which involves capturing greenhouse gas emissions and injecting them back into the ground, has the potential to accelerate the production of low carbon hydrogen from natural gas. However at present blue hydrogen constitutes less than 1% of global hydrogen production due to its high costs and logistical challenges. Based on current developments, it will be to say, the least challenging to scale it enough by 2050 to deliver sufficient levels of blue hydrogen to meet global energy demand.
Another limiting factor for hydrogen energy development is the reliance on nickel for production of electrolysers, which is coincidentally a key component in electric car batteries, another area where the net-zero target will drive massive growth. How are we going to produce enough electrolysers to meet demand for the ‘green’ hydrogen market while simultaneously making enough electric vehicles to meet growing consumer demand? The IEA’s Net Zero roadmap estimates that we need to roll out 850 gigawatts (GW) of electrolyser capacity by 2030, compared to just 0.3GW in production today.
To integrate hydrogen within a carbon-neutral economy we need to address two fundamental questions: how will electrolysers be produced and what will power them with? Scaling hydrogen would create electricity demand that we will struggle to meet using renewable energy sources alone.
Instead, we need to be strategic in our deployment of hydrogen so that we can achieve the maximum reduction in greenhouse gas emissions at the lowest cost. For example, trucks could be replaced by trains powered by electricity whereas ships, which are too big to be electrified, could benefit from further investment in hydrogen fueled shipping vessels.
It may be the smallest element, but hydrogen has the potential to play an enormous role in our transition to a low-carbon economy.