“CHEAP, GREEN HYDROGEN WOULD BE A MASSIVE BREAKTHROUGH IN CLEAN ENERGY.” BILL GATES

As part of the global effort to move the planet to a net zero carbon solution, the consensus is increasingly building that “all of the above” will be needed. This includes battery electric vehicles (BEVs), renewable energy (solar and wind), heat pumps, nuclear etc. Against all these requirements, green hydrogen is the one new area currently receiving a lot of attention. Produced by the electrolysis of water using renewable energy and offering the promise of a seemingly boundless resource (water), green hydrogen uses “clean” energy in its production and emits only a beneficial byproduct (oxygen). But of course, nothing is ever that easy.

The question of whether green hydrogen is on the cusp of entering the mainstream as an alternative energy source continues to be debated among investment circles, with the prevailing question being whether the challenges outweigh the opportunities.

An emerging decarbonisation opportunity

Hydrogen in its natural form isn’t currently exploitable (although there are tentative studies looking at this), so it must be manufactured, and the colour codes relate to how that process is achieved.

To briefly explain the main colour codes:

• Black/Brown: Using coal to produce hydrogen – the worst method from an environmental viewpoint
• Grey: Produced by using steam methane reformation of natural gas, without carbon capture and storage (CCS) – currently the most common method used
• Blue: The same as above but using CCS
• Pink: Using nuclear energy to produce hydrogen from water via electrolysis
• Green: Produced by using clean renewable energy to electrolyse water.

Potential uses of green hydrogen start with the replacement of the hydrogen currently used in industrial processes. This is an amount of 70m-100m tons per annum (tpa) – depending on the source – and is principally used in oil refining and the manufacture of ammonia for fertilisers and methanol. Most of the hydrogen used for these purposes is grey hydrogen, and replacing this with green hydrogen would already eliminate 1.6% of global carbon emissions.

The opportunity for new green hydrogen uses is where the optimists get excited. In many processes, green hydrogen is seen as the best way to decarbonise an existing process and the main areas where this is touted are in chemicals, green steel production and heavy-duty vehicles.

The promise and excitement of green hydrogen are evident in the over 1 400 projects announced across all regions (hydrogen council), totalling US$570 billion of investment, that are supposed to be built before 2030. To date, only 7% of these green hydrogen projects have progressed past a final investment decision and have a known commissioning. However, if all these projects were to go ahead then this would take the total green hydrogen produced to 45m tpa, sufficient to replace approximately 50% of the grey hydrogen currently being used for industrial means.

The question of scale

Initially, the attraction to green hydrogen came from an already identified problem. During certain periods, supply from solar parks and wind turbines is so productive that too much renewable energy is being produced, pushing the energy price to zero and effectively wrecking returns on these investments, thus disincentivising the push for renewable energy. Rather than allow that to happen, that excess energy should be stored in a battery, which could then be used during periods of “Dunkelflaute” (German word for “Dark duldrums” or “dark wind lull”, describing those periods where no energy can be generated from wind or solar). That “free energy” could rather be used to produce green hydrogen, which could then be used for power generation or substituted into industry in place of grey hydrogen. So conceptually, all is well and good so far. However, a few problems start to surface when the rubber hits the road. Green hydrogen is much more expensive than grey hydrogen and is not getting cheaper to produce, given that scale is not being achieved.

The commonly quoted figure is that green hydrogen will have to reduce its costs from >US$5/kg to <US$1/kg to become a cost-effective replacement. However, the likelihood of achieving this type of cost reduction is probably dependent on green hydrogen being rolled out on a massive scale – a typical new tech “chicken and egg” scenario. Increasingly, it appears that for green hydrogen to fulfil its potential, there will have to be massive government intervention in the form of either subsidies or a carbon tax, implying a cost to the consumer. Surveys have consistently demonstrated that most people are in favour of a green transition, but many lose some of that keenness once the potential costs become apparent (mainly related to higher prices for green materials/energy and a loss of jobs in traditional sectors).

At the moment, there’s far too much uncertainty regarding the major inputs into green hydrogen to say with any certainty when (or if) it will become a viable form of alternative, clean energy. The main points of departure would be:

Cost of electricity

There’s still some debate about whether green hydrogen would work off a dedicated connection or by purchasing renewable energy at low-cost times over a grid. A study by the International Council on Clean Transportation (ICCT) suggests a dedicated connection in the US, but a grid connection in most of Europe would be preferable. Hydrogen production can’t draw power from the grid at low renewable energy production, as that would lead to increased fossil fuel consumption, so hourly matching requirements are critical.

Electrolysers

An alkaline electrolyser costs US$1163/kw (2020 figure). Again, drawing on the ICCT study, the range of costs for production in 2050 were estimated between US$100/kw and US$1200/kw, so there’s clearly a huge degree of uncertainty here.

As it stands, the issue of green hydrogen will continue to be a key discussion point – with varying degrees of enthusiasm – as one of the many ways that the planet can decarbonise. Increasingly, however, it appears that the technology challenges – mostly relating to getting the technology to progress down the same cost and efficiency curves that solar power has successfully managed – will mean that this technology is unlikely to be anything but niche for the foreseeable future. Mainstream acceptance and usage would appear to be something more likely to happen in the 2030s or later (if at all) than it will be in the 2020s.