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Article | 18 April 2023 | ESG
Hydrogen - only as clean as the energy used to produce it
The most abundant element in the universe, hydrogen has been used as a fuel since the beginning of the 19th century. Infinitely renewable, it is also pollution free when burnt. Yet pure hydrogen doesn’t exist naturally and must be separated from other elements before it can be used as an energy source. Most hydrogen is currently used in oil refining and the production of fertilisers. A manufacturing process using natural gas accounts for more than 90% of production of hydrogen, but this ‘grey’ process is energy intensive and emits greenhouse gases. It is this inherent contradiction in employing fossil fuels to generate hydrogen which is at the heart of assessing the validity and usefulness of hydrogen in the shift to climate neutrality.
Green hydrogen is made by using renewably generated electricity (produced by solar energy or wind) to split water into hydrogen and oxygen through a chemical process known as electrolysis. Releasing only water when burned, this process could reduce mankind’s dependence on fossil fuels and cut global CO2 emissions. It could, for example, help transform energy intensive sectors such as heavy industry, freight, shipping and aviation.
Yet the high energy consumption during production means it is an expensive (and inefficient) option, estimated to account for less than 1% of total hydrogen output. Estimates from 2020 showed a cost of production between three and six times more than grey hydrogen. Will consumers choose green hydrogen if a cheaper, but non-green option is available?
There is a significant mismatch between the demand trajectory for green and blue hydrogen and the goal of net-zero emissions by 2050. If fulfilled, planned production of both forms of hydrogen will rise from less than 1 megaton (MT) in 2021 to 20 MT by the end of this decade. To reach net zero, an estimated 100 MT will be needed but there are significant obstacles linked to the availability and cost of sufficient renewable energy to power the process. Relatively high production costs for wind and solar, linked to the current cost of energy are all acting as deterrents to a quicker output. Utility companies are at the forefront of investment and technology in green hydrogen, seeking to drive the cost of production down so it is comparable with other (polluting) forms of the gas.
Green hydrogen is enjoying positive political and momentum as the shift away from fossil fuels promotes interest and investment in non-polluting forms of energy. It offers opportunities for decarbonisation in heavily polluting sectors, but also needs to be adopted in sectors where it is little used, such as transport. Together with investments in suitable infrastructure, this could help to reduce costs and contribute to ambitious climate goals and energy security.