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Clean Hydrogen on the Path to Net Zero

Part 2 — The Current Barriers Facing Clean Hydrogen

Clean hydrogen has recently become one of the ‘hottest’ clean energy sources up for discussion amongst many countries looking to reduce their carbon footprints and reach their net zero targets. However, as discussed in Part 1 of Clean Hydrogen on the Path to Net Zero — Addressing the Carbon Gap, the global uptake of clean energy sources, like clean hydrogen, is simply inadequate and lagging behind, preventing us from reaching these targets.

If scaled globally, however, clean hydrogen could be the missing link to fill this carbon gap due to its lucrative features. Simply put, hydrogen is the most abundant element on the planet and is relatively easy to produce via electrolysis. As an energy carrier, it can also deliver or store a tremendous amount of energy that is produced almost entirely free from carbon emissions.

So, if clean hydrogen is that simple to produce and efficient to use, then why hasn’t the world phased out all fossil-fuel-based energy sources, such as coal, and made clean hydrogen their primary energy source?

This comes down to three main challenges:

  1. Production cost

  2. Storage and distribution

  3. Demand

Production Cost

Producing clean hydrogen via electrolysis from renewable sources, such as solar, wind or nuclear energy, is significantly more expensive than producing it via fossil-fuel-based sources, such as via coal gasification or steam methane reforming with natural gas. According to an International Energy Agency report, depending on regional gas prices, the levelised cost of hydrogen production from natural gas ranges from US$0.50 to US$1.70 per kilogram (kg). Using carbon capture, utilisation and storage (CCUS) technologies to reduce the CO2 emissions from hydrogen production increases the levelised cost of production to around US$1-$2/kg, while using renewable electricity to produce hydrogen costs US$3-$8/kg.

For the hydrogen revolution to take place, generating hydrogen via these renewable methods will need to be as cheap, if not cheaper than the less environmentally-friendly options. Countries are realising this and have been investing a significant amount to reduce these costs to make clean hydrogen a viable clean energy source in their energy grids. In the U.S., it currently costs around $5/kg to produce clean hydrogen. To address this, the U.S. Department of Energy (DOE) has set the goal of reducing this production cost by 80% in the next decade to $1/kg. At this price, clean hydrogen would become cost-competitive with fossil-produced hydrogen and could unlock new markets for hydrogen, including steel manufacturing, clean ammonia, energy storage, and heavy-duty trucks.

The U.S. aims to reduce the cost of clean hydrogen to $1/kg in a decade.

For this target price to become a reality, however, governments and private-sector corporations across the world must invest heavily in the research and development (R&D) of creating more efficient technologies to produce this hydrogen via clean methods, such as powering electrolysis with clean electricity, and must also implement ambitious hydrogen policies and strategies to meet and beat these targets.

The International Energy Agency report shows that countries that have adopted hydrogen strategies have committed at least US$37 billion; the private sector has announced an additional investment of US$300 billion. However, putting the hydrogen sector on track for net zero emissions by 2050 requires US$1.2 trillion of investment in low-carbon hydrogen supply and use through to 2030. Governments are starting to announce a wide variety of policy instruments, including carbon prices, auctions, quotas, mandates and requirements in public procurement. Most of these measures, however, have not yet entered into force and are preventing the clean hydrogen dream to become a reality for many countries across the world.

Storage and Distribution

There are a number of ways to store and distribute hydrogen, depending on its state as either a gas or liquid. In its gaseous state, hydrogen can be stored in high-pressurised tanks. In its liquid state, hydrogen needs to be stored at cryogenic temperatures due to its atmospheric boiling point (-253 °C). Additionally, hydrogen can also be stored within solids (by absorption) or carried via organic liquids.

In order for hydrogen to become a mainstream energy carrier, it needs to be capable of being transported in large quantities at a low cost. The easiest and safest way to transport hydrogen is in its liquid state. Converting it from a gas to liquid and back to a gas after transportation, however, is currently quite a costly exercise.

An IRENA report concludes that there are four transport options that are most attractive and should be prioritised globally in the short-term:

  1. Ammonia

  2. Liquid hydrogen

  3. Liquid organic hydrogen carriers (LOHC)

  4. Pipelines

Ammonia ships are the most attractive for the widest range of size and distance combinations mainly because of the low transport costs. Due to the high capital intensity of storing liquid hydrogen at cryogenic temperatures, liquid hydrogen becomes more attractive as the project size increases which leads to an overlap with the conditions where pipelines are the most cost-effective. LOHC, on the other hand, can be attractive in a scenario with slower technology progress, which leads to higher shipping costs overall, making them most attractive for relatively small projects.

Ammonia, liquid hydrogen, and liquid organic hydrogen carriers (LOHC) use shipping as their mode of transportation and the transportation cost is dependent on the size of the project and the transporting distance, with 70–90% of the total cost being in the terminals (plants and storage).

Finally, compressed hydrogen via pipelines, either newly laid or through upgraded existing gas pipelines, is better suited to large flows or regions with existing gas pipeline infrastructure that can be repurposed. Distance is the most critical cost factor for pipelines as their costs are directly proportional to distance (i.e., the longer the pipeline distance, the more material is needed).

The article on the IRENA Report states that the best way to drive down the cost of storage and distribution is via economies of scale to reduce the specific costs of all the steps in the value chain; innovation to reduce energy consumption; improvement through deployment on aspects like standardisation, global supply chains, equipment manufacturing.

A Clean Energy Mix

In order for countries to meet their net zero targets by 2050, emphasis shouldn’t be solely placed on one clean energy source, but rather on a grid that is powered by numerous clean energy sources working in harmony. The global deployment of clean technologies — such as solar, wind, hydro, geothermal, nuclear, fusion, and hydrogen — will be critical in ensuring a flexible and reliable electricity system. Fortunately, a number of these technologies can be used in symbiosis to produce one another, such as nuclear energy being used to produce clean hydrogen.

In the next blog, we will discuss how creating a global demand for clean hydrogen will be crucial for a hydrogen economy to succeed. We will explore key methods to grow this demand, including incentivising existing hydrogen users to switch to clean hydrogen and creating demand for new end-users of hydrogen in the transportation and power sectors.


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