Rethinking Hydrogen's Role in Decarbonization
Hydrogen was supposed to be at the heart of the global decarbonization movement. Lofty goals were set to implement green hydrogen into the transport, shipping, manufacturing, and energy storage industries, with the promise that hydrogen's versatility would allow for the decarbonization of even the most hard-to-abate sectors. But the hydrogen hype has fizzled over the years as the gap between ambition and implementation has grown ever wider.
In 2023, less than a tenth of planned green hydrogen projects were actually carried out. 'Tracking 190 projects over 3 years, we identify a wide 2023 implementation gap with only 7% of global capacity announcements finished on schedule,' researchers wrote in a paper published earlier this year in the scientific journal Nature Energy.
The authors of the paper, 'The green hydrogen ambition and implementation gap', identify three main drivers of the green hydrogen implementation gap. The first is that green hydrogen is pricey to produce, and costs are ticking up. The second is insufficient offtake agreements, which may be due to industry anxieties about 'the risk of becoming locked into an expensive and potentially scarce energy carrier.' Finally, the third reason is that more robust policy measures will be necessary to de-risk investment in green hydrogen.
Indeed, government subsidies will be absolutely critical to get green hydrogen off the ground. 'We estimate that, without carbon pricing, realizing all these projects would require global subsidies of US$1.3 trillion (US$0.8–2.6 trillion range), far exceeding announced subsidies,' the Nature Energy study found. 'Given past and future implementation gaps, policymakers must prepare for prolonged green hydrogen scarcity.'
However, a new paper from Nature Reviews shows that there is still hope for hydrogen within a cleaner energy future, but that we will have to be more selective about its applications. Years of failed and half-failed hydrogen projects have shown us that while the fuel stock is not a panacea for greenhouse gas emissions, but that certain applications still hold enormous promise if we can deploy them at scale.
Specifically, hydrogen still holds critical potential to reduce greenhouse gas emissions in industry, long-duration energy storage and long-haul transport. On the other hand, hydrogen likely does not hold a solution for fuel cell cars and space heating, as it has not remained competitive with electric alternatives. The reviewers suggest that it would therefore be strategic to focus on the areas where hydrogen holds the most promise, and let other technologies take the lead in sectors where hydrogen does not have a competitive edge. 'Clean hydrogen should be strategically deployed in areas where it seems likely to have greatest potential for cost and sustainability benefits compared with alternatives such as direct electrification with clean power sources,' the paper states.
'Green' or 'clean' hydrogen is necessarily made using renewable energies, while most hydrogen currently used in industry is 'gray' hydrogen, which is produced using fossil fuels and which therefore carries significant upstream emissions. But, critically, green hydrogen is not always the best application of clean energies. In many cases, the most eco-friendly and economically efficient application of renewable energy is to use it directly rather than using it to produce green hydrogen, which will then go on to be used as a secondary energy source. However, this cost-benefit analysis shifts over a longer timeline.
'In the short term, renewable electricity could achieve greater emissions abatement if used directly to displace fossil fuels in power generation, heating or transport, instead of being used for green hydrogen production,' reads the Nature Reviews Perspective. 'In the longer term, hydrogen could instead facilitate renewables uptake by integrating excess generation into power systems.'
In short, the green hydrogen era is not over before it has truly begun, but we will need to be discerning and strategic about its implementation. Furthermore, technologies will have to see significant advances and be scaled out to a commercial level for green hydrogen to be economically viable.
By Haley Zaremba for Oilprice.com
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