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While the momentum for clean hydrogen projects has been growing recently,
business leaders say governments need to establish regulatory
frameworks and provide financial incentives to realize the fuel's
potential in a low-carbon world.
Many energy experts—including the International Energy Agency
(IEA)—see blue and green hydrogen having an important role in
the future global energy mix, with more than 130 countries already
pledging to achieve net-zero emissions by the midcentury.
The Hydrogen Council, formed by the CEOs of over 120 financiers
and energy-related companies, said clean hydrogen can help reduce 7
billion metric tons (mt) of CO2 emissions per year in 2050 if its
production reaches 660 million mt.
The Brussels-based trade group estimates $700 billion will be
required to create a hydrogen market of 75 million mt by 2030 as
the initial step. Of that money, $300 billion would be spent on
production, $200 billion on infrastructure, and $200 billion on
incentivizing demand from end-users.
For its interim 2030 goal to be reached, the Hydrogen Council
estimates another 200-250 GW of electrolyzer capacity, 300-400 GW
of renewable electricity, and carbon storage infrastructure with an
annual capacity of 350-450 million mt must be constructed for green
and blue hydrogen production by 2030.
Stakeholders in the public and private sectors have so far just
committed $95 billion to hydrogen production, $20 billion to
infrastructure, and $45 billion to end-uses, resulting in a
financing gap of $540 billion, it added.
Geographically, the Hydrogen Council said China will require
another $160 billion in hydrogen sector investment to meet its 2030
climate goals, Europe will need $90 billion, North America $80
billion, Japan and South Korea $60 billion, and the rest of the
world $150 billion.
Of the announced direct investments, only $20 billion have
reached the final investment decision stage.
"The conversion of this momentum into real deployment and
scale-up now critically depends on the right regulatory framework,
which will create demand, enable supply, and reduce investment
risks," the Hydrogen Council said in a research report published 3
November and presented at a side event at COP26.
"Hydrogen's full potential can only be realized if action is
taken across three fronts to: stimulate demand, enable access
through infrastructure, and create scale to bring down costs and
close the economic gap of hydrogen decarbonization solutions versus
conventional alternatives," it added.
The IEA estimated that hydrogen production totaled 90 million mt
in 2020, nearly all of which was involved the conversion of fossil
fuels, without offsets or capture of the carbon. There was
negligible output of green hydrogen from electrolyzers powered by
renewable energy or blue hydrogen from fossil fuels with carbon
capture and storage technology, it said.
COP26 actions
While more than 30 countries have published national hydrogen
roadmaps, few have started to establish regulatory regimes to
fulfil their goals.
To give the development of hydrogen supply chains an extra push,
Australia, China, India, Japan, South Korea, the UK, the US, and
the EU partnered with 25 countries in the Glasgow Breakthrough
initiative on hydrogen during COP26.
They said 2 November that they will work with the IEA, the
International Renewable Energy Agency, the UN High Level Climate
Action Champions, and other stakeholders in the private and public
sectors to make affordable green and blue hydrogen available on a
global basis by 2030.
In the private sector, 28 of the world's largest energy, mining,
and financial services companies signed up for the World
Business Council for Sustainable Development's H2Zero initiative,
which aims to promote development of clean hydrogen markets.
The Green Hydrogen Catapult (GHC), a UN-backed coalition formed
by Snam, Iberdrola, Ørsted, and some others, also said 4 November its members had
committed to building 45 GW of electrolyzers with secured financing
by 2026. This compared with their previous target of 25 GW in
December 2020.
Details of the projects in the latest announcement are not yet
available. But Fortescue Future Industries (FFI), one of the GHC
members, announced plans to develop green hydrogen projects in
countries like Australia, Jordan, and the UK.
In addition, Argentinian President Alberto Fernandez said on
Twitter 1 November that FFI plans to build an $8.4-billion project
in the country.
The green energy arm of Australian miner Fortescue Metals Group
has a target to produce 15 million
mt of hydrogen from renewable power annually by 2030.
"We are not waiting. The time is now to build the green hydrogen
industry," said FFI CEO Julie Shuttleworth.
The GHC members aim to drive down the cost of green hydrogen to
below $2 per kg, putting it on par with the current costs of grey
and brown hydrogen. Before that happens, they want governments to
ensure "equal market conditions for all fuels to create fair
competition in energy markets." This could be in the form of
subsidies for green hydrogen consumers or additional emission
surcharges on conventional hydrogen users.
In addition, the GHC said governments should promote investment
in hydrogen infrastructure, such as pipelines between production
and consumption hubs.
Trucking sector
The road freight, steelmaking, cement, aluminum, and
petrochemical sectors can make great progress in decarbonization by
replacing fossil fuels in their operations with clean hydrogen,
according to energy experts. When converted to ammonia, hydrogen
can also eliminate emissions from new types of marine and aircraft
engines.
Some major players believe trucking firms could emerge as the
first demand sources in the fledgling market. Trucks powered by
hydrogen fuel cells have already hit the market, while the
infrastructure costs for refueling them are relatively low compared
with other hard-to-abate sectors.
During COP26, TotalEnergies said it has teamed up with
German automaker Daimler Truck to develop "ecosystems for
heavy-duty trucks running on hydrogen." The energy major plans to
be involved in up to 150 hydrogen refueling stations in Germany,
the Netherlands, Belgium, Luxembourg and France by 2030.
"Heavy-duty trucking is an optimal sector for the introduction
of low-carbon hydrogen, as it offers the lowest marginal cost of
abatement," Switzerland-based trader Trafigura and hydrogen
supplier H2 Energy said in a whitepaper 10 November.
"The development of low-carbon hydrogen supply and
infrastructure ecosystem for trucking would act as a catalyst to
accelerate the growth of the wider hydrogen economy," they
added.
The two companies said that clean hydrogen demand from trucks
could reach 32 million mt per year, if 10% of their fuel
requirements are met by low-carbon alternatives.
This is a plausible scenario by 2030, but Trafigura and H2
stressed that governments need to ramp up financial support for
hydrogen producers, consumers, and boost infrastructure development
to realize it.
Their policy wish list includes safety standards for handling
and using hydrogen, exemption of grid connection fees for renewable
energy, subsidies for delivering hydrogen, buying fuel-cell trucks
and scrapping diesel trucks, among others.
"Governments need to act quickly on a range of low-carbon
hydrogen policy measures in order to incentivize private sector
investment and accelerate hydrogen uptake," the companies said.
Hydrogen Council's roadmap
The Hydrogen Council recommended policies such as upfront
subsidies, simplifying licensing and permitting processes,
localized rules and international cooperation on infrastructure,
specified production and consumption targets in various timeframes,
and a number of others.
In particular, the trade group said governments should establish
carbon pricing and certification schemes to promote green and blue
hydrogen at the expense of grey hydrogen, which is generated from
natural gas without abatement technology, and brown hydrogen,
generated from coal.
Posted 12 November 2021 by Max Tingyao Lin, Principal Journalist, Climate and Sustainability