Renewable or ‘green’ hydrogen is a renewable energy source created through the electrolysis of water. Using renewable energy, hydrogen electrolyzers are used to ‘split’ water into both oxygen and green hydrogen, which can then be transformed into electricity or synthetic gas. The ‘green’ distinction is important as it is markedly different from its ‘grey’, ‘blue’ or ‘turquoise’ hydrogen counterparts, which are produced from either methane or coal. Green hydrogen development has been an area of increasing attention and interest in recent years; there are notable drawbacks at present to its wider implementation.
On the 19th of October, in an interview with CNBC the CEO of Siemens Energy, Christian Bruch, stated that “there is currently no commercial case for green hydrogen unless government incentives or quotas are put in place”. He went on to explain that the key issue stunting further adoption of the promising renewable energy option is simply down to cost.
Specifically, he elaborated that at present the economic viability of fossil fuels means that without any form of incentive, large-scale adoption of green hydrogen schemes simply won’t occur at present. CEO of gas company Snam S.p.A., Marco Alverà, stated that following said “policy nudges” investment and utilization of green hydrogen schemes can occur extremely quickly, with the capital already being available through ESG development funds.
Their statements echo a common sentiment regarding renewable energy transitions, simply that action will not occur from within, there needs to be perceived incentive for the companies to begin with. This can take many forms, through so-called “policy nudges” or quotas, but also other factors such as increased customer demand for green alternatives.
Even with the current concerns around the economic feasibility of green hydrogen, predictions made by the hydropower company Statkraft AS in their sixth annual Low Emissions Scenario report stated that by 2050, green hydrogen could make up 20% of European energy demand. The present concerns of both Christian Bruch and Marco Alverà regarding the cost-effectiveness of green hydrogen against traditional fossil fuels were echoed, yet they also predicted significant change in this area.
The report detailed a prediction of a 60% fall in the investment cost of hydrogen electrolysers, the main infrastructure element of green hydrogen operations, by 2050. Such predictions are supported by current observations, with green hydrogen production costs have already fallen by 40% since 2015. Thus, when coupled with predictions of increased storage for green hydrogen, this would open the technology up to greater investment and would see it become a key contributor to Europe’s energy mix.
Significantly, concerning green hydrogen storage, on the 19th of October, it was announced by Hy Stor Energy LP that, alongside their partner Connor, Clark & Lunn Infrastructure, they will develop green hydrogen storage hubs within the United States of America. The intention is that it will serve as a model for further development efforts related to green hydrogen, and to “bridge the gap” between renewables and fossil fuels. The so-called ‘hydrogen hub’ is set to be built in Mississippi, with the CEO of Hy Stor Energy hoping that the area will become a “blueprint for future green hydrogen projects”, with the associated job creation also being a welcomed benefit.
These recent developments are of specific significance when the upcoming context of COP26 is appreciated. Governments are increasingly under pressure to announce more ambitious targets regarding achieving Net Zero emissions and with green hydrogen being touted as the future of renewable energy, it’s not out of the question that the “policy nudges” are required to make green hydrogen bankable may come into fruition. Furthermore, the University of Birmingham has confirmed that the hydrogen-powered HydroFLEX train that the Birmingham Centre for Railway Research and Education developed, will be showcased at COP26. Therefore, it is clear that green hydrogen itself is very much under the spotlight regarding COP26 and is a key area of focus for policymakers and companies alike.
Overall, green hydrogen represents a significant area of research, with expected developments regarding the technology making it arguably one of the most promising emerging renewable energy solutions at present. The present drawbacks and limitations to wider implementation of green hydrogen should not be overlooked, however, and as with most renewable energy sources the necessary drivers for greater uptake of the technology have yet to materialize. However, given the current climate, both economically and physically, green hydrogen is becoming increasingly attractive. It is seemingly a mere matter of time before it becomes a staple in the world’s energy mix.
By Matt Ball
Sector Head: Archit Lal