Hydrogen energy is seeing unprecedented support. Not only from long-time enthusiasts like Japan and Korea, but from upstarts like Australia and Chile. Germany has just announced a plan to spend €7bn on hydrogen as part of an economic stimulus package. The IEA–born in the oil crises–is publicly suggesting we need more hydrogen in the energy system, and the World Economic Forum helped seed the Hydrogen Council, now 81 hydrogen-supporting members including oil and gas companies and carmakers, trading companies and banks. European Commission Vice President Frans Timmermans sees hydrogen as essential to Europe’s Green Deal.
European Commission vice-president in charge for European Green Deal, Frans Timmermans, speaks ... [+]
Why hydrogen? Simply, it can do things electrons cannot. As a molecule, it can be used as a convertible ‘currency’ between renewable energy, chemical feedstock, transport fuel, residential and industrial heat. It is an excellent clean energy store for long periods and large energy needs. It sits alongside and in partnership with electricity as a consummate carbon-free energy vector.
Hydrogen has enormous promise, but needs to be scaled up dramatically to have an impact. Its detractors dismiss it as inefficient and difficult to handle. Battery vehicles seem to be conquering transport, while wind and solar feed our grids. All of the signals scream ‘hype cycle’. Or do they? Three powerful drivers seem to be combining to push hydrogen forward.
Firstly, the concept of ‘net zero’ carbon emissions is gaining pace. National governments and energy companies alike are proclaiming it their goal. And models show that without hydrogen, net zero is almost impossible to achieve. Hydrogen is needed to help decarbonise heat, and shipping, and long-haul trucking, and fertiliser, and heavy industries like steel.
Secondly, our energy and transport systems are on the brink of upheaval, bringing dramatic economic pain. The growth of renewables is accelerating, cost is dropping, vehicles are becoming electric and maybe autonomous. Traditional industries are facing existential threats, and hundreds of thousands of discarded jobs. Hydrogen can help them reinvent themselves, create employment and drive economic growth, while still meeting the climate imperative.
Thirdly, Covid-19 has brutally exposed the inherent fragility and endemic risk in our economies. Supply chains are stationary, oil prices have gone negative, and fiscal rules have been rewritten. The risk from climate change is seen as many times worse. Major company shareholders, like pension funds, are scrutinising corporate ESG reports for their willingness to limit social upheaval and exposure to carbon emissions. Thierry Philipponnat, an EU expert on sustainable finance at Finance Watch and board member of France’s financial regulator, suggests that bank risk ratings for fossil fuels should be increased by up to an order of magnitude, to fairly reflect future threats. Investors and analysts increasingly see hydrogen as an option for long-term sustainable investment, and will reward company boards for pursuing it, where in the past they penalised.
Hydrogen is rarely an easy solution to any single problem. A lot must be done before it makes a meaningful energy - or climate - or economic - contribution. But the current conditions suggest an opportunity to be seized.
