Unlocking the Potential of Green Hydrogen

Green hydrogen has been identified as a critical pathway in the global transition to sustainable energy and a decarbonized civilization, however it is still not economically competitive compared to fossil-fuel-based hydrogen and renewables like solar. Nevertheless, many countries are racing to develop their own green hydrogen industrial base, and emerge as leaders in this new fuel sector.

China hopes to be producing around 40 percent of the world’s green hydrogen by 2040, having created a new regulatory framework for green hydrogen production. Europe is expected to be the biggest market for the gas, and is moving to expand its industry to keep up with China, the US, and also initiatives from the Middle East.

The US Department of Energy has put $100 million into the research and development of hydrogen and fuel cells. The EU has announced plans to invest $430 billion in green hydrogen by 2030. Other countries like Chile, Japan, Germany, Saudi Arabia, and Australia have also invested in the sector. This has created a race to be the leader in the field, hoping reap the rewards as the industry matures.

The downside of hydrogen is that production is currently costly, and there are large energy-losses in the process. This could be offset by more efficient production, such as PhotoElectroChemical splitting (PEC), which merges photo and chemical manufacture in one process.

Australia has considerable potential for green hydrogen production from its renewables base. Guy Debelle, the director of Fortescue Future Industries, believes Australia’s natural renewable energy advantage in the race to develop a green hydrogen industry is at risk of being overwhelmed by “huge and aggressive” policy support in the US and the Middle East. He suggests new policies, such as President Biden’s Inflation Reduction Act (IRA), could encourage people to migrate to countries with greater funding opportunities in the field, with their expertise and know-how. He stated, “There’s a risk that, despite Australia’s great comparative advantages in green energy, the US and the Middle East are going to eat our lunch.”

Demand is expected to grow significantly in the coming decades, – with almost 200 million tonnes of the fuel needed by 2030 to be on track for net zero emissions by 2050, according to the IEA, which is more than double the current consumption of 94 million tonnes – so the world will need a steady global green hydrogen output. The development of projects across multiple regions of the world could also help ensure greater energy security, ensuring countries can reduce their reliance on politically unstable areas for their energy supply.

The IEA has a positive view of the potential for significant cost reductions: “Our analysis suggests that with today’s fossil energy prices, renewable hydrogen could already compete with hydrogen from fossil fuels in many regions, especially those with good renewable resources and that must import fossil fuels to meet demand for hydrogen production. There is of course uncertainty about how this plays out over the next few years. But if electrolyser projects in the pipeline are realised and the planned scale-up in manufacturing capacities takes place, costs for electrolysers could fall by around 70% by 2030 compared to today. Combined with the expected drop in the cost of renewable energy, this can bring the cost of renewable-based hydrogen down to a range fo USD 1.3-4.5/kg H2 (equivalent to USD 39-135/MWh). The lower end of this range is in regions with good access to renewable energy where renewable hydrogen could already be structurally competitive with unabated fossil fuels.” IEA Global Hydrogen Review 2022

Currently no country or region is emerging as a clear winner in the green hydrogen production race. Both Europe and Asia are hiking their investments in the sector and developing strong markets to push future demand for the clean fuel. So there is a lot to play for in ensuring that green hydrogen is available on the world market to satisfy growing future needs.