Policies essential for hydrogen to reduce global emissions

Net-zero targets could help reduce levels by a third, says study

NET-ZERO goals and policies are needed to allow hydrogen to help address hard-to-abate greenhouse gas (GHG) emissions and reduce global emissions by up to a third, according to global study and research company BloombergNEF (BNEF).

Hydrogen is a clean alternative to coal, oil, and gas in a variety of applications. To enable net environmental benefits, it should be produced using clean sources. Renewable hydrogen can be produced by electrolysis of water – a process which employs electricity to split water into hydrogen and oxygen – using electricity generated via wind or solar power. Clean hydrogen can also be produced using fossil sources, with subsequent use of carbon capture and storage (CCS).

According to BNEF’s Hydrogen Economy Outlook, in the coming decades, clean hydrogen could be deployed to cut up to 34% of global GHG emissions from fossil fuel use and industry at a manageable cost – if policies are implemented which facilitate technology scaleup and drive down costs.

The cost of wind and solar energy is falling, offering a promising route to reduce emissions from fossil fuel dependent sectors of the economy, such as steel and cement.

Furthermore, according to BNEF, the cost of alkaline electrolyser technology – used for electrolysis – fell by 40% between 2014 and 2019 in North America and Europe, going from US$2,000/kW to US$1,200/kW. The cost of Chinese-produced alkaline electrolysers fell by up to 80% to US$200/kW.

Kobad Bhavnagri, lead author and Head of Industrial Decarbonisation at BNEF, said that it currently costs US$0.7–2.2/kg to produce hydrogen from fossil fuels, without carbon capture and storage. Production using renewable electricity costs US$2.5–4.5/kg.

According to the Outlook, the cost of renewable hydrogen is primed to fall, and it suggests that before 2050, hydrogen could be produced for US$0.8–1.6/kg, in most parts of the world. This is equivalent to gas priced at US$6–12/MMBtu, making it competitive with current natural gas prices in Brazil, China, India, Germany, and Scandinavia, on an energy equivalent basis.

Additionally, renewable hydrogen is cheaper than clean hydrogen produced using fossil fuels with use of CCS. However, BNEF expects such production may continue to play a significant role in countries such as China and Germany, that may not have enough land for renewables but are well-endowed with gas and coal.