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The growth of green hydrogen: current state and future scenarios

Despite being around for a while, hydrogen is gaining momentum now more than ever. Independent energy research and business intelligence company Rystad Energy expects the demand for hydrogen to quintuple by 2050.

“While the demand for the refinery industry will go down, we will see a growth in other sectors like steel, aviation, shipping and buildings,” said Minh K Le, Senior Research Analyst for Renewable Energy at Rystad Energy, speaking at the Green Hydrogen Forum by Leadvent Group which took virtually place on 26-27 May.

Also, Adamo Screnci, Vice President for Clean Hydrogen at the energy company Total agreed that by 2050 hydrogen is expected to have high benefits in the energy sector: it will create 30 million jobs, it will represent 1.8 per cent of the final energy demand and it will abate CO2 by 6 gigatonnes (Gt) annually.

“Hydrogen is really versatile in applications: transportation, heating, power generation, energy storage, feedstock,” he said. “While the business is interesting, it is also very complex. We are at the beginning of this economy and the main focus now should be on transportation, as it is the most visible market we see.”

A lot of gigawatts but only as a concept phase

However, to get there there is a long way to go. Mr Le mentioned that the current pipeline of electrolysers accounts for 100 gigawatts (GW) worldwide, but they are still in a concept phase. Australia is the leader with 35 GW, thanks to its national hydrogen strategy released in November 2019 which aims at making Australia the world’s top exporter of hydrogen. It is followed by Europe with 25 GW. Realistically, the EU expects electrolysers installations of 6 GW by 2024 and 40 GW by 2030 in the EU.

“If we look at the top projects for electrolysers to start by 2022, there is only one project above 50 GW,” he said. “If we take out that project, we only have very small initiatives which include Plug Power in the US and Westkuste in Germany.”

As for the technology, most o the projects use polymer electrolyte membrane (PEM) electrolysis, although alkaline electrolysis equipment is currently less expensive than PEM technology.

Then there is the challenge of transportation. Mr Screnci explained that today more than 90 per cent of the hydrogen we use is consumed on the spot where it is produced as it is very difficult to transport.

“The next phase will be to create, especially in areas around ports, regional hydrogen hubs,” he noted. “Then these hubs will be connected through pipelines so to be transformed into continental hubs first and intercontinental ones later, especially using other ways of transportations like shipping.”

Green hydrogen won’t be enough

According to a scenario designed by Eurogas, the association representing the European gas wholesale, retail and distribution sectors towards the EU institutions, green hydrogen alone won’t be enough.

“The share of hydrogen from electrolysis will overtake hydrogen from reformed natural gas only in 2050,” said Andreas Guth, Policy Director at Eurogas. “So it is not just decarbonising the gas supply, we need to look at post combustion carbon capture storage. Green hydrogen can become cost competitive compared to other renewable or low carbon gases but still need to look at other options.”

Indeed, Mr Screnci reminded that we cannot be colour blind and there are different colours of hydrogen to be taken into consideration: grey hydrogen produced from fossil fuels, green hydrogen from renewables (mainly solar and wind) and blue hydrogen which comes from fossil fuels with Carbon Capture and Storage during the production.

Mr Guth also underlined that investors confidence is a fundamental aspect (together with the alignment of the gas and electricity market design and coherence with other Fit for 55 legislative package).

So, what do companies need to kick-start the hydrogen economy ?

“We need the market and the traction for the market,” replied Mr Screnci from Total. “We also need support for CAPEX investment at the beginning. The third thing is to get a harmonised regulation about what to call blue, the taxonomy, the certified logo and so on.”

For Luis Ignacio Parada, Head of Global Regulatory Services at Spain’s energy company and European Transmission System Operator (TSO) Enagás, the most important aspect is for TSOs to be able to engage in power-to-gas activities as it happens with LNG terminals.

“Especially in peripheral Member States we need to start producing hydrogen and blending will help,” he pointed out. “We need an integrated planning for electricity and hydrogen.”

In other words, to have a holistic approach, at least at the initial phase of the production to assure a scale-up in the long term.

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