Green Hydrogen

The role of green hydrogen in the energy transition is quickly rising up the agenda, with governments and energy companies across the world starting to evaluate the potential advantages of developing the technology to reduce carbon emissions across utilities, transport and industrial sectors.

What is green hydrogen?

Green hydrogen is hydrogen produced by using clean electricity produced from renewable energy technologies to electrolyse water (H20) and separate the hydrogen atom from oxygen.

Why green hydrogen?

Hydrogen is used in oil refining, ammonia and methanol production and steel manufacturing. According to Wood Mackenzie, global demand for hydrogen is 70 million tonnes annually. According to the International Renewable Energy Agency (Irena), more than 95 per cent of hydrogen today is produced from hydrocarbons such as natural gas and coal and is therefore a significant source of carbon dioxide emissions (Co2).

The electrolysers used for green hydrogen production can operate at full capacity in seconds, and, therefore, can be paired with renewable energy assets. This provides a solution to the intermittency problem of renewable energy, and can allow the provision of green electricity at any time of day or night.

Green hydrogen can also be stored for long periods and used for industrial applications and used to power fuel cells for modes of transport such as ships which traditionally produce high volumes of CO2.

Many view the greatest potential for green hydrogen in the aviation, long-haul sea and road transport where there are few alternatives to enable decarbonization.

Grey v blue v green hydrogen

Currently, hydrogen is mainly produced from natural gas, which generates significant carbon emissions. This is known as 'grey hydrogen'.

Blue hydrogen' is a cleaner way of producing hydrogen, where carbon emissions from the hydrogen production process are captured, stored or reused.

'Green hydrogen' is produced by renewable energy resources without creating carbon emissions at all.

What is the cost of green hydrogen?

The main challenge to the implementation of green hydrogen on a large-scale in the short term is the cost. Currently, green hydrogen is significantly more expensive than fossil-fuel hydrogen production.

The cost of green hydrogen today falls between $3 and $7.50 per kilogram (kg), with the cost of conventional 'grey' hydrogen between $0.90-$3.20kg.

The main driver of the cost of 'grey hydrogen' is the price of natural gas.

The cost of green hydrogen is affected by a few different factors. One of these is the cost of the electrolysis, the process through which hydrogen is produced from water. Today, the total electrolysis capacity globally is limited and expensive. However, the planned increases in electrolysis globally is expected to reduce costs of the process substantially in the next decade.

The cost of green hydrogen is expected to fall sharply over the next decade, with the IEA estimating it will drop by 30 per cent by 2030.

Cutting the cost of electrolyzers will be critical to reducing the price of green hydrogen. The IEA believes electrolyzer costs could fall by half by 2040, from around $840 per kilowatt of capacity in 2020.

The most important factor behind the cost of green hydrogen is the price of the clean energy used for the electrolysis process. The cost of generating energy from solar and wind technologies has fallen dramatically since 2010, falling by up to 80 per cent and 60 per cent respectively.

In 2020, Wood Mackenzie released research - Hydrogen production costs to 2040: Is a tipping point on the horizon? that predicted the cost of green hydrogen would fall by 64 per cent by 2040 as the market scales up. The firm believes the costs of green hydrogen will equal fossil-fuel-based hydrogen production by then.

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