Are you ready for hydrogen energy?

As the world responds to climate change, energy systems are evolving, and fast. The past 10 years have seen the rise (and dramatic cost reduction) of renewables such as wind and solar, to the extent that they are no longer considered ‘alternative’ energy.

What will be the next big thing as we shift to a low-carbon future? So far, indications point towards hydrogen.

The combustion of hydrogen with oxygen produces water as its only byproduct, a better result than fossil fuels, such as coal or natural gas, which produce carbon dioxide (CO2) and other pollutants such as sulfur dioxide and nitrogen oxide. Hydrogen can be used directly as fuel in power generation and other heat applications, and can be blended with natural gas in pipeline networks. In particular, hydrogen used with fuel cells (a device that converts chemical potential energy into electrical energy) is most promising for heavy duty transport applications (such as trucks, rail, and ships) and industrial applications that require both electricity and heat.

The Hydrogen Council, a global initiative of energy, transport and industry companies, envisages that by 2050 hydrogen may power more than 400 million passenger cars worldwide and up to 20 million trucks and 5 million buses. It expects hydrogen technologies to provide 18% of the world’s total energy needs by that time, with the annual sales generated from the hydrogen fuel cell market reaching $2.5 trillion and creating 30 million jobs globally. The broader “hydrogen economy” could be much larger.

However, before this can happen, energy industries have to answer one crucial question: Where will all this hydrogen be coming from?

How hydrogen… works

Currently more than 95% of the world’s hydrogen is produced from fossil fuels such as natural gas via the steam methane reforming process. Unfortunately, this is a carbon intensive process, with emissions of seven kilograms (kg) of CO2 on average when producing one kg of hydrogen. The steam methane reforming process can be coupled with carbon capture and storage technology to cut CO2 emissions but the cost of producing hydrogen carbon capture and storage is about 45% higher. And the cost of CO2 avoidance is also high, at about €70 per ton. This is not financially viable and would require technological breakthroughs in carbon capture and storage to become a sustainable solution.

As an alternative, hydrogen can also be produced by electrolysis, which uses electricity to split water into hydrogen and oxygen, using zero-carbon and low-cost renewable energy. Hydrogen produced from renewable electricity also could facilitate the integration of high levels of variable renewable energy into the energy system by using surplus renewable output for electrolysis, storing hydrogen for long periods of time, then using hydrogen to produce electricity in fuel cells.

This overall cycle is somewhat similar to pumped hydropower storage in terms of the ability for long-term storage and time-shifting of renewable output. The oxygen produced by electrolysis also has market value for industrial and medical applications (it is important to keep in mind that for each kg of hydrogen produced there are eight kilograms of oxygen produced). Developing countries can maximize the development of their renewable energy potential by participating in the global hydrogen economy.

The world needs pioneers who are willing to take the lead and bear the cost of “first movers” for hydrogen energy, just like Germany did for solar photovoltaic technology. In Japan, as part of its “3E+S” (energy security, economic efficiency and environmental protection, plus safety) energy policy, the government formulated the world’s first 21st century hydrogen strategy in December 2017, with the aim of establishing a “hydrogen economy” by 2050.

The economy based on hydrogen

The hydrogen economy is premised on the use of hydrogen as a fuel, particularly for electricity production and hydrogen vehicles; and using hydrogen for long-term energy storage and for the long-distance transportation of low-carbon energy. The key to achieving such a hydrogen economy is to bring the cost of hydrogen down from more than $10 per kg to about $2 per kg, which would then be competitive with natural gas.

Developing countries would be the big winners from the move toward a hydrogen economy. First, on the supply side, developing countries could tap their renewable energy resources to produce hydrogen and export it to other countries, as is already done with liquefied natural gas.

For example, renewable energy (including hydropower, wind, biomass and solar) in Laos may represent a potential of about 50 gigawatts (GW). The country and its neighbors need about 20 GW to meet their electricity demand, so the unused renewable energy potential could be used to produce hydrogen with zero CO2 emissions. So potentially, Laos could become a significant exporter of renewable energy through the hydrogen supply chain.

Second, on the demand side, developing countries could start using hydrogen technologies in specific areas. For example, fuel cell vehicles can be charged fully with hydrogen within five minutes for a driving range of 500 kilometers and more, with zero CO2, sulfur dioxide or nitrogen oxide emissions.

In recent years, due to transmission bottlenecks, China has been curtailing its renewable energy (wind, solar and hydro) power generation by about 100 terawatt hours annually. This curtailed energy output could be used to produce about 1.5 million tons of hydrogen, enough to power about 10 million hydrogen-based fuel cell cars for one year. This avoids about 30 million tons of CO2 emissions. In line with national air quality objectives, The Asian Development Bank has supported fuel cell buses in Zhangjiakou City in Hebei Province, the site of next Winter Olympic Games.

Next steps

What are the next steps? Development finance institutions such as ADB can do more by supporting its members in five specific ways:

  1. Share information on hydrogen energy so policy makers and industry players are aware of the latest trends and technologies
  2. Help governments to develop a strategy, roadmap and regulatory framework for hydrogen energy development
  3. Enhance the carbon trading platform to cover the extra cost of fossil fuel-based hydrogen production with carbon capture and storage
  4. Pilot hydrogen technologies and business models for scaling up
  5. Finance hydrogen energy projects, including production, transportation and distribution infrastructure, as well as market applications.

Adopting these initiatives will make developing countries “hydrogen ready”. For the good of the environment and the development of new and dynamic industries, the world is undergoing a low carbon energy transformation. No country should be left behind.

How hydrogen can offer a clean energy future  

General Motors built its first vehicle powered by hydrogen in 1966. But instead of revolutionising the auto industry, the GM Electrovan ended up in a museum. Half a century later, we’re still waiting for hydrogen to live up to its promise as a clean energy technology.

The industry joke is that hydrogen is the fuel of the future — and it always will be. But that could be wrong. The huge challenges of climate change as well as the rise of the wind and solar industries are giving it new momentum, attracting fresh interest from governments and businesses well beyond the auto ­industry.

Most hydrogen produced now is not clean, but the technology to change that already exists. To understand how hydrogen can go from hype to reality it’s important to grasp the situation our energy system faces.

Right now, the world is moving away from the goals of the Paris agreement on climate change that aim to reduce carbon emissions quickly. To reverse that trend, renewable energy sources such as wind and solar will have to make up a far greater share of global supply, and fast. But they face difficulties, not least that the amount of electricity they produce can vary depending on the weather or the time of day or year, so it might not be flowing when people need it.

Hydrogen is one of the few ways of storing that variable energy. Other options include lithium-ion batteries — which power smartphones and electric cars — but they can’t compete with hydrogen in terms of scale. A big hydrogen storage facility in Texas, for instance, can hold about 1,000 times as much electricity as the world’s largest lithium-ion battery complex, in South Australia.

Clean hydrogen can do a lot more than just fuel cars. It can power trucks and ships and be a key raw material for refineries, chemical plants and steel mills — all of which now have few alternatives to today’s polluting processes.

Fortunately, these sectors tend to cluster at major industrial ports, offering great opportunities to build combined infrastructure. And hydrogen is already produced at ports to feed local chemical factories and refineries.

So, hydrogen offers tantalising promises of cleaner industry and emissions-free power: turning it into energy produces only water, not greenhouse gases. It’s also the most abundant element in the universe. What’s not to like?

One of the biggest issues is that by far the most common way to produce hydrogen is from fossil fuels. The amount generated from coal and natural gas this year for industrial uses would be enough, in theory, to power roughly half the cars on the road worldwide. But hydrogen production releases about the same amount of carbon emissions as the UK and Indonesia economies combined, according to an IEA report to be released next week.

Cleaning up these industries by capturing and storing their carbon emissions or supplying them with hydrogen from renewable sources represents a considerable challenge, but it’s also an opportunity to start building a global clean hydrogen industry for the future.

Another big difficulty is cost. Hydrogen from renewable electricity is two to three times more expensive than that produced from natural gas. But solar and wind costs have plummeted in recent years, and if they continue to fall clean hydrogen will become more affordable. Still, the technology that turns water into hydrogen (without producing carbon emissions) needs to be developed on a much greater scale to cut costs.

Governments will be crucial in determining whether hydrogen succeeds or fails. Most of the more than 200 projects under way still rely heavily on direct government funding, according to International Energy Agency analysis. But smart policies should encourage the private sector to secure long-term supplies of clean hydrogen and give investors the incentives to back the best businesses.

We also need to kick-start the international hydrogen trade with the first shipping routes. There are encouraging signs: Japan has several important pilot projects to figure out the best way to ship hydrogen over long distances.

Meanwhile, the EU has backed an initiative to make hydrogen a significant part of Europe’s efforts to decarbonise its economies.

The IEA will help governments craft the right policies. At the request of the Japanese presidency of the G20, we have carried out an in-depth study on the state of play of clean hydrogen, recommending immediate practical steps to foster its development. The report will be released next week at the meeting of the G20 energy ministers.

The world should not miss this unprecedented chance to make hydrogen a serious part of our sustainable energy future, rather than leaving it parked in a museum.

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