Insights and Commentaries

Insights and Commentaries

Hydrogen may be the next clean energy game changer

29th June 2019

Climate change and the challenges to limit global warming are demanding an unprecedented transition to a net-zero emissions economy by mid-century. On track to a 3-plus degrees Celsius world (5.4 degrees Fahrenheit), according to the United Nations Environment Program, all decarbonization options must be on the table, including hydrogen, or H2, a zero emissions and versatile fuel largely seen as the energy vector of the future.

Hydrogen has versatile industrial applications and can be used for heating, power, and transportation while emitting only water and heat—no carbon dioxide.

There are several ways to produce hydrogen. Electrolysis, which relies on renewable energy, has caught a lot of attention and will be extremely important in the future, but only makes up a fraction of global hydrogen production today.

Most hydrogen production, some 98%, is dependent upon fossil fuels. Largely unabated, this process currently produces annual emissions equal to that of the U.K. and Indonesia combined.

Some of the production processes, such as steam methane reforming (SMR) of natural gas—which accounts for half of current global hydrogen produced—can be coupled with carbon capture and storage (CCS), a suite of emissions reductions technologies, for near emissions-free production.

This process is well-known, cost-competitive, and used at scale for decades. Most importantly, ready for large-scale deployment, H2 production with CCS can kick-start the energy transition by enabling infrastructure build-out and creating a path to integrate increased hydrogen production from electrolysis in the future.

The Global Hydrogen Race

A number of countries are racing ahead with hydrogen. Australia, Japan, and the Australian State of Victoria, along with industry partners, announced the launch of a Hydrogen Energy Supply Chain (HESC) last year.

Japan also adopted a carbon-neutrality strategy this month that includes innovation goals for both carbon capture and hydrogen.

China, the world’s biggest emitter, is looking to hydrogen to fix some of its air pollution troubles and recently proposed a plan to promote hydrogen cars. China launched a similar campaign for electric vehicles and rose to the top of the global EV game within a decade.

Europe is also moving ahead with multiple hydrogen-CCS projects added in 2018.

The U.K.’s Committee on Climate Change argues that hydrogen can play an important role in the country’s decarbonization along with efficiency, electrification, and renewables. Two UK projects aim to decarbonize millions of homes and businesses through supplying hydrogen produced from natural gas with CCS. In the Netherlands, natural gas to hydrogen fuel switching at a power plant is being evaluated.

One country that has been relatively quiet on the issue recently is the U.S., despite the fact that its carbon emissions also rose 2.7% in 2018, according to the Rhodium Group. Resource-rich and innovation hungry, the U.S. possesses a competitive edge that could catapult it to the front of an emerging global hydrogen race.

The U.S. has ideal conditions for large-scale production of decarbonized H2 with CCS. Holding vast resources of natural gas, the U.S. is expected to become a net exporter by 2020, the U.S. Energy Information Agency said. Yet, with the pressing need to eliminate carbon emissions, the ability to keep developing these resources—as well as find markets abroad—will depend on being able to decarbonize them. H2 production with CCS is an opportunity to cement the U.S. position as a leader in innovation and decarbonization alike.

The U.S. is also home to 10 of 18 large-scale carbon capture and storage facilities globally, three of which produce hydrogen, according to the Global CCS Institute. Companies possess significant expertise and a supportive policy framework, including a federal tax credit called 45Q and California’s Low-Carbon Fuel Standard, provide deployment incentives.

The New Hydrogen Economy

Currently, U.S. hydrogen demand is low. The International Energy Agency argues that blending just 5% hydrogen into existing natural gas supply and infrastructure could boost demand significantly. Evaluating target sectors for H2-based decarbonization in the US, as well as infrastructure needs, is key.

In the transportation sector, which accounts for almost a quarter of global carbon emissions, hydrogen can be used to fuel trucks, buses, and trains. Hydrogen can also provide high heat in hard-to-abate industrial processes such as steel production, according to a report from the nonprofit Energy Transitions Commission.

In shipping, experts anticipate large-scale use of hydrogen to deliver on environmental ambition. The International Maritime Organization (IMO) recently pledged to cut the shipping sector’s emissions of carbon dioxide and other pollutants by 50% by 2050 from 2008 levels with a goal to eliminate carbon emissions.

Natural gas-to-hydrogen fuel switching for power plants is certainly worth exploring, as emissions reductions from coal-to-gas switching are already being outpaced by a growth in electricity demand, which is being met partially by increased natural gas capacity.

Leaders should be cognizant that a global market for hydrogen—enabled through the transportation via freight and reminiscent of what some call the LNG revolution—might as well become the global clean energy market of the future. As other nations are racing ahead to deploy technologies to produce the zero-emissions vector of the future, the U.S., lacking new initiatives, is at risk of falling behind.

This piece was written by Lee Beck, our DC-based Senior Advisor for Advocacy and Communications, and was first published on Bloomberg Environment.

Home page cover photo:  Source Bloomberg Environment, Photographer: David Paul Morris/Bloomberg via Getty Images

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