WoodMac: Green hydrogen is key to net-zero future
Energy intelligence group Wood Mackenzie sees green hydrogen as a key driver for net-zero economies and decarbonising global energy systems.
The COP26 conference brings countries together to align on a pathway to net-zero. However, WoodMac says it should not be only discussions. The industry needs real solutions that can be delivered once the conference has concluded.
Every technology will play its part in decarbonising global energy systems. Renewable generation such as wind and solar, supported by short-term storage, have become standard in recent years. They also participated in transforming perceptions of the potential for 100 per cent clean energy.
These technologies will continue getting cheaper, but they cannot get the job done alone, Woodmac says. Green hydrogen holds the key to transforming renewable power into solutions for every sector.
Given the right market and policy environment, green hydrogen has the potential to act as a key driver for the net-zero ambitions of many nations who participated in COP26.
Governments are already looking into the potential to become one of the first hydrogen-powered countries. Several have placed green hydrogen front and center of energy policymaking; like the UK government’s pledge to deliver 5GW of hydrogen production capacity by 2030.
California’s Low-Carbon Fuel Standard has spurred early momentum in the US, and the Biden administration has made hydrogen a key element in its plans to fight climate change. Hydrogen was also one enabler of the UAE’s recent pledge to become the first of the Persian Gulf’s petrostates to reach net-zero by 2050.
Green H2 is being deployed at scale across the world. WoodMac says we must ensure its commercialization matches the pace at which economies are accelerating towards net-zero.
Overcoming the cost barrier for green hydrogen
Cost is the principal implementation barrier. Green hydrogen is currently up to three times more expensive than hydrogen produced from fossil fuels.
However, there are some positive examples like Califonia-based manufacturer of solid oxide fuel cells Bloom Energy. The company has been focused on reducing the cost curve of green hydrogen around the world.
WoodMac gives examples of similar cases in the energy industry. In each case, a strategic mix of policies, investment and technological innovation led to rapid cost declines. This accelerated deployment worldwide.
Considering the touchpoints for green hydrogen (transport, aviation, maritime, heavy and light industry, power, oil, and gas), it covers every aspect of society. Therefore, it brings more constituents together than any other potential low-carbon technology.
The potential for growth across a broad range of markets is immense. WoodMac says we must put the effort in now to boost market confidence and cultivate strong demand.
The green hydrogen tripod
Rapid technology development and commercialization are crucial to growing a green hydrogen economy, but this is just one aspect. The rest include the right policy framework and a strong demand-side market to achieve a subsidy-free end state for green hydrogen.
To really accelerate the green hydrogen economy, governments need to use the right policy levers to support infrastructure development and stimulate strong demand.
With global net zero ambitions supercharging the potential of green hydrogen, we need policymakers to put in place the regulation to act as the connection between supply and demand. Thus, we need collaboration between a large ecosystem of players who may not usually work together.
Green H2 producers, users and innovators, must come together to showcase green hydrogen in multiple industries and settings, bring costs down, and illustrate its potential for scalability.
To fully realise the economic and environmental opportunities presented by green hydrogen, the players must support each other as we innovate and supercharge its potential. If they stand together, governments will create effective market frameworks that drive confidence and demand. Only then can green H2 live up to its potential and play its role in achieving a global net-zero economy.
“Current challenges of deploying low carbon hydrogen at scale include transportation from the production side to the demand side, besides bridging the gap from the supply to demand side, here is where governments can really step in and support the deployment of large-scale midstream infrastructure such as pipelines which are the cheapest method of transporting hydrogen,” said Flor Lucia De la Cruz, senior research analyst, Hydrogen and Emerging Technologies.