Green hydrogen is becoming ever more feasible as an affordable and secure renewable energy source as rising fossil fuel prices push up the cost of its blue and grey counterparts, new research from energy analysts Rystad Energy has predicted.
Green hydrogen. Credit: petrmalinak / Shutterstock
Credit: petrmalinak / Shutterstock
Green hydrogen was already set to take off this year and pass the 1 GW milestone, but Rystad says the war in Ukraine has "turbocharged the sector".
This potential boost for green hydrogen would come at the expense of its fossil fuel-related grey and blue alternatives, the costs of which have shot up by 70% since the war began.
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Both grey and blue hydrogen are produced using natural gas or a process known as steam reforming. The difference is that while the carbon emitted during the production of blue hydrogen is captured and stored, this is not the case with grey hydrogen.
The EU has announced plans for a €300 million funding package for hydrogen as well as the Hydrogen Accelerator initiative from REPowerEU which aims to reduce the bloc's dependence on Russian gas. It is also widely expected that a further raft of support packages for green hydrogen is likely to emerge. Member states have also accelerated their national plans.
"Since the Russian invasion of Ukraine, the economics of green hydrogen have become increasingly attractive with lower production costs of $4/kg (particularly in the Iberian Peninsula) compared to $14/kg for blue and $12/kg for grey in other parts of Europe," Rystad said in a press release.
Green hydrogen is produced using only renewable energy, meaning that not only is it emissions-free but it provides a level of energy security, and offers the potential for growth in regional economies.
Rystad predicts that we may be looking at a fundamental shift in the energy sector, and moving from a world where energy is sourced in a few key regions, to one where production is more spread out.
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The research described the decade ahead as being "make or break" for the green hydrogen sector. If the industry is to become a permanent fixture of the global energy mix, Rystad says it will need to increase production to more than 10 million tonnes worldwide by 2030 and cut costs to $1.5/kg.
"While industry and governments are heading in the right direction, their challenge is to lower the risks for green hydrogen investors and create incentives necessary to scale up quickly both the demand and supply. Fundamentally, a world where green hydrogen fulfils the role currently played by oil, gas and coal will look very different," said Minh Khoi Le, head of hydrogen research with Rystad Energy.
Hydrogen Russia conflict impact. Credit: Rystad Energy
Green hydrogen is increasingly being seen an attractive alternative, with Germany already planning to produce 25 GW by 2040 and Spain on track to produce more than 4 GW by 2030.
However, besides industry applications where hydrogen is already a key feedstock, the amount of hydrogen required to replace gas and coal in Europe’s power sector is enormous – its own gas and coal usage is set to represent 1,020 TWh and 602 TWh in 2030 and 2040, respectively.
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If this was to be generated by hydrogen alone it would require about 54 million tonnes of hydrogen in 2030. Europe is currently on track to produce 3 million tonnes of green hydrogen every year by 2030 so the gap is considerable.
In its research, Rystad also identified ammonia as "standing out as one of the key carriers for hydrogen" with the fertiliser industry facilitating trade. Hydrogen carriers store hydrogen in some other chemical state rather than as free hydrogen molecules making them easier to transport.
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