Hydrogen is touted as a way to decarbonise sectors as diverse as aviation and steelmaking. The challenge now will be deciding who should get first dibs on the clean fuel and how to produce enough of it sustainably to make a difference.

It all sounds too good to be true. The most abundant chemical substance in the universe can be used as an energy source, the only waste product is water and we can use renewable power to produce it. But as with everything linked to the energy transition, the story around hydrogen is far more complex than it seems. Hydrogen may be abundant but it has to be harvested first and the processes for doing so are, currently at least, not particularly sustainable.

Climate policies, especially in Europe, are now in the mainstream and are set to become even more ambitious in the current years. Some processes simply cannot be electrified and hydrogen offers an elegant solution for many industries that want to go green. Hydrogen-hype is by no means new: Hollywood actor Jack Nicholson was driving a car powered by the fuel all the way back in 1978 and its fossil-fuel-busting potential has endured to the present day, even if it has gone largely unfulfilled.

Times are changing
The European Commission has crafted its own strategy for the fuel and countries like Germany and Spain have also announced their intention to invest large-scale in the import and production of hydrogen. In late May, the German government gave the green light to hydrogen project investments worth more than €8 billion and also has plans to develop partnerships with countries like Australia, where the fuel can be produced using solar power.

Source: Jens Schlueter / AFP

Spain, meanwhile, hopes to become a sector ‘hub’ where electrolysers are manufactured. According to Prime Minister Pedro Sanchez, Spain has “the best conditions” to be a leader in Europe’s hydrogen push and more than €1.5 billion from the country’s EU pandemic recovery payout will be invested in the green fuel’s value chain.

Central and Eastern European countries are keen to repurpose existing infrastructure in order to tap into the hydrogen hype. “We need to adapt the networks. We need to make sure that the already existing gas infrastructure will be adapted to also transport decarbonised gases, including hydrogen,” Polish climate minister Michal Kurtyka said recently.

This is where the EU will face some of its biggest energy challenges in the coming months and years, as there are differing opinions over whether gas pipelines should be funded in this way. Later this year, the TEN-E regulation - which governs what energy infrastructure is eligible for EU funds - will be reviewed. Green lawmakers and their allies do not want any loopholes for gas and will push back against any attempts to provide exemptions. However, the European Parliament is somewhat at odds with itself, because in May MEPs voted in favour of a resolution that supports ‘low carbon hydrogen’, which includes gas produced using fossil fuels.

The lawmakers in favour insist that this will allow the energy industry to use low carbon hydrogen as a bridge towards zero carbon hydrogen. But not everybody is convinced by the idea of using this ‘blue’ hydrogen, which is produced using carbon capture storage tech. “Green hydrogen is clearly better for the environment than blue hydrogen given that CCS will never get to 100% and in many cases remains far from that threshold,” said Adrian Hiel of Energy Cities. “The main argument for green hydrogen over blue hydrogen is economics. If cost parity between blue and green hydrogen is achieved in a decade or so as the European Commission plans then the infrastructure and investments to make all of that blue hydrogen are stranded and the business case is shot,” he warned.

Who gets first dibs?
Half of this particular energy transition challenge will focus on how to produce hydrogen, while the other half will be geared towards deciding what the precious commodity should actually be used to power. Ever since it became clear a few years ago that the fuel will finally get its time in the sun, different sectors have scrambled to put their hand up as candidates for decarbonisation by hydrogen.

According to a chart put together by Hiel and elaborated by Bloomberg New Energy founder Michael Liebreich, some options are far more deserving than others. Candidates such as fertiliser and methanol production, long-haul aviation, international shipping and steelmaking all rank highly, given that electrification is currently not a viable solution and may never reach the energy density requirements needed to fuel them.

Concept Credit: Adrian Hiel/Energy Cities; Source: Liebreich Associates

Heavy goods vehicles, ferries and commercial heating are less deserving, given that other options are available and upcoming improvements to electric battery technology and costs will bring them within range. At the bottom end, light aviation, urban transport and power system balancing are graded ‘F’ and ‘uncompetitive’ in the race for hydrogen decarbonisation.

No consensus
Within sectors themselves, there is a difference of hydrogen opinion. Airbus announced last year it will invest billions of euros to build hydrogen aircraft by the mid-2030s but Boeing, the other half of the global aviation duopoly, is putting its faith in sustainable fuels. Volkswagen is betting big on electrification, converting entire factories to produce EVs and sees no future for fuel cell cars. Japanese rival Toyota, however, is pressing ahead and has even started testing hydrogen-powered race cars.

Copyright: Daimler

Industrial processes such as steelmaking and cement are considered the ‘hidden giants’ of climate policy, given that they are not all that visible to everyday consumers. Nevertheless, they desperately require cleaning up. Cement produces about 8% of the globe’s emissions, while steel’s output is a little over 5%. Both are expected to grow if nothing is done to decarbonise them.

Sweden’s HYBRIT project, which will use hydrogen and renewable energy to produce steel, is arguably Europe’s leading foray into the ‘hard to abate’ world. The first batch of green steel is expected by 2026 and is attracting attention from investors. German auto giant Daimler recently signed a partnership with H2 Green Steel, another Swedish company, that will see the firm use CO2-free materials on its production lines as of 2025. The steel startup aims to produce 5 million tonnes of green product by 2030.

This kind of partnerships will be absolutely crucial to hydrogen’s scale-up in the sectors that need it most. With a focus on creating sustainable industrial value chains delivering products with a lower carbon footprint, EIT InnoEnergy launched the European Green Hydrogen Acceleration Center (EGHAC). Supported by Breakthrough Energy, EGHAC wants to build a EUR 100 billion a year green hydrogen economy by 2025. Similar tie-ups in the battery value chain between manufacturers, car firms and recycling giants are already showing how an energy transition ecosystem can work.

Plenty of question marks remain over how hydrogen should be produced and where the fuel should be used but finally after so many decades of untapped potential there are genuinely positive signs that it might finally start to help green our economies.

Written by Sam Morgan

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