Green hydrogen

Fuelling a sustainable future

Hydrogen is the most abundant and simplest chemical element on the planet; it is present in 75% of matter. Humanity has been using it as a raw material in the chemical and metallurgical industries for over 100 years. Additionally, it is light, can be stored and does not, in itself, generate emissions, so it is a perfect candidate for a sustainable fuel¹.

Hydrogen cannot be obtained directly from nature; it needs to be manufactured. The process used determines whether this fuel is clean. When produced from renewable energy sources, hydrogen is one of the fuels of the future.

According to S&P Research, green hydrogen is one of the top ten cleantech trends in 2024, and it is becoming a key part of net zero plans to decarbonizing hard-to-abate sectors. It also offers major opportunities for historically energy dependent countries^2,3. It can increase developing countries’ overall resilience while driving the creation of a diversified and knowledge-based economy⁴. 

Hydrogen has traditionally been used as an input across carbon intensive industries that are more difficult to decarbonize, the so-called hard-to-abate sectors. 

It is not a primary energy source; rather, it is an energy vector, which means that it requires a chemical process to be produced². Non-renewable hydrogen is extracted from fossil gas, a process that releases CO2 emissions while green hydrogen is extracted from water using renewable energy in the process³.

Types of hydrogen, based on the manufacturing process

The hydrogen chain will require USD 9.4 trillion in total of investments through 2050, USD 3.1 trillion of which in developing economies, mainly for technology development and renewable energy. 

Investments are key to overcoming the following challenges:

Demand growth

By 2050, total global demand for hydrogen may be 4 to 6 times the current levels⁸.

A growing number of countries and companies are engaged in intense competition for leadership in clean hydrogen technologies. 

Supportive policies will be needed to meet targets and achieve the necessary installed capacity by 2050. 

Plans by geography

The EU aims to produce 10 Mt of green hydrogen and import an additional 10 Mt by 2030¹⁰, as it is considered a major contributor to reduce dependence on imports of Russian fossil fuel. Despite Europe’s leading position on announced volumes, the maturity of theproject funnel is low with only 5% committed volumes. In 2022, hydrogen accounted for less than 2% of Europe’s energy consumption with 96% of it produced from natural gas.

Despite low announced volumes, China has the highest commitments, about 40% of the total announced supply in China is already committed while in North America, the share drops to 20%. The low announced volumes in China could be due to fewer companies announcing their plans or different public support schemes. In North America, more than 70% of the announced volumes is low carbon hydrogen (blue), mainly driven by the tax credits received for CO2 capture and storage boosted by the IRA.

H2 Green Steel, headquartered in Stockholm, was founded in 2020 and aims to build a large-scale green steel production facility using a combination of renewable electricity and green hydrogen, thus eliminating almost all the CO₂ emissions from the conventional steelmaking process.

Green hydrogen could represent 10% on the expectedmix of renewable energy technologies facing the emissions reduction required to reach Net Zero by 2050, posing a promising alternativefor several hard-to-abate industries. The main existing challenges are electrolyzers technology, efficiency and infrastructure. A specific policy development could be a catalyst for this sector.

Green hydrogen can be transported and stored. It could be a game changer for countries with high renewable energy resources. Additionally, it can play an important role in ensuring countries´ energy independence.

1. Acciona: https://www.acciona.com/green-hydrogen/?_adin=02021864894
2. Business Norway: https://businessnorway.com/articles/norway-poised-to-lead-green-hydrogen-marketgad_source=1&gclid=EAIaIQobChMIqO7YkoXYhQMVFUlBAh05Ag4oEAAYASAAEgLcq_D_BwE
3. IMF: https://www.imf.org/en/Publications/fandd/issues/2022/12/hydrogen-decade-van-de-graaf
4. Deloitte: https://www2.deloitte.com/content/dam/Deloitte/at/Documents/presse/at-deloitte-wasserstoffstudie-2023.pdf
5. The Economist impact: https://impact.economist.com/sustainability/projects/the-future-of-hydrogen/hydrogen-why-this-time-is-different.html
6. S&P Global: https://www.spglobal.com/commodityinsights/es/market-insights/special-reports/energy-transition/top-ten-cleantech-trends-in-2024
7. Linkedin articles: https://www.linkedin.com/pulse/green-hydrogen-challenges-amit-ahuja-mkaac/
8. IRENA: https://www.esmap.org/sites/default/files/2022/2023/H4D/Full_Slide_deck_Scaling%20Hydrogen%20Financing%20for%20Development_November17.pdf
9. IRENA: https://www.irena.org/Energy-Transition/Policy/Policies-for-green-hydrogen#Policies-to-support-electrolysers
10. Hydrogen council and McKinsey: https://hydrogencouncil.com/wp-content/uploads/2023/05/Hydrogen-Insights-2023.pdf
11. OECD: https://www.oecd.org/en/about/programmes/clean-energy-finance-and-investment-mobilisation/greenhydrogen.html#:~:text=H2%20Green%20Steel%2C%20headquartered%20in,from%20the%20traditional%20steelmaking%20process
12. European commission: https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/what-eu-ets_en
13. US Department of energy: https://www.energy.gov/eere/fuelcells/articles/fuel-cells-fact-sheet

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