Wind and solar power are the main focus in the fight against climate change, but there are sources of greenhouse gases they can’t clean up. Manufacturing steel, cement and chemicals has traditionally required fossil fuels, either to burn to create the extreme temperatures needed, or as raw materials and catalysts for chemical reactions. That’s why hydrogen is becoming the new climate bet. It burns far more cleanly than fossil fuels, can stand in for carbon in some reactions and so-called green hydrogen — gas produced using electricity from renewable sources — is essentially emissions free. Hydrogen is also seen as a clean solution for fueling cars, trucks and ships and heating buildings. All that involves vast expense and work of creating a new energy industry almost from scratch, and bringing costs down to competitive levels.
1. What’s hydrogen’s advantage?
Hydrogen flames hot and clean. Replacing the fossil fuels now used in furnaces that reach 1,500 degrees Celsius (2,700 Fahrenheit) with hydrogen could make a big dent in the 20% of global carbon dioxide emissions that now come from industry. In steelmaking, hydrogen could replace the coal that’s now used not only for heat but as a purifying agent. Hydrogen also removes the oxygen from the iron ore, but the result is water vapor rather than CO2.
2. How is it made?
There’s plenty of hydrogen in the atmosphere around us, but harnessing it for industrial purposes is a different matter. Here are the main techniques for manufacturing it:
- A way of making green hydrogen is via electrolysis, a process that sends an electric current through water to split hydrogen atoms from oxygen. Using renewable electricity to feed the process is key to harvesting the full benefit of hydrogen. Nowadays, most of the hydrogen used as fuel is derived by splitting it off from molecules of natural gas. But that requires a good deal of energy and also produces carbon dioxide at the same time, making the process decidedly unclean. So switching to electricity generated by renewables is key to harvesting the full benefit of hydrogen.
- Another technology option for producing hydrogen from renewables is steam reforming of biomethane and biogas, in which high-temperature steam reacts with the methane source, in the presence of a catalyst.
- There are also other less developed technologies, such as pyrolysis, which heats up natural gas until it generates hydrogen. Carbon is produced as a residue, but in a solid form that’s easier to store without adding to atmospheric emissions.
3. Who’s doing this?
The European Union has set a target to build 40 gigawatts of renewable hydrogen electrolyzers by 2030, the equivalent of twice the capacity of China’s Three Gorges Dam, the world’s largest energy plant. For that, it envisages as much as 470 billion euros of public and private investments by 2050 and plans to kickstart a global hydrogen market, allowing the fuel to be traded as a liquid commodity denominated in euros. In Germany, Chancellor Angela Merkel’s climate cabinet said in September green hydrogen would play a central role in “rebuilding” Germany’s industrial base as it moves to zero emissions by 2050.
4. What’s happening elsewhere?
In Asia, a number of countries are pursuing hydrogen more as a way of diversifying their energy sources, than on the need to reduce carbon emissions. Most countries in the region are focusing on the use of hydrogen for transport and electricity generation. Japan has the world-largest renewable powered hydrogen project, with 10 gigawatts of capacity, and is the leader in hydrogen refueling stations. South Korea plans to have six cities completely fueled by hydrogen by 2025 as part of the country’s efforts to accelerate the energy transition. The U.S. has 6,500 fuel cell electric cars available to costumers or running on the roads — the world’s largest fleet, accounting for almost half of the global market.
5. What’s the private sector doing?
Most of the world’s energy companies and big industrial groups are involved in hydrogen somehow. Among the most recent announcements were Mitsubishi Power Americas Inc., that plans to build three hydrogen-ready gas-fired power plants in the U.S. and Germany’s RWE, which plans to supply hydrogen to steel maker Thyssenkrupp AG and to promote the use of the fuel at its planned liquefied natural gas terminal in Germany. The U.K.’s ITM Power and Ceres Power, Sweden’s Powercell and Norway’s Nel ASA are among the listed companies whose core business involve hydrogen technologies. Australia’s Infinite Blue Energy said it plans an initial public offering that would make it the first zero-emissions hydrogen company to list on the Australian Stock Exchange. Utility giant Entergy Corp. is taking steps to throttle back its reliance on natural gas by investing in hydrogen production with Mitsubishi Power. And European planemaker Airbus SE is working on designs for hydrogen-powered aircraft as it races to bring a zero-carbon passenger plane into service by 2035.
6. What hurdles does green hydrogen face?
Mainly, its cost. While the companies involved are all confident the technology will work, question marks remain over whether hydrogen can ever be profitable. Green hydrogen costs between $2.50 and $4.50 a kilogram to make, due to the relatively high price of renewable-powered electrolysis, according to an analysis from BloombergNEF. That would need to fall below $1 in order to make renewable hydrogen competitive with the low-cost hydrogen made from fossil fuels.
7. Anything else?
The other issue is that making huge amounts of green hydrogen may strain electricity grids that are already facing a big challenge in preparing for a broad societal shift to powering more things with electricity rather than fossil fuels, most notably electric cars. Hydrogen is also difficult to store, transport and deliver: its very low density makes storage and most forms of transportation expensive in comparison to fossil fuels. But those costs should come down with innovation and greater scale, says BloombergNEF.
8. When will hydrogen technology be commercially viable?
As the technology scales up and distribution becomes more efficient, renewable hydrogen could be produced for $0.70 to $1.60 per kilogram in most parts of the world before 2050, according to BNEF, making it competitive with current natural gas prices in China, India, Germany and Scandinavia. Others are even more optimistic — by 2030, the cost reduction of hydrogen for the end user will reach 60%, with the technology becoming a competitive alternative to conventional fuels in some applications, according to Hydrogen Council, a CEO-led organization. Hydrogen could meet as much as 24% of the world’s energy needs by 2050, if supportive policy is in place, according to BNEF’s Hydrogen Economy Outlook.