It seems it will take more than a global pandemic to break Europe’s commitment to green hydrogen. On May 27, as the continent was beginning to ease out of lockdown, the European Union (EU) proposed an economic recovery plan that pledges to continue its Green Deal—a strategy to eliminate greenhouse gas emissions in Europe—and battle the virus-induced downturn with low-carbon investments.
The plan includes a commitment to eventually produce 1 million metric tons (t) of green hydrogen per year, backed by funding of up to €30 billion (about $33 billion). On the same day in the UK, which is no longer part of the EU, members of Parliament published a blueprint for a green recovery from COVID-19 that advises the government to boost investment in hydrogen infrastructure.
Today, hydrogen is mainly used in oil refining and the manufacturing of ammonia and methanol, two key basic chemicals. Its backers see the gas being used in the future to produce electricity or being fed into fuel cells to run cars or power plants. Hydrogen’s major attraction is that when burned or used in a fuel cell, the only by-product is water.
Most hydrogen is produced from natural gas and coal, in a process called steam-methane reforming. But if hydrogen can be made “green”—produced by electrolyzing water using renewable energy—then society can reduce its dependence on fossil fuels for energy and chemical production. Currently, only 0.1% of the roughly 120 million t of hydrogen produced every year is green, according to the International Energy Agency (IEA).
Proponents of green hydrogen see blue as a transitional molecule on the road away from gray.
▸ Produced from steam reforming of natural gas
▸ Costs $1.60 per kilogram in 2020
▸ Projected 2030 cost not available
▸ Produced from steam reforming of natural gas with capture, use, or storage of by-product CO2
▸ Costs $2.10 per kilogram in 2020
▸ Projected to cost $1.80 per kilogram in 2030
▸ Produced from electrolysis of water, using renewable energy
▸ Costs $6.00 per kilogram in 2020
▸ Projected to cost $2.50 per kilogram in 2030 under European wind farm conditions; $1.20 per kilogram under optimal conditions
Source: Hydrogen Council, Path to Hydrogen Competitiveness: A Cost Perspective, 2020.
Green hydrogen already had momentum in Europe. Last year, the European Commission unveiled an initiative to put $67 billion into making the clean fuel. National hydrogen strategies are underway in countries such as Germany, the Netherlands, Portugal, and the UK.
But Europe’s economic stimulus plans could dramatically boost prospects for green hydrogen, predicts Grzegorz Pawelec, research, innovation, and funding manager with the trade association Hydrogen Europe. At first glance, this seems unlikely: falling oil and gas prices are working against the competitiveness of renewable energy, which is essential for generating green hydrogen at anywhere near the price of producing it from natural gas. The economic downturn will scare investors and could delay or end some R&D projects, Pawelec acknowledges.
In the longer term, however, things are looking up. “The EU is undeterred in its ambition to increase emission-reduction targets, and clean hydrogen is very much indispensable for any ambitious large-scale decarbonization initiatives,” Pawelec says. “Putting clean energy and decarbonization as the focus of stimulus packages should result in a boost for the clean hydrogen sector.”
Europe’s chemical industry, a major hydrogen user, is ready to throw its weight behind this boost. Although replacing traditional “gray” hydrogen generated from natural gas with its green counterpart faces economic and logistical hurdles, a growing number of experts say the transition is sensible, realistic, and inevitable.
“We are transitioning to green hydrogen while we’re still developing the support mechanisms,” says Marco Waas, director for technology and R&D at the chemical maker Nouryon. “We have to develop the technology, scale production, and set up the supply chain. But there is a cost-competitive situation on the horizon, and we won’t get there by staying in the lab.”
Making large-scale green hydrogen production work rests on three pillars: the cost and capacity of electrolyzers, the availability and affordability of renewable energy, and infrastructure development.
Electrolyzers—the machines that split water molecules into hydrogen and oxygen—are moving fast in the right direction. Over the past three years, the British electrolyzer manufacturer ITM Power has halved the cost of its equipment, to about $890 per kilowatt of capacity. By the mid-2020s, the company expects to reduce costs to $555 per kilowatt, an expectation echoed in a 2020 report on hydrogen competitiveness produced by McKinsey & Co. for the Hydrogen Council, a coalition of 81 companies and investors.
This speedy development is powered by huge market potential, says ITM Power CEO Graham Cooley. “If you were to replace only 10% of the hydrogen used in refineries with green hydrogen, it would be a market for electrolyzers of €90 billion,” or about $100 billion, he says.
A similar replacement for producing ammonia and methanol represents an electrolyzer market “in the tens of billions of euros” apiece, Cooley adds. ITM Power intends to claim a hefty share of that money. Last year, the company raised $72 million, in part to build the world’s largest electrolyzer factory in Sheffield, England. It also launched a joint venture with the industrial gas company Linde.
The EU is undeterred in its ambition to increase emission-reduction targets.
Grzegorz Pawelec, research, innovation, and funding manager, Hydrogen Europe
Cheap electrolysis is vital for bringing down the cost of green hydrogen production, says Oliver Busch, head of sustainable businesses at Creavis, the strategic innovation unit of the specialty chemical company Evonik Industries. But even more important, Busch says, is cutting the price of renewable power.
The cost of generating solar and wind energy has come down spectacularly in the past decade. A recent BloombergNEF report estimates that renewables are now the cheapest source of new electricity for more than two-thirds of the world’s population. Globally, prices for wind and solar energy are around 50% less than in 2018.
A prolonged period of low oil and natural gas prices, which have plummeted during the pandemic, could challenge this. But the IEA forecasts the renewables sector will be the only part of the global energy system to grow this year, and government support for it remains high. The EU’s economic recovery package anticipates €25 billion in investment for renewable energy capacity in the next two years.
Evonik has been leveraging excess renewable power from windmills and hydropower stations to run several projects for green hydrogen in chemical manufacturing and other sectors. Most recently, the German firm teamed up with BP, the power company RWE, and two pipeline operators to create a green hydrogen pipeline network. It’s due to start supplying industrial companies in late 2023.
For now, Busch says, the renewable energy available is enough to support Europe’s initial green hydrogen production goals. “In the longer term,” he cautions, “it will likely mean a much higher demand for green hydrogen than green energy produced in Europe can currently support.”
On paper, the renewable energy demands for large-scale green hydrogen production are extravagant. In the UK alone, electricity supply from low-carbon sources will need to quadruple by 2050 in order to support the intended production of about 7 million t of low-carbon hydrogen per year, according to the country’s Committee on Climate Change (CCC), an independent government advisory body.
“Yes, that’s a massive scale-up,” acknowledges Mike Hemsley, the CCC’s team leader on carbon budgets. “But it’s plausible, especially when you base it on using hydrogen sensibly: by starting with decarbonizing industry, rather than, for example, converting all the natural gas used in people’s homes right away.”
Even with a scale-up this ambitious, the CCC estimates that by 2050, around 80% of the clean hydrogen used in the UK will be blue—produced from natural gas with the capture, use, or storage of by-product carbon dioxide—and only 20% green. Embracing carbon capture is the only way to start clean hydrogen production at industrial scale in the 2020s, Hemsley says.
And yet Hemsley, like Busch and Waas, is not worried about a lack of renewable energy hampering the transition to green hydrogen in the long run. He expects output of renewable energy to increase in parallel with the hydrogen scale-up.
There is a cost-competitive situation on the horizon, and we won’t get there by staying in the lab.
Marco Waas, director for technology and R&D, Nouryon
Besides, Europe does not have to generate all the renewable hydrogen that it needs. In principle, hydrogen can be shipped around the world to places that lack cheap renewable energy.
This option was floated by a Belgian industry coalition that is working on a road map for ways to transport hydrogen across the energy and chemical sectors. The solution to Europe’s renewable energy needs “will consist of domestic wind and solar and imports, as well as transmission lines and pipelines for hydrogen transport,” the coalition tells C&EN.
Transporting hydrogen efficiently, however, requires dedicated infrastructure. The most promising way to store and transport it is by repurposing existing gas grids. Evonik’s project, for instance, uses an old gas pipeline and envisions repurposing more of Germany’s existing infrastructure for a dedicated hydrogen network.
In the Netherlands—where the big coastal area and shallow seas have massive potential for wind power—the government sees an opportunity to leverage gas pipelines and the chemical industry for a hydrogen export initiative, Nouryon’s Waas says. “The industry can convert electrons straight from the windmills by the coast into hydrogen, use some in chemical production, and move the rest further inland via the gas pipeline.” Nouryon recently partnered with the Dutch gas network operator Gasunie for the construction of a 20 MW electrolyzer in Delfzijl in the Netherlands.
These ambitions are long term. It will take time to establish hydrogen infrastructure, just as it will take time before green hydrogen becomes cost-competitive enough for large-scale use in the chemical industry.
The Hydrogen Council study puts the cost of renewable hydrogen produced from offshore wind in Europe at about $6 per kilogram in 2020, a figure that could drop to $2.50 per kilogram by 2030. The cost of traditional gray hydrogen is around $1.60 per kilogram (excluding a fee imposed on CO2 emissions, which in Europe ranges from 2–3 cents per kilogram).
Meanwhile, blue hydrogen goes for about $2.10 per kilogram today and will decline to about $1.80 by 2030 in Europe, according to the report.
At these prices, the chemical industry would do well to make use of blue hydrogen while the infrastructure for green develops, says Maurits van Tol, chief technology officer at the UK-based specialty chemical company Johnson Matthey. JM is invested in blue hydrogen projects such as HyNet, a government-funded consortium in northwest England. The consortium wants to develop a blue hydrogen plant at Ellesmere Port, south of Liverpool, that will double the UK’s capacity for hydrogen production. According to HyNet, the plant will capture and store more than 95% of the carbon it creates.
Van Tol says blue hydrogen will allow decarbonization of the hardest-to-solve areas in fossil fuel use, such as chemicals, and help create the infrastructure for green. Blending small amounts of blue hydrogen into gas grids now will test the system until transporting large amounts of green hydrogen becomes realistic. “It’s not green versus blue,” van Tol says. “It’s sequencing. Blue followed by green is a win-win for the economy and the environment—and means we can act now.”
The Center for Solar Energy and Hydrogen Research Baden-Württemberg (ZSW), a German nonprofit foundation that supports climate-friendly energy research, sees an argument for speeding the buildup of a hydrogen infrastructure with blue but cautions against closing the path to green. “We would really have to see [blue hydrogen] as a transitional technology and not allow an extension of greenhouse gas-emitting infrastructures,” says Maike Schmidt, ZSW’s head of system analysis. Expanding blue hydrogen production requires an investment in carbon capture infrastructure, which could slow the transition to its carbon-free counterpart, Schmidt warns.
Whether it’s green or blue, clean hydrogen will not scale without government support, says Schmidt’s colleague, Marc-Simon Löffler, who heads the ZSW’s department of renewable energy sources and processes. But Schmidt and Löffler are positive that governments are beginning to move in the right direction. Coupled with a motivated industry, Europe looks set to march its green hydrogen commitments through mutliple economic and logistical hurdles.
“We are living through the starting point of a ramp-up,” Löffler says. “From the political side it’s become clear that clean hydrogen is indispensable to achieve climate policy goals. It’s now all about developing economically viable models.”