Hydrogen is the simplest and most prevalent element in our universe. But is it a clean energy silver bullet that many are suggesting, helping economies achieve net zero emissions by 2050? Things may not be as simple as they seem, says Rahab Paracha, Multi-Asset Investment Specialist, Rathbones
In 2021, there was more than one ‘C’ that dominated the headlines.
From the summer onwards, the COP26 climate conference in Glasgow in November got a lot of airtime. By far the biggest focus was accelerating global action to hit the goals of the Paris Agreement (limiting climate change to significantly less than 2 degrees Celsius above pre-industrial levels, preferably 1.5 degrees).
Several countries made new net-zero commitments. These commitments should ensure the amount of greenhouses gases (primarily carbon dioxide) they release into the atmosphere is balanced by an equal amount taken out. Big changes are needed to meet these targets, and it isn’t so clear how this will be done. The International Energy Agency (IEA) predicts energy demand is to rise 50% by 2050. If powered by fossil fuels, this would make limiting global warming to 1.5 degrees virtually impossible.
Therefore many people – rightly or wrongly – have high hopes for hydrogen to help enable the transition away from fossil fuels and decarbonise a number of difficult sectors including transport, steel, cement and agriculture. Hydrogen is the lightest and most abundant element, estimated to make up almost three quarters of the mass of the visible universe. It acts as an energy carrier which means it can store and deliver usable energy when burnt – and most importantly it burns cleanly. When we burn hydrogen in the air the only waste product is water vapour.
The main issue, however, is getting the hydrogen in the first place. While it’s abundant, it normally doesn’t exist by itself in nature, so has to be produced. Ways of doing this include using fossil fuels (e.g. coal or natural gas), nuclear power, biogas and renewable power such as solar and wind. These different methods of producing hydrogen gas can themselves emit carbon and therefore have varying levels of environmental impacts.
Shades of hydrogen
Most hydrogen produced today is ‘grey’. Produced through a process called natural gas steam reforming or steam methane reformation, where natural gas or methane is split into hydrogen but also CO2. Per tonne of hydrogen, about 10 tonnes of CO2 are generated as waste and released into the atmosphere – not a huge help in reaching net-zero! Around 6% of current global natural gas usage produces hydrogen in this way.
You’ve then got ‘blue’ hydrogen. This is where the carbon dioxide is captured after the reaction and stored underground via industrial carbon capture and storage (CCS). But this is also not a perfect solution as typically only 80-90% of the CO2 can be captured. One of Shell’s blue hydrogen plants manages to sequester just 48%, giving it the carbon footprint of 1.2 million petrol cars. There are also considerable costs to storing carbon underground.
The holy grail is ‘green’ hydrogen where electrolysis breaks down water into hydrogen and oxygen, therefore no carbon emissions. If renewable energy is used to perform the electrolysis this method is genuinely climate neutral. And because it uses electricity, it also offers the potential to divert any excess electricity – which is hard to store – to electrolysis, using it to create hydrogen gas that can be stored and fed back into the grid for when demand rises.
The future is green – or is it?
It seems to be a no-brainer then that green hydrogen will be essential in helping economies achieve net zero emissions by 2050 and reach the goals of the Paris Agreement. So, what’s stopping us?
Green hydrogen is currently expensive and inefficient – which is why it contributes only around 1% of all hydrogen production. Today, there are a handful of green hydrogen projects which are commercially viable, and many believe it won’t become widely viable until at least 2030. In part, this is because green hydrogen relies upon the capacity of electricity generation and the affordability of renewable energy – itself a work in progress, as we’ve seen recently on our power bills.
Also, energy can be lost during the process of electrolysis, which is why we say it’s inefficient. There’s an immediate energy loss because it takes a lot of power to break the chemical bond between oxygen and hydrogen. This means, on average, the cost of hydrogen per kilowatt hour is greater than the electricity it’s derived from. Another stumbling block is storage and transport. Hydrogen molecules are so small that they can leak out of containers, meaning pipe networks previously used for natural gas or methane may have to be upgraded before they are fit for hydrogen. And, of course, other infrastructure also needs to be built – for example refuelling stations – to encourage widespread adoption.
As is often the case, if we want the ‘hydrogen economy’ to help our journey to a low-carbon future, we need a little help from the government to put the regulations and policies in place to incentivise investment and consumer take-up. Encouragingly, this seems to be happening. According to a report from the Hydrogen Council, at the beginning of 2021 over 30 countries had released hydrogen roadmaps. That had led to 200 hydrogen projects and governments worldwide had committed more than $70 billion in public funding. This includes the UK.
Last summer Britain launched its first ever vision to kick start a world-leading hydrogen economy. The vision is a “twin track approach”, using both blue and green hydrogen to phase out fossil fuels rather than green alone. It’s argued that blue hydrogen can be used as a low-carbon transition tool until green hydrogen becomes more commercially viable. That seems prudent, given the challenges in generating fully renewable hydrogen. But it’s really important that blue hydrogen generation isn’t captured itself by energy producers that may use it as a means to stay relevant and prolong the lifespan of their existing, dirty assets.
[Main image: anthony-rampersad-pVHRCsd0uKI-unsplash]
