In order to achieve net-zero emissions by 2050 and keep global warming to 1.5 degrees Celsius, hydrogen is predicted to play a crucial role. Considered by many as the only long-term, scalable, and affordable alternative for profound decarbonisation in industries like steel, maritime, aviation, and ammonia, clean hydrogen (both renewable and low carbon) complements other decarbonisation technologies like renewable electricity, biofuels, or advances in energy efficiency. The deployment of hydrogen solutions in these areas is projected to have the potential to prevent 80 GT of cumulative CO2 emissions between now and 2050.[i] A major push for hydrogen has been launched by policymakers eager to meet net-zero emissions targets, particularly in the United States and the European Union. Low-carbon hydrogen prices are sometimes subsidised, and in other instances, tax credits are given to the sectors that create or consume hydrogen. Investment in hydrogen projects is expanding, in part because of these financial incentives. The Brussels based industry group , the Hydrogen Council, predict that the hundreds of large-scale hydrogen projects that have already been announced might result in an investment of US$240 billion by 2030, even though only one-tenth of these transactions have been fully executed to date. According to the council, the market for hydrogen and hydrogen-related products will be worth $2.5 trillion annually by 2050.[ii] In the EU, the "hydrogen accelerator" under the REPowerEU plan envisions importing 10 million tonnes of renewable hydrogen and producing 10 million tonnes of domestic renewable hydrogen by 2030. It comprises steps to scale up the hydrogen infrastructure, which is heavily dependent on the installation of port infrastructure and renewable energy deployment, as well as its link to industrial and transportation customers. The Commission also outlines a number of initiatives in the plan to hasten the use of renewable hydrogen and its derivatives in hard-to-decarbonize industries, including transportation and manufacturing. For instance, it is predicted that by 2030, 30% of the primary steel produced in the EU might be decarbonised using renewable hydrogen.[iii]
Source: Nature after IEA
As the IEA’s net zero emissions scenario indicates, by 2030, the amount of hydrogen produced using coal must decline, admittedly by a modest amount, but recent trends from China create doubt for a future hydrogen heyday. Although China produces more hydrogen than any other country, its generation now produces a lot of emissions. China produced about 33 Mt of hydrogen in 2020, representing 30% of the global amount. The main sources of today's hydrogen demand, the global chemical industry and China's considerable capacity for oil refining are the reasons for China's leadership. One-third of China's hydrogen production is powered by coal, which emitted roughly 360 Mt of CO2 in 2020. China is the only nation in the world to produce hydrogen from coal on a considerable scale.[iv] Whilst COP27 reaffirmed global commitments to phase down coal, will the pursuit of hydrogen production at scale hamper these efforts?[v]
Governments have increased coal use and imports of liquefied natural gas from other countries in response to impending energy problems related to the ongoing conflict in Ukraine and related sanctions on Russia. Following a 14% increase in 2021, the International Energy Agency projects that Europe's coal consumption will rise by 7% in 2022.[vi] According to the IEA research, 50 out of 100 financial institutions that have funded coal-related projects since 2010 have not made any promises to limit such financing; this is a concerning prospect for the burgeoning hydrogen market as it seeks to build itself sustainably. Although many governments' policy responses to the current energy crisis are encouragingly moving toward growing renewable energy, according to IEA executive director Fatih Birol, "a major unresolved problem is how to deal with the massive amount of existing coal assets worldwide.".[vii] Progress is being made in some cases outside Europe; the rising awareness of climate change and the declining cost of renewable energy sources are driving global attempts to move away from coal. However, there are still substantial obstacles. According to research by Carbon Brief, policies need to be suited for the particular country setting if they are to increase the political viability of coal phaseouts. International activity can also influence domestic policy. Countries phasing out coal could use international agreements to strengthen the legitimacy of their goals, such as joining a "climate club" of forward-thinking leaders, issuing a joint statement under the G20's auspices, or including them in their climate commitments under the Paris Agreement. These nations are capable of providing both technical and financial support to nations with lower incomes and administrative and technological capacities.[viii]
In light of the continued monetary support for coal-related projects, policy priorities for the sustainable production of hydrogen are of high importance.
The Hydrogen Council’s 2022 insights report provided the following policy priorities that could support global clean growth in hydrogen production.
[i] Hydrogen Council- Global Hydrogen Flows: Hydrogen trade as a key enabler for efficient decarbonization
[ii] Nature- How the hydrogen revolution can help save the planet — and how it can’t
[iii] European Commission- In focus: Renewable hydrogen to decarbonise the EU’s energy system
[iv] IEA- Opportunities for Hydrogen Production with CCUS in China
[v] The Guardian- Second draft of Cop27 text: what has changed since the first draft?
[vi] Euractiv- Europe should shape the green hydrogen market now
[vii] Financial times- Climate graphic of the week: Will the world phase down coal within 8 years?
[viii] Carbon Brief- Guest post: What we learned about coal phaseout by studying 15 countries
[ix] Hydrogen Council- Hydrogen Insights 2022 An updated perspective on hydrogen market development and actions required to unlock hydrogen at scale
[x] Ibid
[xi] Ibid
Oscar is a recent graduate with a background in earth science. He is currently studying an MSc focussing on disaster responses, emergency planning and community resilience. His postgraduate research project will assess the link between climate crisis risk perception and attitudes to green energy projects. “Adapting to the climate crisis through the pursuit of net zero requires community engagement and understanding. Zero Carbon Academy’s goals closely align with this approach and I’m excited to have the opportunity to research and communicate a variety of topics relating to our environment and sustainability”.
