Hydrogen future – analysis

It is time to harness the potential of hydrogen to play a key role in a clean, safe and affordable energy future. At the request of the Government of Japan under its G20 Presidency, the International Energy Agency (IEA) has released this landmark report to analyze the current status of hydrogen and to provide guidance on its future development. The report found that clean hydrogen currently enjoys unprecedented political and commercial momentum, with a rapid expansion of the number of policies and projects around the world. He concludes that it is time to expand the range of technologies and reduce costs to allow hydrogen to be used on a large scale. The practical and actionable recommendations being made will allow governments and industry to take full advantage of this growing momentum.

Hydrogen can help with various critical energy challenges. It offers ways to remove carbon from a range of sectors – including long-distance transportation, chemicals, and iron and steel – where it has proven difficult to effectively reduce emissions. It can also help improve air quality and enhance energy security. Despite very ambitious international climate goals, global energy-related carbon dioxide2 Emissions reached an all-time high in 2018. Outdoor air pollution remains a pressing problem, with around 3 million people dying prematurely each year.

Hydrogen is versatile. Currently available technologies allow hydrogen to produce, store, transport, and use energy in various ways. A variety of fuels are capable of producing hydrogen, including renewables, nuclear, natural gas, coal, and oil. It can be transported as gas by pipelines or in liquid form by ships, such as liquefied natural gas (LNG). It can be converted into electricity and methane to power homes and fuel industry, and into fuel for cars, trucks, ships and planes.

Hydrogen could enable renewables to make a greater contribution. It has the potential to help with the changing output of renewables, such as solar photovoltaics (PV) and wind power, the availability of which is not always proportional to demand. Hydrogen is one of the leading options for energy storage from renewable energy sources and appears promising to be a less expensive option for storing electricity over days, weeks, or even months. Hydrogen and hydrogen-based fuels can transport energy from renewables over long distances – from regions with abundant solar and wind energy resources, such as Australia or Latin America, to energy-hungry cities thousands of kilometers away.

There have been false starts for hydrogen in the past; This time it could be different. Recent successes with solar PV, wind, batteries, and electric vehicles have demonstrated that policy and technology innovations have the potential to build global clean energy industries. With a global energy sector in flux, hydrogen’s ingenuity is attracting stronger interest from a variety of governments and companies. The support comes from governments that import and export energy as well as renewable electricity suppliers, industrial gas producers, electric and gas utilities, automakers, oil and gas companies, major engineering firms and cities. Investments in hydrogen can help boost new technological and industrial development in economies around the world, and create skilled jobs.

Hydrogen can be used more widely. Today, hydrogen is mostly used in oil refining and fertilizer production. In order to make a significant contribution to clean energy transitions, it must also be adopted in sectors that are currently almost completely absent, such as transportation, buildings, and power generation.

However, the clean and large-scale use of hydrogen in global energy transitions faces many challenges:

  • Hydrogen production from low-carbon energy is currently expensive. An IEA analysis found that the cost of hydrogen production from renewable electricity could fall by 30% by 2030 as a result of lower costs for renewables and increased hydrogen production. Fuel cells, refueling equipment, and electrolyzers (which produce hydrogen from electricity and water) can benefit from mass manufacturing.
  • Hydrogen infrastructure development is slow and hinders its widespread adoption. Hydrogen prices for consumers are highly dependent on the number of refueling stations, how often they are used and the amount of hydrogen delivered per day. Addressing this will likely require planning and coordination that brings together national and local governments, industry and investors.
  • Hydrogen is supplied almost entirely from natural gas and coal today. Hydrogen is already with us on an industrial scale worldwide, but its production is responsible for annual CO2 emissions equivalent to those in Indonesia and the UK combined. Harnessing this current scale on the path to a clean energy future requires both CO2 capture from hydrogen production from fossil fuels and a greater supply of hydrogen from clean electricity.
  • Regulations currently limit the development of the clean hydrogen industry. Government and industry must work together to ensure that current regulations are not an unnecessary barrier to investment. Trade will benefit from common international standards for the safety of transporting and storing large quantities of hydrogen and for tracking the environmental impacts of various hydrogen supplies.

The International Energy Agency has identified four near-term opportunities to boost hydrogen on the path toward its clean and large-scale use. Focusing on real-world launch pads on hydrogen can help bring the scale needed to lower costs and reduce risks for governments and the private sector. While every opportunity has a distinct purpose, every opportunity is mutually reinforcing.

  1. Making industrial ports nerve centers to expand the use of clean hydrogen. Today, much of the refining and production of chemicals that use hydrogen based on fossil fuels is already concentrated in coastal industrial regions around the world, such as the North Sea in Europe, the Gulf Coast in North America and southeast China. Encouraging these plants to switch to cleaner hydrogen production will lower overall costs. These large sources of hydrogen supply can also fuel ships and trucks that serve ports and power other nearby industrial facilities such as steel mills.
  2. Building on existing infrastructure, such as millions of kilometers of natural gas pipelines. The introduction of clean hydrogen to replace only 5% of countries’ natural gas supply will greatly boost hydrogen demand and reduce costs.
  3. Expand the use of hydrogen in fleet, freight and corridor transportation. Operating long-distance cars, trucks, and buses to carry passengers and goods along common roads could make fuel cell vehicles more competitive.
  4. Launching the first international shipping methods for hydrogen trade. Lessons learned from the successful growth of the global LNG market can be learned. International hydrogen trade must begin soon if it has an impact on the global energy system.

International cooperation is vital to accelerating the growth of clean, versatile hydrogen around the world. If governments act to increase hydrogen in a coordinated manner, it can help spur investments in factories and infrastructure that will lower costs and enable the exchange of knowledge and best practices. Trade in hydrogen will benefit from common international standards. As the global energy organization covering all fuels and all technologies, the IEA will continue to provide rigorous analysis and policy advice to support international cooperation and effectively track progress in the years ahead.

As a roadmap for the future, we offer seven key recommendations to help governments, businesses and others seize this opportunity to enable clean hydrogen to realize its long-term potential.

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