Contrary to much decarbonization hype, jumping on the green hydrogen bandwagon is not a silver bullet solution to climate change. In fact, it’s a double-edged sword. A versatile energy carrier, hydrogen is projected to play a major part in decarbonization of global manufacturing and industrial supply chains, but its production, transport, and conversion require major inversions of energy and investment that could slow down the rest of the green energy transition if mismanaged. Hydrogen is touted as a key element in any decarbonization trajectory because unlike solar and wind energy, hydrogen can be used as a combustible fuel source. This means that it can replace fossil fuels in industrial furnaces, but instead of emitting carbon dioxide and other greenhouse gasses when burned, it leaves behind nothing but water vapor. The implications of a wide-scale replacement in high-heat industrial applications are enormous. “Replacing the fossil fuels now used in furnaces that reach 1,500 degrees Celsius (2,732 degrees Fahrenheit) with hydrogen gas could make a big dent in the 20% of global carbon dioxide emissions that now come from industry,” Bloomberg Green wrote last year in report titled “Why Hydrogen Is the Hottest Thing in Green Energy.”
The problem is that hydrogen is only as green as the energy source used to make it. The process of creating hydrogen is energy intensive, and the vast majority of hydrogen being produced today is made using fossil fuels. This is referred to as gray hydrogen, and it is already used widely in global industry. Green hydrogen is made with all renewable energy sources. ‘Blue hydrogen’ is also sometimes used as a third designation referring to hydrogen produced using natural gas, which yields lower emissions than other fossil fuels and is seen by some as a stepping stone to full decarbonization.
While it seems like it would be a no-brainer that the increased production and consumption of green hydrogen would be an obvious win for the energy transition, however, the reality is not so simple. A new report by the International Renewable Energy Agency (IRENA) warns against the “indiscriminate use of hydrogen,” cautioning policy-makers to weigh their priorities carefully and to consider that extensive use of hydrogen “may not be in line with the requirements of a decarbonised world.” The report goes on to single out green hydrogen, arguing that it “requires dedicated renewable energy that could be used for other end uses.” As such, diverting too much green energy toward hydrogen production could actually slow down the decarbonization movement as a whole.
According to current projections, hydrogen use is going to skyrocket between now and 2050 in order to meet the energy and fuel demands of a net-zero emissions future. In G-7 countries alone, hydrogen use could balloon to four to seven times its current size by mid-century.
In the United Kingdom, the government is experimenting with the use of hydrogen to heat homes in the midst of a major energy crisis. By next year the nation will have chosen its very first “hydrogen village” to take part in a two-year pilot program. Not everyone is enthusiastic about the experiment, but it is likely just the beginning of such ventures as European nations move to shore up domestic energy independence while simultaneously trying to reach their stated emissions targets.
In the United States, the Department of Energy is doling out billions of dollars in federal funding to create up to 10 “hydrogen hubs” across the nation. These would function as “a network of clean hydrogen producers, potential clean hydrogen consumers and connective infrastructure located in close proximity.” And the $7 billion dollars earmarked for the hubs is only one part of hydrogen investment at the federal level. The Inflation Reduction Act also provisioned a clean hydrogen production tax credit and created other decarbonization incentives such as carbon capture tax credits that could prove to be a boon to the nascent but fast-growing green hydrogen sector.
On the whole this is good news for the energy transition and for global climate goals. But the growth of the green hydrogen industry will need to be balanced with other energy needs going forward for a smooth trajectory toward decarbonization.
By Haley Zaremba for Oilprice.com
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