Green hydrogen development advanced further this week after the world’s first pilot project for green hydrogen heating of homes was approved. While proponents of green hydrogen—the low-carbon emission hydrogen made from electrolysis with power from renewables—cheer this world-first trial, the structure of the project’s funding offers a glimpse into what green hydrogen desperately needs to become a feasible solution to emission reductions—solid government support.
Green hydrogen has been the hype of the past year in clean energy technologies. From governments to oil majors, everyone is talking up green hydrogen solutions to cut emissions in sectors where this is more difficult than in electricity production, such as chemicals and ammonia production.
Today, nearly all—or 99.6 percent—of global hydrogen production comes from fossil fuels—coal, oil, or natural gas.
“Although there is a tremendous amount of hype regarding green hydrogen, it barely registers across the full value chain for hydrogen’s uses,” Wood Mackenzie said in a report this year.
The first-ever trial of 100-percent green hydrogen use for home heating and cooking is expected to offer insights into how feasible it could be in replacing natural gas. The trial also shows that for green hydrogen to become mainstream in technologies, not only in media, government support, incentives, co-funding, and collaboration with industry is a must.
This week, the UK and Scottish authorities announced they would fund the world’s first trial of a 100 percent green hydrogen generation, storage, and distribution network to heat 300 homes in Scotland as part of the UK and Scottish ambitions to achieve net-zero emissions within three decades.
The UK’s energy regulator Ofgem on Monday said it was awarding US$24 million (18 million British pounds) to the H100 Fife project in Fife, Scotland, which will see 300 homes heated with and cooking with green hydrogen made from electrolysis from offshore wind power. The project also receives a further investment of US$9.2 million (6.9 million pounds) from the Scottish Government.
“I see this project as a critical step towards understanding our decarbonization options for heat and will deliver a purpose-built end-to-end hydrogen system, so I warmly welcome Ofgem’s investment in the project,” said Scotland’s energy minister Paul Wheelhouse.
Exploring the options for hydrogen production and ways to cut hydrogen costs is one of the key pillars in the UK’s The Ten Point Plan for a Green Industrial Revolution, which the government unveiled last month.
Related: A Major Oil Rally Could Be On The Horizon Political momentum in support of hydrogen has grown over the past year, but governments need to strongly support hydrogen, especially low-carbon hydrogen, in the near term and include it in long-term policies for emissions reduction, the International Energy Agency (IEA) said in its Hydrogen report this year.
“Low-carbon production capacity remained relatively constant and is still off track with the SDS [Sustainable Development Scenario],” the IEA said, noting that “More efforts are needed to: scale up to reduce costs; replace high-carbon with low-carbon hydrogen in current applications; and expand hydrogen use to new applications.”
Companies are working on developing green hydrogen projects. One of the latest announcements came from Italy’s major Eni, which, together with top utility Enel, plans to produce green hydrogen through electrolyzers powered by renewable energy and located near two of the Eni refineries where green hydrogen appears to be the best decarbonization option.
Offshore wind developer Ørsted and fertilizer producer Yara in October said they were developing a project to replace fossil hydrogen with renewable hydrogen in the production of ammonia in the Netherlands.
Related: The True Cost Of The Global Energy Transition
“If the required public co-funding is secured and the right regulatory framework is in place, the project could be operational in 2024/2025,” Ørsted said.
Green hydrogen requires a lot of policy support, collaboration, funding, research and development (R&D), and private capital to become an industry.
Green hydrogen costs are set to fall by up to 64 percent by 2040, according to WoodMac research from August.
“Even with a multitude of challenges that await the nascent green hydrogen market, we firmly believe there will be some form of low-carbon hydrogen economy soon,” said Ben Gallagher, Wood Mackenzie Senior Research Analyst.
“Given the degree of explicit policy, corporate and social support that has blossomed in 2020, green hydrogen will successfully scale and realise huge production cost declines,” Gallagher noted.
By Tsvetana Paraskova for Oilprice.com
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