As the world races towards a cleaner future, hydrogen is quickly becoming a popular alternative to fossil fuels in industries where electrification is impractical. However, the high cost of producing hydrogen has been a major obstacle for its widespread adoption. Governments worldwide are seeking ways to facilitate rapid development and incentivize investment in this fuel source to make it an economic alternative to fossil fuels in industry.
At the CERAWeek, oil executives called on governments to simplify rules around hydrogen supply to draw in investment and scale up production. Hydrogen can be produced through various methods, such as electrolysis using power from renewables or from natural gas. When carbon emissions from the process are captured and stored, it is known as blue hydrogen.
While there are discussions and rules around classifying hydrogen made from renewable fuels or natural gas, energy industry executives believe that making the fuel affordable for consumers should be the primary focus. Transporting hydrogen is currently not commercially viable nor affordable for consumers, which further adds to its cost.
Government mandates may be required to encourage industries such as shipping to embrace hydrogen and make it cost-competitive with cheaper petroleum-based fuel oil. Spanish energy producer Cepsa SA plans to produce green ammonia using renewable energy-made H2 for green marine fuel by 2030 and export it by 2027 while selling it ships by 2026.
While there are challenges associated with developing a robust market for hydrogen as a business, simplifying rules around its production and transport could help draw in investments and make it more accessible and affordable for consumers.
There is no doubt that there are significant benefits of transitioning towards clean technology that includes exploring alternatives like green hydrogen. The International Energy Agency report published last year suggests that about 30-35% of our total energy system will require green hydrogen by 2050 if we aim to decarbonize global warming pollution created by transportation sectors like aviation or long-distance trucking.
Simplifying rules around production & transport coupled with government mandates could go miles ahead in drawing investments & making Hydrogen more accessible & affordable for consumers which could lead us towards sustainable development goals much faster than anticipated.
By Michael Kern for Oilprice.com
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