Green Hydrogen

Green Hydrogen

Hydrogen is the most abundant and lightest element in the universe with the atomic number 1 and an atomic weight of 1.008. It is a colourless gas. It was discovered by Henry Cavendish in 1766. The molecular form of hydrogen, which is of interest as an energy carrier, is the diatomic molecule composed of two protons and two electrons. On Earth, hydrogen is naturally present in molecular forms bound to oxygen or carbon (such as water and hydrocarbons) rather than pure hydrogen molecules, and hence cannot be directly used as a resource.

On its own, hydrogen gas can be an excellent fuel, burning at a high temperature or readily converted electro-chemically in fuel cells and possessing physical properties which make it relatively easy to handle (although it is more complicated to store compared to current infrastructure fuels, such as high-pressure, low-temperature storage tanks, compression and expansion units, etc. Hydrogen can also be a feedstock for other fuels and chemicals, including ammonia (NH3), methanol (CH3OH) and gasoline. At present, around 50 % of the hydrogen production goes into fertilizers like ammonia and urea, with the balance largely going into fuel production and petrochemicals.

Since hydrogen is such a small molecule, it can be challenging to store and transport. It is normally to be compressed to high pressures, liquefied at very low temperatures, or stored within a porous material. It can leak more readily than present gaseous infrastructure fuels like natural gas or propane. It can also embrittle some of the present infrastructure materials such as pipeline steels, posing challenges for their immediate use for hydrogen without investment.

For the generation of the useful energy (heat or power), hydrogen can be burned in a furnace, boiler, or turbine or converted directly to electric power and lower-grade heat in a fuel cell. Hydrogen can produce heat at high temperatures sufficient for the steelmaking and other high temperature industrial processes, while establishing reducing (low-oxygen) conditions for applications such as cement, glass, and computer chip manufacturing. Hydrogen can also drive an engine, power a zero -emission fuel cell car, back up a power generator, or warm a house. The electric power produced from hydrogen can provide grid services or run an electric drive train, a truck, or a bus. Hydrogen can also be a key feedstock for conventional fuels and chemicals (like ammonia or methanol) or new synthetic fuels and materials (e.g. e-fuels) made of recycled CO2 (carbon di-oxide). Combustion of hydrogen with pure oxygen or consuming it in a fuel cell emits no direct carbon emissions. NOx (nitrogen oxides) emission is possible for hydrogen combustion in air while several other pollutants are avoided, including CO (carbon mono-oxide), soot, partial-burned hydrocarbons etc.

Due to its abundancy, it is one of the key replacements for fossil fuels for the reduction of carbon emissions. It is a rich source of energy, far more efficient than other fuels. It is a clean energy carrier which is likely to play an important role in the global energy transition. It is already deployed at the industrial scale across the globe. Its sourcing is critical. Hydrogen demand has been increasing at a steady pace over the past four decades. The main issue presently is that traditional means of producing hydrogen generate large volumes of CO2.

Hydrogen is a very versatile fuel which can be produced using all types of energy sources (coal, oil, natural gas, biomass, renewables, and nuclear) through a very wide variety of technologies (reforming, gasification, electrolysis, pyrolysis, water splitting and many others). Presently, the industrial production of hydrogen is normally based on converting fossil fuels, although conversion of biogenic sources or water is also being accomplished to a lesser extent.

Annually around 120 million tons of hydrogen is produced around the world, of which two-third is pure hydrogen and one-third is in a mixture with other gases. Hydrogen produced today is mostly used in crude oil refining, production of ammonia and methanol synthesis together represents 75 % of pure and mixed hydrogen demand. Hydrogen produced for this is mostly obtained from natural gas and fossil fuels which together accounts for 95 %, electrolysis produces around 5 % of global hydrogen, as a byproduct during the production of chlorine.

Green hydrogen is defined as hydrogen produced from water electrolysis with zero-carbon electric power, can have considerable potential in helping countries transition their economies to meet climate goals. Today, green hydrogen production faces enormous challenges, including its cost and economics, infrastructure limitations, and potential increases in CO2 emissions (e.g. if produced with uncontrolled fossil power generation, which can be hydrogen but not green).

Hydrogen can be produced in several pathways and multiple processes. In recent years a colour code has been used to refer to different hydrogen production pathways. This colour code consists of (i) grey hydrogen, (ii) blue hydrogen, (iii) turquoise hydrogen, (iv) green hydrogen, and (v) yellow (purple) hydrogen is used to indicate the different pathways  for hydrogen production. Fig 1 shows identification of hydrogen generation pathways with colour representation. There are also some specialized terms such as ‘safe’, ‘sustainable’, ‘low-carbon’ and ‘clean’ presently under use. However, there is no international agreement on the use of these terms as yet, nor have their meanings in this context been clearly defined.

Fig 1 Identification of hydrogen generation pathways with colour representation

Grey hydrogen – The most common process is to use either natural gas or coal as feedstock which reacts with steam at high temperatures and pressures to produce synthesis gas, which consists primarily of hydrogen and carbon mono-oxide. The process is known as steam methane reforming (SMR). The synthesis gas is then reacted with additional water to produce pure hydrogen and CO2. These are well-established processes, but they generate considerable CO2 emissions, which is why the resulting element is termed ‘grey hydrogen’. The use of grey hydrogen emits substantial CO2 emissions, which makes these hydrogen technologies unsuitable for a route towards net-zero emissions.

Blue hydrogen – The second-most-common process, blue hydrogen, relies on the same basic processes as gray hydrogen, but it traps upto 90 % of the greenhouse gas emissions through carbon capture, utilization and storage (CCUS) technology. In some cases, this carbon is stored underground. The underground storage needs considerable capital costs. Or it is reused as a feedstock for industrial applications, in which CO2 is still ultimately released into the atmosphere. Blue hydrogen has limitations which have so far restricted its deployment. These limitations include (i) use of finite resources, (ii) exposed to fossil fuel price fluctuations, and (iii) does not support the goals of energy security.

Turquoise hydrogen – It combines the use of natural gas as feedstock with no CO2 production. Through the process of pyrolysis, the carbon in the methane becomes solid carbon black. A market for carbon black already exists, which provides an additional revenue stream. Carbon black can be more easily stored than gaseous CO2. At the moment, turquoise hydrogen is still at the pilot stage.

Green hydrogen – It is produced by using renewable energy. It is the most suitable one for a fully sustainable energy transition. The most established technology option for producing green hydrogen is water electrolysis fuelled by renewable electricity. The electrolysis process splits water molecules into hydrogen and oxygen. Electrolysis needs energy. This energy comes from lower-cost renewable sources and this makes this form of hydrogen ‘green’.

Yellow (purple) hydrogen – It is produced by water electrolysis using energy from nuclear power.

Blue hydrogen has some attractive features, but it is not inherently carbon free. Fossil fuels with CCUS need CO2 monitoring and verification and certification to account for non captured emissions and retention of stored CO2. Such transparency is necessary for global hydrogen commodity trade.

Among the different shades of hydrogen, green hydrogen production through electrolysis is consistent with the net-zero routes aimed for the carbon emissions. Green hydrogen production is a near-zero carbon production route.

Green hydrogen is an energy carrier which can be used in several different applications. However, its actual use is still very limited. Presently, there is no considerable hydrogen production from renewable sources. The production of green hydrogen has been limited to demonstration projects. The production of green hydrogen through electrolysis is the most suitable one for a fully sustainable energy transition. The most established technology options for producing green hydrogen is water electrolysis with the use of renewable electric power. This technology is presently under focus around the globe. Other renewables-based solutions to produce hydrogen exist. However, these are not mature technologies at commercial scale yet.

Producing hydrogen from low-carbon energy is presently costly. Fortunately, advances in electrolysis technology and the falling cost of renewable energy are enabling possible the mass production of green hydrogen, which is more environmentally sustainable. These developments have altered the calculus for hydrogen and created a significant opportunity for the countries to boost economic growth and move away from fossil fuels.

Green hydrogen production allows the exploitation of synergies from sector coupling, thus decreasing technology costs and providing flexibility to the power system. Low variable renewable energy (VRE) costs and technological improvement are decreasing the cost of production of green hydrogen. For these reasons, green hydrogen from water electrolysis has been gaining increased interest.

Important synergies exist between accelerated deployment of renewable energy and hydrogen production and use. Hydrogen can increase renewable electricity market growth potentials considerably and broaden the reach of renewable solutions. For example in industry, electrolyzers can add demand-side flexibility. Another example, European countries such as the Netherlands and Germany are facing future electrification limits in end-use sectors which can be overcome with hydrogen. Hydrogen can also be used for seasonal energy storage. Low-cost hydrogen is the precondition for putting these synergies into practice.

Green hydrogen, produced with renewable electricity, is projected to grow rapidly in the coming years. Several ongoing and planned projects point in this direction. Hydrogen from renewable electric power is technically viable today and is quickly approaching economic competitiveness. The rising interest in this supply option is driven by the falling costs of renewable electric power and by systems integration challenges due to the rising shares of variable renewable electric power supply. The focus is on deployment and learning-by-doing to reduce the electrolyzer costs and supply chain logistics. Electrolyzers are also scaling up quickly, from megawatt (MW) to gigawatt (GW).

Production process technologies for green hydrogen

Because of economics and technical maturity, most hydrogen production today involves fossil fuel conversion and separation. In several countries, steam methane reformation of natural gas followed by water-gas shift (WGS) reactions and pressure wing absorption (PSA) purification is the preferred approach. In some countries, coal gasification is combined with WGS reactions and PSA purification to produce, depending on the type of coal used. Both approaches create by-product streams of CO2, which are typically vented into the atmosphere or combined with produced ammonia to make urea.

Green hydrogen is formed by using renewable energy to power electrolysis which splits water molecules into their constituent elements namely hydrogen and oxygen. The green hydrogen formed through this process is a clean energy source which can be stored for a long time and transported over considerable distances. All the green hydrogen production methods are normally not used presently. But because of the increasingly widespread availability and lower cost of solar and wind electric power, green electrolytic hydrogen is expected to become the most common means of producing hydrogen in the future. Hydrogen produced by electrolysis using electric power from power grids with high average CO2 emissions (due to fossil-fired generation) is not considered green because of the associated upstream greenhouse gas emissions (GHG) emissions.

There are three major electrolysis technologies with different levels of maturity for the production of green hydrogen. These three technologies are (i) alkaline electrolysis, (ii) proton exchange membrane, and (iii) solid oxide electrolyzers. These three technologies are described below.

Alkaline electrolysis process – Alkaline systems have operated for over 100 years, and alkaline electrolyzers have operated for decades. Alkaline electrolysis is the most common electrolyzer process which is available today. It is the most basic and mature technology and has a market share of around 70 % of the very small green hydrogen present market. It benefits from low cost, and this process has a long operational life.

The alkaline electrolyzers consist of an anode and cathode separated by a porous separator (such as Zirfon) immersed in an aqueous alkali hydroxide electrolyte (typically potassium hydroxide, KOH). They show 59 % to 70 % conversion efficiency, and their relatively low cost (USD 860 / kW to USD 1,240 / kW) has led most industrial producers to favour them over other approaches. Alkaline electrolyzers perform poorly with intermittent and fluctuating power sources because of slow start-up and cross-diffusion of hydrogen and oxygen molecules under low system loads

This process applies a solution which needs recirculating of the electrolyte into and out the stack components to separate hydrogen from water molecules by applying electric power. This technology needs constant flow of electric power and hence it is less efficient with variable renewable energy sources. This process is required to run continuously or the production equipment can get damaged. The intermittent nature of renewable energy, hence, rules it out as a single source of power for the alkaline electrolysis process.

The advantages of the alkaline electrolysis process include (i) it relies on convenient catalysts and its electrolyte solutions are widely available and cheap to produce, (ii) cheap inputs also mean that a large part of the cost of the alkaline electrolysis process is labour which in turn implies considerable economies of scale.  (iii) electrolyte solutions are easily exchangeable and have minimal corrosive impact on the electrodes, implying relatively long useful life of the electrolyzer, and (iv) alkaline electrolysis produces highly pure hydrogen since hydrogen does not easily diffuse in the electrolyte solution. Fig 2 shows typical flow sheet of alkaline electrolysis process.

Fig 2 Typical flow sheet of alkaline electrolysis process

At the heart of alkaline electrolysis process is an electrolyzer. The electrolyzer consists of a series of cells each with a positive and negative electrode. The electrodes are immersed in water which has been made electrically conductive, achieved by adding hydrogen or hydroxyl ions, normally in the form of alkaline potassium hydroxide (KOH). The anode (positive electrode) is typically made of nickel and copper and is coated with oxides of metals such as manganese, tungsten, and ruthenium. The anode metal allows quick pairing of atomic oxygen into oxygen pairs at the electrode surface.

The cathode (negative electrode) is typically made of nickel, coated with small quantities of platinum as a catalyst. The catalyst allows quick pairing of atomic hydrogen into pairs at the electrode surface and thereby increases the rate of hydrogen production. Without the catalyst, atomic hydrogen builds up on the electrode and blocks current flow.

A gas separator, or diaphragm, is used to prevent intermixing of the hydrogen and oxygen although it allows free passage of ions. It is normally made of an asbestos-based material, and tends to break apart above 80 deg C.

The three reactions which are taking place at the cathode are (i) K+ + e- = K in which a positively charged potassium ion is reduced, (ii) K + H2O = K+ + H + OH- in which the ion reacts with water to form a hydrogen atom and a hydroxyl ion, (iii) H + H = H2 in which the highly reactive hydrogen atom bonds to the metal of the cathode and combines with another bound hydrogen atom.

The three reactions which are taking place at the anode are (i) OH- = OH + e- where a negatively charged hydroxyl ion is oxidized, (ii) 2OH = H2O + O where the ion reacts to form water and an oxygen atom, and (iii) O + O = O2 where the highly reactive oxygen atom then bonds to the metal of the anode and com-bines with another bound oxygen atom to form an oxygen molecule which then leaves the anode as a gas. Fig 2 shows a typical electrolysis cell.

Proton-exchange membrane process – It is also known as polymer electrolyte membrane (PEM) process. It is a modern electrolyzer technology known for higher efficiency and production rates. In this technology, a solid membrane is used to separate hydrogen. This process is more simple and agile compared to alkaline electrolysis process and allows for operation under differential pressures, typically 3 MPa to 7 MPa. The PEM electrolysis process has a market share of around 30 % and is being adopted by most of the leading electrolyzer manufacturers. PEM yields higher-quality hydrogen and can be operated intermittently, but is also expensive and has lower production rates than alkaline electrolysis process.

PEM electrolyzers perform better with fluctuating input currents and integrate better with intermittent power generation (e.g., wind and solar). In addition, they have the potential to produce hydrogen at higher pressures by electro-chemical compression. PEM electrolyzers’ capability to operate highly dynamically with intermittent load and at higher pressure balances their higher capital cost (USD 1,350 / kW to USD 2,200 / kW). These costs are expected to drop through innovation and deployment), which can lead to greater adoption of PEM systems.

In contrast with alkaline electrolysis which makes use of electrolyte solutions to catalyze the separation of hydrogen from water molecules, PEM electrolyzers use a solid polymer membrane which absorbs positively charged hydrogen atoms (separated from oxygen using electricity) and allows them to flow into a separate tank where they bond back together into hydrogen molecules. The technology is available commercially but in low quantities. An important advantage of PEM electrolyzers is that they are safer than alkaline electrolyzers because they do not require caustic or corrosive electrolytes.

The key advantages of PEM electrolysis process include (i) higher purity of output compared to alkaline electrolysis process, (ii) fast response times, which make PEM electrolyzers suitable to provide grid balancing services and allow PEMs to better deal with the volatility of renewable output (resulting in higher efficiency), and (iii) very small scale can be achieved and installation is simple, making PEM electrolyzers easy to bring onsite. However, PEM electrolyzers are more expensive. This is because more expensive materials are used for the PEM electrolyzers, meaning that there are limited economies of scale on large installations. Fig 3 shows typical flow sheet of PEM electrolysis process.

Fig 3 Typical flow sheet of PEM electrolysis process

Solid oxide electrolyzer process – Green hydrogen can also be produced using solid oxide electrolysis cells or anion exchange membrane electrolysis. The process uses the latest generation of electrolyzer cell which is still in the demonstration stage but has great future prospects. This technology produces hydrogen through high-temperature electrolysis of steam. It offers high efficiency at low cost.

Solid oxide electrolyzers are typically operated for high temperature water electrolysis or steam electrolysis, where a larger portion of the energy for splitting water molecules is provided in the form of heat. The process reduces the electric power consumption, resulting in a higher stack electrical efficiency but not necessarily a higher overall energy efficiency. While both solid oxide electrolysis cells and anion exchange membrane electrolysis have made significant progress in recent years and offer some advantageous characteristics, they need primary systems integration and durability proofs before they can achieve widespread commercial deployment.

Solid oxide electrolyzers, which use a solid ceramic material as the electrolyte, selectively conduct negatively charged oxygen ions at high temperatures to generate hydrogen in a slightly different way. Steam at the cathode combines with electrons from the external circuit to form hydrogen gas and negatively charged oxygen ions. The oxygen ions pass through the solid ceramic membrane and react at the anode to form oxygen gas and generate electrons for the external circuit.

Solid oxide electrolyzers are required to operate at temperatures high enough for the solid oxide membranes to function properly (around 700 deg C to 800 deg C, compared to PEM electrolyzers, which operate at 70 deg C to 90 deg C, and commercial alkaline electrolyzers, which typically operate at less than 100 deg C). Advanced laboratory scale solid oxide electrolyzers based on proton conducting ceramic electrolytes are showing promise for lowering the operating temperature to 500 deg to 600 deg C. The solid oxide electrolyzers can effectively use heat available at these high temperatures (from various sources, including nuclear energy) to decrease the amount of electrical energy needed to produce hydrogen from water.

The solid oxide electrolyzers need a long startup time and the components of this process have a short operational life. Fig 4 shows typical flow sheet of solid oxide electrolyzer process.

Fig 4 Typical flow sheet of solid oxide electrolyzer process

Water consumption for green hydrogen

The water footprint of electrolytic hydrogen is very small. This water footprint arises from both direct consumption of fresh water in the electrolysis reaction and the fresh water consumption associated with the required electric power generation. The water consumed directly in an electrolyzer is required to be purified beforehand, but this purification process accounts for around 0.4 % of the energy consumption of green hydrogen production. The water consumption of electric power generation is considerably larger for fossil electric power compared to solar and wind power due to the evaporation of water which is most frequently used in thermo-electric power plants for the required cooling step. Using thermo-electric power, electrolytic hydrogen has an overall water consumption of around 130 litres of water per kg of hydrogen. By contrast, green hydrogen production powered by solar or wind has a water footprint of around 30 litres of water per kg of hydrogen. With a 30 litres of per kg of hydrogen water consumption, supplying the world’s current 70 million tons per year demand for hydrogen using green H2 will consume 2.1 billion cubic metre of fresh water per year, which is three orders of magnitude less than global fresh water consumption of around 1,500 billion cubic metre per year for non-agricultural activities. In specific locations and applications, such as arid coastal environments, the water footprint of green hydrogen can stress limited fresh water resources, in which case technologies are being developed to directly electrolyze sea water instead of fresh water to produce hydrogen.

Drivers for present interest for green hydrogen

There have been several waves of interest in hydrogen in the past. These waves were mostly driven by oil price shocks, concerns about peak oil demand or air pollution, and research on alternative fuels. Hydrogen can contribute to energy security by providing another energy carrier with different supply chains, producers and markets and this can diversify the energy mix and improve the resilience of the system. Hydrogen can also reduce air pollution when used in fuel cells, with no emissions other than water. It can promote economic growth and job creation given the large investment needed to develop it as an energy carrier from an industrial feedstock. As a result, more and more energy scenarios are giving green hydrogen a prominent role, although with considerably different volumes of penetration. The new wave of interest is focused on delivering low-carbon solutions and additional benefits which only green hydrogen can provide. The drivers for green hydrogen include the following.

Low VRE electricity costs – The major cost driver for green hydrogen is the cost of electricity. The price of electricity procured from solar PV (photovoltaic) and onshore wind power plants has decreased substantially in the last decade. The price level in 2008 for solar PV was around from 250 USD per megawatt hour (MWh) in 2018 which has come down to 56 USD per MWh in 2018. Similarly, onshore wind prices have also fallen during the period, from 75 USD per MWh in 2010 to 48 USD per MWh in 2018. By 2020, the price level for solar PV electricity has further come down to new record low levels of less than 14 USD per MWh in some countries. With the continuously decreasing costs of solar PV and wind electric power, the production of green hydrogen is increasingly becoming economically attractive.

Technologies ready to scale up – Several of the components in the hydrogen value chain have already been deployed on a small scale and are ready for their utilization commercially and now need investment to scale up. The capital cost of electrolysis has fallen by 60 % since 2010, resulting in a decrease of hydrogen cost from a range of 10 USD per kilogram (USD/kg) – 15 USD/kg to as low as 4 USD/kg – 6 USD/kg in 2018. Many strategies exist to bring down costs further and support a wider adoption of hydrogen. The cost of fuel cells for vehicles has decreased by at least 70 % since 2006. While some technologies have not been demonstrated at scale yet (such as ammonia-fuelled ships), scaling up green hydrogen can make these pathways more attractive since the production costs is going to decrease.

Benefits for the power system – As the share of VRE rapidly increases around the world, the power system is going to need more flexibility. The electrolyzers used to produce green hydrogen can be designed as flexible resources which can quickly ramp up or down to compensate for fluctuations in the renewable energy production. Green hydrogen can be stored for long periods, and can be used in periods when VRE is not available for power generation with stationary fuel cells or hydrogen-ready gas turbines. Flexible resources can reduce VRE curtailment, stabilize wholesale market prices and reduce the hours with zero or below zero electricity prices (or negative price), which increases the investment recovery for renewable generators and facilitates their expansion. Finally, hydrogen is suitable for long-term, seasonal energy storage, complementing pumped-storage hydro-power plants. Green hydrogen thus supports the integration of higher shares of renewal energy into the grid, increasing system efficiency and cost effectiveness.

Government objectives for net-zero energy systems – Around middle of 2020, seven countries had already adopted net-zero GHG emission targets in legislation, and 15 others had proposed similar legislation or policy documents. In total, more than 120 countries have announced net-zero emissions goals. While these net-zero commitments have still to be transformed into practical actions, they need cutting emissions in the ‘hard-to-abate’ sectors where green hydrogen can play an important role.

Broader use of hydrogen – Earlier waves of interest in hydrogen were focused mainly on expanding its use in fuel cell electric vehicles (FCEVs). In contrast, the present interest covers several possible green hydrogen uses across the entire economy, including the additional conversion of hydrogen to other energy carriers and products, such as ammonia, methanol and synthetic liquids. These uses can increase the future demand for hydrogen and can take advantage of possible synergies to decrease costs in the green hydrogen value chain. Green hydrogen can, in fact, improve industrial competitiveness, not only for the countries which establish technology leadership in its deployment, but also by providing an opportunity for the existing industries to have a role in a low-carbon future. Countries with large renewable resources can derive major economic benefits by becoming net exporters of green hydrogen in a global green hydrogen economy.

Interest of multiple stakeholders – As a result of all the above points, interest in hydrogen is now widespread in both public and private organizations and institutions. These include energy utilities, iron and steel producers, chemical industry, port authorities, car and aircraft manufacturers, ship owners and airlines, multiple jurisdictions and countries aiming to use their renewable resources for export or to use hydrogen to improve their own energy security. These many players have also created partnerships and ongoing initiatives to foster collaboration and co ordination of efforts.

Green hydrogen role in different scenarios of energy transition

Green hydrogen role in the present regional and global energy transition scenarios differs greatly because of a number of factors. The first factor is that not all scenarios aim for the same GHG reduction target. The more ambitious is the GHG reduction target, the greater is the amount of green hydrogen expected in the system. For low levels of decarbonization, renewable electric power and electrification can be sufficient. But with deeper targets for decarbonization, green hydrogen is to play a larger role in the future energy mix.

The second factor is that not all scenarios rely on the same set of enabling policies. The removal of fossil fuel subsidies, for example, increases the space for carbon-free solutions. The third factor is that the technology options available vary between scenarios. Scenarios which give higher weightge to the social, political, and sustainability challenges of nuclear, CCUS, and bio-energy anticipate limited contributions from those technologies to the energy transition, and hence need higher green hydrogen use. As per the fourth factor, the more end uses for green hydrogen are included in a scenario, the higher is going to be the hydrogen use.

Scenarios which cover all hydrogen applications and down-stream conversion to other energy carriers and products provide more flexibility in ways to achieve decarbonization. More hydrogen pathways also help create larger economies of scale and faster deployment, leading to a virtuous circle of increasing both demand and supply. Finally, cost assumptions, typically input data including capital and operating costs differ between different scenarios. Those with the highest ambitions for hydrogen deployment are the ones with the most optimistic assumptions for cost reduction. For all these reasons, the role of green hydrogen varies widely between scenarios. However, as more and more scenarios are being developed to reach zero or net-zero emissions, green hydrogen is more prominently present in scenarios and public dialogue.

Barriers for green hydrogen

Green hydrogen faces a number of barriers which prevent its full contribution to the energy transformation. Barriers include those which apply to all colours of hydrogen, such as the lack of dedicated infrastructure (for example transport and storage infrastructure), and those mainly related to the production stage of electrolysis, faced only by green hydrogen (for example, energy losses, lack of value recognition, challenges ensuring sustainability and high production costs).

High production costs – Green hydrogen produced using electric power from an average VRE plant was two to three times more expensive than grey hydrogen in the year 2019. In addition, adopting green hydrogen technologies can be expensive for different end uses. Vehicles with fuel cells and hydrogen tanks cost at least 1.5 times to 2 times more than their fossil fuel counterparts. Similarly, synthetic fuels for aviation are today, even at the best sites in the world, upto eight times more expensive than fossil jet fuel.

Lack of dedicated infrastructure – Hydrogen has to date been produced close to where it is used, with limited dedicated transport infrastructure. There are only around 5,000 kilometers (kms) of pipelines around the world for the transmission of hydrogen as compared with more than 3 million kms of pipelines for the transmission of natural gas. There are only around 470 hydrogen refuelling stations around the world. Some of the natural gas infrastructure can be modified for hydrogen, but not all regions of the world have existing infrastructure. On the other hand, it can be possible to use existing infrastructure for synthetic fuels made from green hydrogen, though it has the need to be expanded.

Energy losses – Green hydrogen incurs considerable energy losses at each stage of the value chain. Around 30 % to 35 % of the energy used to produce hydrogen through electrolysis is lost. In addition, the conversion of hydrogen to other carriers (such as ammonia) can result in 13 % to 25 % of the energy loss, and transporting hydrogen needs additional energy inputs, which are typically equivalent to 10 % to 12 % of the energy of the hydrogen itself. Use of hydrogen in the fuel cells can lead to an additional 40 % to 50 % of energy loss. The total energy loss is dependent on the final use of hydrogen. The higher is the energy losses, the more renewable electric power capacity is needed to produce green hydrogen.

However, the key issue is not the requirement of the total capacity, since global renewable potential is in orders of magnitude higher than the hydrogen demand, and green hydrogen developers are likely to first select areas with abundant renewable energy resources. The key issue is whether the annual pace of development of the solar and wind potential is going to be fast enough to meet the needs for both the electrification of end-uses and the development of a global supply chain in green hydrogen, and the cost which this additional capacity is going to entail.

Lack of value recognition – There is at present no green hydrogen market, no green steel, no green shipping fuel, and basically no valuation of the lower GHG emissions which green hydrogen can deliver. Hydrogen is not even counted in official energy statistics of total final energy consumption, and there are no internationally recognized ways of differentiating green from grey hydrogen. At the same time, the lack of targets or incentives to promote the use of green products inhibits several of the possible down-stream uses for green hydrogen. This limits the demand for green hydrogen.

Need to ensure sustainability – Electric power can be supplied from a renewable energy plant directly connected to the electrolyzer, from the grid, or from a mix of the two. Using only electricity from a renewable energy plant ensures that the hydrogen is ‘green’ in any given moment. Grid-connected electrolyzers can produce for more hours, reducing the cost of hydrogen. However, grid electricity can include electricity produced from fossil fuel power plants, so any CO2 emissions associated with that electric power is required to be considered when evaluating the sustainability of hydrogen. As a result, for the production of hydrogen from electrolysis, the quantity of fossil fuel-generated electric power can become a barrier, in particular if the relative carbon emissions are measured based on national emission factors.

Key cost components for green hydrogen

Green hydrogen is to compete both with fossil fuels and with the hydrogen of other colours. Hence, it is important to understand the factors which determine the cost of green hydrogen. The production cost of green hydrogen depends on the investment cost of the electrolyzers, their capacity factor, which is a measure of the extent to which the electrolyzer is actually used, and the cost of electricity produced from the renewable energy. However, if the load factors are higher, investment costs make a smaller contribution to the per-kg green hydrogen cost. Hence, as the facility load factor increases, the electrolyzer investment cost contribution to the final hydrogen production cost per kg drops and the electric power cost becomes a more relevant cost component.

At a given cost of electric power, the electric power component in the final cost of hydrogen depends on the efficiency of the process. Since at present, there is relatively high cost of electrolyzers, low-cost electric power is needed to produce green hydrogen at prices comparable with grey hydrogen. The objective of green hydrogen producers is now to reduce these costs, using different strategies. Once the costs of the electrolyzers have fallen, then it becomes possible to use higher cost renewable electric power to produce cost-competitive green hydrogen.

Transporting hydrogen generates additional costs. Transport costs are a function of the volume transported, the distance and the energy carrier. At low volumes, the cost of transporting compressed hydrogen 1,000 km in a truck is relatively high as compared to the costs involved in transporting using large pipelines (around 2,000 tons per day) over short distances. Hydrogen transport by pipeline can be one-tenth of the cost of transporting the same energy as electric power.

Important issues related to green hydrogen

Despite the promise of green hydrogen, it represents less than 1 % of the existing hydrogen market. To play a substantial role as fuel or feedstock in a circular carbon economy, green hydrogen production is required to increase around 1,000 times over the next 30 years.

Interest in green hydrogen is increasing since it is one of the solutions for an energy transition toward net-zero carbon emissions. However, the significance is placing a broader focus on creating a link between renewable electric power and hard to-electrify end uses. Its drivers include (i) low renewable electric power costs, (ii) the maturity of relevant technology, (iii) power system flexibility benefits, (iv) national pledges to achieve net-zero emissions, and (v) a more extensive base of interested stake holders.

Global interest in hydrogen as an energy source is expected to keep growing over the next decade and toward 2050, with an increased share of hydrogen in the projected global energy mix of various sovereign and corporate climate change commitments. The falling price of renewables to power electrolyzers has also increased the potential for availability of cheap green hydrogen for replacing fossil power plants with hydrogen-fueled power stations (this is to be true as well for price reduction for other zero-carbon electric power supplies).

With a number of targets, mandates, and policy incentives globally which directly support green hydrogen production, spending on hydrogen energy research, development, and demonstration by national governments has also risen. These investments have led to deployment of green hydrogen projects with the potential of meeting around 18 % of the global total energy needs by 2050 using hydrogen technologies, giving rise to a big potential market globally by 2050.

At the same time, the widespread use of green hydrogen in global energy transitions faces several challenges which includes (i) It is to compete with the hydrogen which is presently produced from the fossil fuels, (ii) presently, producing hydrogen from low-carbon energy is costly which is to be brought down substantially, (iii) the use of the hydrogen is to be widened from its present use which is mostly in oil refining and for the production of ammonia, (iv) use of hydrogen is also to be adopted in sectors where it is presently almost completely absent, such as transport, buildings, and power generation etc., (v) the development of hydrogen infrastructure is a challenge and is holding back widespread adoption of hydrogen and for this new and upgraded pipelines and efficient and economic shipping solutions need further development and deployment, and (vi) regulations presently limit the development of a green hydrogen industry and they need revision  to ensure that the regulations are not an unnecessary barrier to investment.

Green hydrogen and fuels made from green hydrogen (e.g., ammonia, methanol, and aviation fuels) can reduce GHG emissions considerably through fuel substitution in the transportation sector, industrial sector, and power sector. They can provide (i) heat to buildings and industrial processes, (ii) serve as a feedstock to chemical and fuel production, including synthetic hydrocarbon fuels, and (iii) serve as a reducing gas in manufacturing processes (e.g. iron and steel, glass, and computer chips). They can anchor the recycling of CO2 through conversion to fuels, chemicals, and materials. Green hydrogen also can enable greater contribution of renewable electricity in the power grid by adding reliability of supply (e.g., through storage, fuel cells, and hydrogen turbines). Several countries have large renewable energy resources which can produce hydrogen, and the technology to produce, convert, and use green hydrogen today is mature.

Beyond the high cost of green hydrogen production today, the scale-up of green hydrogen markets is limited by infrastructure, specifically infrastructure associated with the transport, storage, delivery, and dispensing of hydrogen. Transport of gaseous hydrogen needs compressors and special tanks, and liquid transport needs liquefaction trains and special containers. Pipeline infrastructure and fueling infrastructure are also severely limited today. To enable ease of storage and transport, green hydrogen can need ammonia synthesis, storage, handling, and fueling infrastructure to utilize ammonia as a hydrogen carrier. In addition to the enormous amounts of zero-carbon power, green hydrogen production needs corresponding electric power generation infrastructure, which is desirable nonetheless for economy-wide decarbonization.

Because it is so versatile, green hydrogen presents opportunities for uptake and use in several sectors across a circular carbon economy. Because zero-carbon electric power is the principal cost to green hydrogen development at scale, regions and nations with high renewable electricity generation potential are well positioned to take advantage of emerging markets enabled by emerging policies. Similarly, limits to green hydrogen uptake and deployment are to be countered to maximize its economic and environmental potential.

The ability of green hydrogen services and goods to scale rapidly into major markets is limited by technical, economic, policy, infrastructure, and public acceptance challenges. To manifest the opportunities of green hydrogen to maximal climate and economic benefit, several actions and investments are needed.

Though, water splitting to make hydrogen and oxygen through electrolysis has been documented and used for over 200 years, commercial use of electrolysis at scale has only just begun. The high cost and limited experience with many large-scale hydrogen production methods limits the speed and scale of deployment today. For example, mass production of alkaline and PEM electrolyzers, the two most mature green hydrogen production technologies, remains limited and expensive today. Although some groups have projected rapid cost reductions, these are not yet matched by an innovation agenda focused on applied science and demonstration in most countries. Also, important technology options for green hydrogen production, such as solid oxide electrolysis, are at low levels of technology readiness and have received almost no R&D (research and development) funding. These low levels of funding and policy support are especially stark in comparison to the amount of R&D and policy funding support given to comparably important solar, wind, and battery energy storage technologies around the world.

Innovation in green hydrogen needs to involve both investment in improving the cost, performance, and efficiency to move it beyond the low technology readiness level (TRL) as well as development and demonstration of enabling engineering and technology which can further reduce cost and improve performance. At low TRLs, innovation investments can include catalysts and special materials to reduce energy requirements and costs for water splitting (e.g. photo-catalytic materials or ceramic membranes). At higher TRLs, the innovation focus can include seals, coatings, low-cost manufacturing and balance-of-system optimization concerns for alkali and PEM electrolyzer stacks. Although some countries have started to increase programmatic investments, much more investment, of the order of billions of USD is needed for achieving rapid scale.

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