Hydrogen to play key role in decarbonisation

Hydrogen is set to play a key role in the utilities sector as the world starts to actively pursue decarbonisation strategies.

The path to net-zero has picked up momentum recently, since targets have been set by the UAE, Saudi Arabia, Bahrain, Japan, South Korea, and Canada with the aim of becoming carbon neutral by 2050.

China has also set a target to decarbonise by 2060 and the Biden administration has recommitted to the Paris agreement.

While global demand for hydrogen currently sits at 8-10 exajoules (EJ), this is set to grow significantly.

The EU published its plans for renewable energy last summer and is aiming for hydrogen to make up six gigawatts (GW) of capacity by 2024 and reaching 40 GW by 2030.

The Hydrogen Council has estimated that hydrogen could make up a fifth of energy demand by mid-century and is the lowest-cost solution to decarbonisation.

Currently, approximately 95% of worldwide hydrogen is produced through fossil fuels, according to the International Renewable Energy Agency (IRENA).

However, hydrogen from renewable sources has the potential to transform the energy industry which is facing key challenges.

Despite the opportunities and a drive in decarbonisation, the International Energy Agency (IEA) says demand for low-carbon hydrogen remains low, with interest mainly coming from the transport industry.

It says that more efforts are needed to create demand and encourage industries to make the switch to low-carbon hydrogen.  

Ferdinand Varga, Managing Director and Senior Partner of Boston Consulting Group, the Strategic Insights Partner of the World Utility Congress said: ‘One of the most forward-looking energy supplies for industries is low-carbon fuels, specifically hydrogen. Meeting the future demand for hydrogen will not be easy, as production and supply of it might require subsidisation of its production to close the gap with other forms of low–carbon fuels—and most importantly, an adequate supply of cheap renewable power. Discussion on how hydrogen will play a key role in the decarbonisation of the utility sector will help to provide a path forward on when, where, and how players should participate in it.’

The cost of green hydrogen is beginning to drop, as solar and wind power becomes cheaper and electrolyser capacity improves.

But the scaling up of hydrogen faces challenges, as renewable capacity is slow to increase, limited funds have been allocated to hydrogen production projects, and carbon-intensive sectors, such as transport, are slow to pick up the fuel.

Photo by Sigmund