A key element of our energy future?

The prospects for a hydrogen based fuel economy are enjoying unprecedented momentum around the world. The IEA believes that to seize this opportunity, governments and industry need to be taking ambitious and real-world action now. Its study provides an assessment of hydrogen that lays out where things stand now, the ways in which hydrogen can help to achieve a clean, secure and affordable energy future, and how we can go about realising its potential. It has identified the most promising opportunities to provide a springboard for the future.

Prospects

The IEA report finds that clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly. It concludes that now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used. The recommendations to governments and industry that are provided should make it possible to take full advantage of this increasing momentum.

Hydrogen can help tackle various critical energy challenges. It offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help improve air quality and strengthen energy security. Despite very ambitious international climate goals, global energy-related CO2 emissions reached an all time high in 2018. Outdoor air pollution also remains a pressing problem, with around 3 million people dying prematurely each year.

Hydrogen is versatile. Technologies already available today enable hydrogen to produce, store, move and use energy in different ways. A wide variety of fuels are able to produce hydrogen, including renewables, nuclear, natural gas, coal and oil. It can be transported as a gas by pipelines or in liquid form by ships, much like liquefied natural gas (LNG). It can be transformed into electricity and methane to power homes and feed industry, and into fuels for all kinds of vehicles.

Role of renewables

Hydrogen can enable renewables to provide a greater contribution. It has the potential to help with variable output from renewables, like solar photovoltaics and wind, whose availability is not always well matched with demand. Hydrogen
is one of the leading options for storing energy from renewables and looks promising as a lowest-cost option for storing electricity over days, weeks or even months. Hydrogen and hydrogen- based fuels can transport energy from renewables over long distances – from regions with abundant solar and wind resources, to cities thousands of kilometres away.

There have been false starts for hydrogen in the past; this time could be different. The recent successes of solar PV, wind, batteries and electric vehicles have shown that policy and technology innovation have the power to build global clean energy industries. With a global energy sector in flux, the versatility of hydrogen is attracting stronger interest from a diverse group of governments and companies. Support is coming from governments that import and export energy as well as renewable electricity suppliers, industrial gas producers, electricity and gas utilities, automakers, oil and gas companies, major engineering firms, and cities.

Wider applications

Hydrogen can be used much more widely. Today, it is used mostly in oil refining and for the production of fertilisers. For it to make a significant contribution to clean energy transition, it also needs to be adopted in sectors where it is almost completely absent at the moment, such as transport, buildings and power generation, but the, widespread use of hydrogen in global energy transitions faces several challenges: 

• Producing hydrogen from low-carbon energy is costly. IEA analysis finds that the cost of producing hydrogen from renewable electricity could fall 30% by 2030 as a result of declining costs of renewables and the scaling up of hydrogen production. Fuel cells, refuelling equipment and electrolysers can all benefit from mass manufacturing.
• The development of a hydrogen infrastructure is slow and holding back widespread adoption. Hydrogen prices for consumers are highly dependent on how many refuelling stations there are, how often they are used and how much hydrogen is delivered per day. Tackling this will require planning and co-ordination that brings together national and local governments, industry and investors.
• Hydrogen is almost entirely supplied from natural gas and coal today. Hydrogen is already with us at industrial scale all around the world, but its production is responsible for annual CO2 emissions equivalent to those of Indonesia and the United Kingdom combined. Harnessing this existing scale on the way to a clean energy future requires both the capture of CO2 from hydrogen production from fossil fuels and greater supplies of hydrogen from clean electricity.
• Regulations currently limit the development of a clean hydrogen industry. Government and industry must work together to ensure existing regulations are not an unnecessary barrier to investment. Trade will benefit from common international standards for the safety of transporting and storing large volumes of hydrogen.

Opportunities

The IEA has identified four near-term opportunities to boost hydrogen on the path towards its widespread use. Focusing on these could help achieve the necessary scale to bring down costs and reduce risks for governments and the private sector.

1. Make industrial ports the nerve centres for scaling up the use of clean hydrogen. Much of the refining and chemicals production that uses hydrogen based on fossil fuels is already concentrated in coastal zones around the world, such as the North Sea in Europe, the Gulf Coast in North America and SE China. Encouraging these plants to shift to cleaner hydrogen production would drive down overall costs. These large sources of hydrogen supply can also fuel vessels and trucks serving the ports and power other nearby industrial facilities like steel plants.
2. Build on existing infrastructure, such as millions of kilometres of natural gas pipelines. Introducing clean hydrogen to replace just 5% of the volume of countries’ natural gas supplies would significantly boost demand for hydrogen and drive down costs.
3. Expand hydrogen in transport through fleets, freight and corridors. Powering high- mileage cars, trucks and buses to carry passengers and goods along popular routes can make fuel-cell vehicles more competitive.
4. Launch the hydrogen trade’s first international shipping routes, referencing lessons from the successful growth of the global LNG market. International hydrogen trade needs to start soon if it is to make an impact on the global system.

International co-operation is vital – if governments work to scale up hydrogen in a co-ordinated way, it can help to spur investments in factories and infrastructure that will bring down costs and enable the sharing of knowledge and best practices. Trade in hydrogen will benefit from common international standards. As the global energy organisation that covers all fuels and all technologies, the IEA will continue to provide rigorous analysis and policy advice. As a roadmap for the future, it is offering seven key recommendations to help governments and others to seize the chance to enable hydrogen to fulfil its long-term potential.

Key recommendations for scaling up

• Establish a role for hydrogen in long-term energy strategies. National, regional and city governments can guide future expectations. Companies should also have clear long-term goals. Key sectors include refining, chemicals, iron and steel, freight transport, buildings, and power generation and storage.
• Stimulate commercial demand for clean hydrogen. Clean hydrogen technogies are available but costs remain challenging. Policies that create sustainable markets for clean hydrogen, especially to reduce emissions from fossil fuel-based hydrogen, are needed to underpin investments. By scaling up supply chains, these investments can drive cost reductions, whether from low- carbon electricity or fossil fuels with CCuS.
• Address investment risks of first-movers. New applications for hydrogen, as well as clean hydrogen supply and infrastructure projects, stand at the riskiest point of the deployment curve. Targeted and time-limited loans, guarantees and other tools can help the private sector to learn and share risks.
• Support R&D to bring down costs. Alongside cost reductions from economies of scale, R&D is crucial to lower costs and improve performance, including for fuel cells, hydrogen-based fuels and electrolysers. Government actions, including use of public funds, are critical in setting the research agenda, taking risks and attracting private capital for innovation.
• Eliminate unnecessary regulatory barriers and harmonise standards. Project developers face hurdles where regulations and permit requirements are unclear, unfit for new purposes, or inconsistent across sectors and countries. Sharing knowledge and harmonising standards is key, including for equipment, safety and certifying emissions.
• Engage internationally and track progress. Enhanced international co- operation is needed across the board but especially on standards, sharing of good practices and cross- border infrastructure. Hydrogen production and use need to be monitored and reported on a regular basis to keep track of progress towards long-term goals.
• Focus on four key opportunities to further increase momentum over the next decade. By building on current policies, infrastructure and skills, these mutually supportive opportunities can help to scale up infrastructure development, enhance investor confidence and lower costs; make the most of existing industrial ports to turn them into hubs for lower-cost, lower-carbon hydrogen; use existing gas infrastructure to spur new clean hydrogen supplies; support transport fleets, freight and corridors to make fuel-cell vehicles more competitive; establish the first shipping routes to kick- start the international hydrogen trade. 

Repurposing the natural gas network 

The UK is investigating supplying hydrogen to homes and businesses by ‘repurposing’ the natural gas network. In a new report titled ‘Transitioning to hydrogen’, experts from a cross-professional engineering institution working group, including the Institution of Engineering and Technology, have assessed the engineering risks and uncertainties and concluded there is no reason why repurposing the gas network to hydrogen cannot be achieved. But there are several engineering risks and uncertainties that need to be addressed. 

The risks and uncertainties

Hydrogen experience is limited to industrial applications only and there are no examples of networks anywhere in the world supplying 100% hydrogen to homes and business. To make a significant contribution to meeting the UK’s 2050 GHG (greenhouse gas) target, large-scale deployment to homes and businesses would need to be implemented over the next 30 years. The report identifies 15 core questions that need to be addressed before large-scale deployment can be achieved.

Although natural gas has helped reduce the UK’s CO2 emissions by displacing coal and oil (which produce around twice as much CO2), it has now become the largest source of carbon emissions in the UK. 40% of electricity generation is from gas, 85% of homes are heated by gas, 50% of the energy used for industry and businesses is from gas.

When burned, hydrogen produces no CO2 and so it offers the prospect of a low-carbon alternative to natural gas.

Factors

Hydrogen allows much of the existing gas infrastructure to be used, it can be used by industry, businesses and homes, ‘hydrogen-ready’ gas boilers will have to be produced, hydrogen can be produced in large volumes, production from gas reforming has been used by industry for years, but a by-product is CO2, which needs to be captured and stored.

Key conclusions

• Progress CCuS infrastructure – CCuS (carbon capture, utilisation and storage) infrastructure is essential to the bulk production of hydrogen.
• Deploy critical new technology – new technologies will need to be deployed for which there is limited experience.
• Prepare a transition programme – this needs to include sufficient detail to ensure the identification of critical path items and their associated uncertainties.
• Assumptions will need to be underpinned by evidence and where evidence is not available, it will need to be sought.
• Develop skills and plan resources – transitioning to hydrogen will require a broad range of skills and resources. Mobilising these resources will necessitate the commitment from many parties.
• Fund the programme – the transition programme will require substantial investment over many years. 

Image: Comparison of natural gas and low carbon heating technologies for large scale retrofit deployment to domestic buildings. Hydrogen compares well with other low-carbon heat technologies. The diagram compares the primary heating technologies suitable for large-scale retrofit deployment against several criteria.