Green hydrogen represents a promising zero-emission alternative to fossil fuels. It is generated by harnessing renewable electricity to split hydrogen from water molecules, producing only water vapor as a byproduct. This innovative energy source holds the potential to significantly decarbonize hard-to-abate sectors, including heavy industry, long-haul aviation, and transportation. However, challenges such as high production costs, the need for infrastructure updates, and the scaling up of green hydrogen facilities persist.
Green hydrogen’s ability to store energy for future use makes it a crucial component in the global transition toward sustainable energy, especially when compared to conventional renewable electricity. Moreover, producers can generate hydrogen using nuclear energy or fossil fuels in combination with Carbon Capture, Utilization, and Storage (CCUS) technologies, resulting in low-emission hydrogen solutions, often referred to as blue hydrogen.
The Promise of Green Hydrogen
Decarbonizing all sectors of the global economy poses considerable challenges, particularly in hard-to-abate sectors like heavy industry, long-haul aviation, and transportation, where direct electricity usage is impractical. Here, green hydrogen emerges as a viable alternative.
By utilizing renewable electricity, this energy source offers widely accessible solutions for fossil fuels and has immense potential to facilitate the global shift toward sustainable energy. As the most abundant element in the universe, hydrogen serves as a clean and versatile energy carrier. It can significantly reduce our reliance on fossil fuels, thereby accelerating the transition to a cleaner and greener future.
What is Green Hydrogen?
Hydrogen is a colorless and odorless gas that acts as an energy carrier, capable of delivering or storing vast amounts of energy, such as in fuel cells for electricity generation. Presently, hydrogen finds extensive use in petroleum refining, fertilizer production, metal treatment, and food processing. Additionally, it plays a role in transportation: hydrogen internal combustion engine vehicles (HICEVs) utilize modified gasoline engines, while electric vehicles often incorporate fuel cells in conjunction with batteries to power their electric motors.
However, the global production of hydrogen currently stands at around 75 million tons annually, predominantly through processes that rely on fossil fuels like natural gas and coal. This conventional production method contributes to substantial CO2 emissions. The International Energy Agency (IEA) reports that nearly all hydrogen production today relies on natural gas and coal, primarily for the chemicals and refining sectors, resulting in 830 million tons of CO2 emissions each year.
In contrast, green hydrogen is produced by applying renewable electricity—such as wind energy—to power an electrolyzer that separates hydrogen from water molecules, resulting in zero emissions. The only byproduct of this process is water vapor. Importantly, unlike most renewable electricity forms, we can store green hydrogen for future use.
It’s worth noting that low-emission hydrogen can also be generated from nuclear power or fossil fuels like natural gas when combined with CCUS technologies that capture CO2 emissions. While blue hydrogen utilizing CCUS is crucial for increasing low-emission hydrogen production in the short to medium term, green hydrogen stands out as a zero-carbon solution and is regarded as the ultimate goal in the energy transition.
The Potential of Green Hydrogen
The large-scale adoption of green hydrogen will enable an environmentally friendly expansion of hydrogen usage beyond its current applications. Green hydrogen has the capacity to dramatically reduce carbon emissions across various sectors, including long-haul transport, steel and iron production, cement manufacturing, and chemical processing.
For instance, long-haul transport accounts for around 7% of global CO2 emissions, making it a particularly challenging sector to decarbonize. By utilizing green hydrogen as a fuel source, we can significantly lower emissions from this sector, which currently relies heavily on fossil fuels.
Similarly, the cement industry is a substantial contributor to CO2 emissions, representing about 7% of total global emissions. The production of cement clinker, a vital component of cement, requires high temperatures and generates considerable carbon emissions. Implementing green hydrogen as a fuel source in cement production could help mitigate carbon emissions in this industry.
Moreover, the chemical industry contributes approximately 10% of global carbon emissions, primarily due to chemical production processes. Green hydrogen can serve as both a sustainable fuel and a feedstock, especially in ammonia production, thereby significantly curtailing emissions from this sector.
In the iron and steel industries, which are responsible for about 4% of anthropogenic CO2 emissions in Europe and 9% worldwide, the heavy reliance on coal is a major issue. Steel production requires substantial amounts of coal to convert iron ore into iron in blast furnaces and then transform the iron into steel in basic oxygen converters. By substituting coal with green hydrogen, the industry can effectively decarbonize, significantly reducing emissions associated with steel production.
High Costs and Infrastructure
Transitioning to green hydrogen is essential for achieving carbon-neutral industries. However, this shift faces challenges, including high production costs. Currently, replacing coal with green hydrogen could increase the price of a ton of steel by roughly one-third. Despite this, there is room for optimism. As renewable electricity costs continue to decline and carbon-emission pricing raises the cost of coal usage, the financial viability of green hydrogen improves.
Furthermore, scaling up green hydrogen production and optimizing hydrogen-based steel manufacturing processes can lead to enhanced efficiency and reduced costs. A European Parliament briefing paper highlights that green hydrogen can fully decarbonize steel production processes, although this requires establishing more pilot plants and increasing the overall production of green hydrogen.
Technological readiness is currently limited and needs validation at scale. Therefore, expanding green hydrogen facilities is crucial for achieving price parity with hydrogen produced from fossil fuels. The International Renewable Energy Agency (IRENA) notes that increasing plant sizes from 1 MW to 20 MW can cut costs by over one-third.
Additionally, IRENA emphasizes the need for stable, long-term policy frameworks and key international climate goals to support large-scale development and deployment, which will drive rapid cost reductions for green hydrogen. Achieving the necessary trajectory to limit global warming to 1.5°C could make electrolyzers approximately 40% cheaper by 2030, according to IRENA.
Adapting existing gas transport infrastructure to accommodate green hydrogen is also vital. While significant reconfiguration and adaptation will be necessary, existing gas pipelines can potentially transport green hydrogen, thereby reducing the need for expensive new infrastructure. The International Energy Agency (IEA) estimates that repurposing natural gas pipelines for green hydrogen transport could decrease investment costs by 50% to 80% compared to building new pipelines. However, the IEA cautions that practical experience with this adaptation remains limited.
Global Trends
According to the IEA, global hydrogen demand reached 94 million metric tons (Mt) in 2021, yet less than 1 Mt of that was low-emission hydrogen, mainly produced from fossil fuel plants utilizing CCUS. Nevertheless, the IEA projects that low-emission hydrogen production could grow to between 16 and 24 Mt annually by 2030, with 9 to 14 Mt generated through electrolysis. This growth will require an installed electrolyzer capacity of 134 to 240 GW by 2030. However, this projection still falls short of the 34 Mt needed annually to meet international climate commitments and the 2050.
African Nations’ s Interest and Progress Hydrogen Projects
Regions rich in renewable energy resources are best positioned for green hydrogen production. Sub-Saharan Africa, with its vast non-arable land and abundant solar and wind resources, has the highest potential. A 2022 Statista study suggests that this region could produce up to 1,923 exajoules of green hydrogen at a cost of less than USD 2 per kilogram. In contrast, even under the most optimistic scenarios, Europe, which already has numerous green hydrogen plants, could only generate up to 343 exajoules per year.
Developing a green hydrogen economy in Africa not only offers global benefits but also addresses many of the continent’s challenges, such as energy poverty, while supporting sustainable development without harming human health or the environment. IRENA estimates that Africa’s energy transition could create 26 million jobs by 2050.
The United Nations reports that, despite contributing less than 4% to global greenhouse gas emissions, many African nations are looking to green hydrogen as a way to sustainably utilize existing resources, meet increasing energy demands, and reduce reliance on fossil fuels.
Countries like Egypt and Zambia have already installed over 100 MW of electrolyzers, and additional green hydrogen projects are planned in Egypt, Mauritania, Morocco, Namibia, and South Africa. The H2Atlas-Africa initiative, a collaboration between the German government and Sub-Saharan African partners, aims to produce 165,000 TWh annually in West Africa through multiple projects.
Australia’s Leading Role in Production
Australia also possesses significant renewable energy potential, particularly in solar photovoltaic energy, and currently leads the world in the number of green hydrogen plants, boasting 96 facilities as of 2022, according to Statista. By 2050, Australia is expected to achieve some of the lowest levelized costs for green hydrogen production due to its abundant solar and wind resources.
China’s Dominance in Global Green Hydrogen Production
China, the leading global producer of green hydrogen, accounts for roughly one-third of total production. The country plans to establish a 260 MW facility by mid-2023 in addition to its existing 150 MW alkaline electrolyzer, which is the largest in the world. Sinopec, the state-controlled Chinese company, is building a green hydrogen plant in Kuga City, Xinjiang region, powered by a 300 MW solar power station, with an expected annual production capacity of 20,000 metric tons.
Large-Scale European Initiatives for Green Hydrogen
In Europe, numerous large-scale green hydrogen initiatives are underway. For example, HyDeal Ambition, a platform comprising 30 firms, covers the entire green hydrogen value chain, including solar power generation, electrolyzer production, gas transmission and storage, as well as industrial applications in steel, chemicals, and energy. This network spans Western Europe from Spain to France and Germany, aiming to produce 3.6 million metric tons of green hydrogen by 2030, supported by 95 GW of solar and 67 GW of electrolyzer capacity.
Two notable projects are planned for the Port of Rotterdam. Shell has signed a contract to build a 200 MW electrolyzer, which will generate up to 60,000 kilograms of green hydrogen daily, sourcing renewable electricity from the Hollandse Kust offshore wind farm. Concurrently, the H2-Fifty Project, a joint venture between BP and HyCC, will have a capacity of 250 MW, producing 20,000 to 30,000 tons of green hydrogen while reducing CO2 emissions by up to 270,000 metric tons per year.
In Denmark, the HySynergy project by Everfuel aims to establish a large-scale green hydrogen production and storage facility with a capacity of 300 MW by 2025 and 1 GW by 2030. Germany plans to expand its capacity to 100 MW with the REFHYNE2 project. Additionally, the EU’s REPowerEU plan, released in May 2022, targets the production and import of 10 million metric tons of green hydrogen by 2030 as part of its goal to achieve climate neutrality by 2050.
The Future of Green Hydrogen
Green hydrogen holds significant promise in the global transition to sustainable energy, especially in hard-to-abate sectors such as heavy industry and transportation. By scaling up green hydrogen production facilities and optimizing hydrogen-based steel manufacturing processes, we can drive rapid cost reductions.
However, production costs and the need for infrastructure adaptation remain challenges. Despite these hurdles, the potential of green hydrogen to reduce carbon emissions across various sectors makes it a compelling alternative to fossil fuels.
