IEA: governments and companies increasingly committed to investments in hydrogen

  Fuels, NEWS & INTERVIEWS, Sustainable Mobility, Technical innovation

The latest report by the International Energy Agency highlights an increase in the number countries which have drawn up strategic plans and global growth in investments: 37 billion dollars from the public sector and 300 billions from the private sector

Countries with strategies for hydrogen they have committed at least 37 billion dollars for the development and spread of energy vector technologies, while the private sector has announced additional investments coming to 300 billion dollars. This is what emerges from the Global Hydrogen Review 2021 published on 4 October by the International Energy Agency (IEA). The document highlights the growth in undertakings by governments since 2019, the year when the special report on the future of hydrogen was published for G20. As the Agency pointed out, at the time only France, Japan and Korea had hydrogen strategies, while 17 governments have published their strategies this year and over 20 have publicly announced that they are working in this direction. This is joined by the interest shown by many companies keen looking to take advantage of business opportunities. Pilot projects are already underway to produce steel and chemicals using low-carbon hydrogen, with other industrial applications under development. The cost of fuel cells that run on hydrogen continues to fall and sales of fuel cell vehicles are growing,” the IEA said.

The IEA emphasized that investments in projects focusing on hydrogen are rising “but further efforts are needed to reduce costs and encourage broader use in all sectors”. According to the Agency’s estimates, putting the hydrogen sector on a route in keeping with the goal of zero global net emissions by 2050 would require 1.2 trillion dollars of investments between now and 2030. Inasmuch, the IEA called on governments “to move faster and more decisively across a wide range of policy measures to ensure that low-carbon hydrogen can achieve its potential to help the world achieve zero net emissions and support energy security.” The IEA feels that global production of low-carbon hydrogen involves costs that are not yet competitive and its use in promising sectors such as industry and transport remains limited. However “there are encouraging signs that it is on the verge of a significant drop in costs and widespread global growth”.

The IEA highlighted the characteristics that make hydrogen an excellent vector for energy production: it is light, can be stored and has high energy density; its use as a fuel does not cause direct emissions of pollutants or greenhouse gases. The main obstacle facing extensive use of low-carbon hydrogen, however, remains the cost of production. Production from water requires large amounts of electricity or the use of carbon dioxide capture technologies if produced from fossil fuels. To date, virtually all the hydrogen produced comes from non-carbon capture fossil fuels, with carbon dioxide emissions estimated at 900 million tonnes, equivalent to the combined emissions of the UK and Indonesia. According to the IEA, “investments and targeted policies are needed to close the price gap between low-carbon hydrogen and emission-intensive hydrogen produced from fossil fuels. Depending on the prices of natural gas and renewable electricity, producing hydrogen from renewable sources can cost two to seven times more than producing it from natural gas without carbon capture. However, the Agency believes that technological advances and scale economies will help the cost of producing hydrogen with photovoltaic solar electricity become competitive with hydrogen produced from natural gas, as outlined in the Roadmap to Net Zero for 2050 also published by the IEA.

The report also found that the global capacity of electrolysers, which produce hydrogen from water using electricity, has doubled in the past five years, with around 350 projects currently under development and another 40 projects in the early stages of development. “If all these projects were implemented, the global supply of hydrogen from electrolysers – which creates zero emissions provided the electricity used is clean – would reach eight million tons by 2030. This is a huge increase compared to today’s figure of less than 50,000 tons but it remains well below the 80 million tons required in 2030 in the IEA path to zero emissions by 2050.”

The IEA noted that in 2020 hydrogen was mainly used in industry and refining plant. However, the Agency also noted that hydrogen can be used in chemical, steel, long-haul road haulage, shipping and aviation sectors. Currently, the Agency suggests that the main problem is that policy action is still focused on low-carbon hydrogen production, while the corresponding steps required to create demand in new applications of the carrier are limited. “Ensuring more widespread use of hydrogen in industry and transport will require much stronger policy measures to encourage the construction of the necessary storage, transmission and recharging facilities,” the IEA pointed out.

Lastly, the IEA made a number of recommendations for short-term action over and above simply mobilizing investments in relation to research, production and infrastructure. The Agency believes that governments could stimulate demand and reduce price differences through carbon pricing, quotas and a hydrogen requirement in public procurement. Furthermore, international cooperation is needed to define standards and regulations, as well as to create global hydrogen markets that would stimulate demand in countries with limited potential for producing low-carbon hydrogen at the same time as create export opportunities for countries with large renewable energy supplies or large carbon dioxide storage potential.