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Hydrogen use proliferation could cut climate benefits

Government support should be targeted at the hydrogen use cases that have the greatest emissions reduction potential

Among the lively debates and disagreements at the virtual World Hydrogen Congress in late September one thing appeared clear—there is a wide variety of competing use cases for hydrogen which offer an equally wide range of ­emission abatement.

In the enthusiasm to build the hydrogen economy, there is a danger the limited potential volumes of low or zero-carbon supply will not find their way into the areas which offer the greatest mitigation impact. Its prized flexibility could undermine its effect.

“Hydrogen needs to contribute to climate mitigation—hydrogen has to be carbon-neutral,” Dries Acke, director, energy systems programme at the non-profit European Climate Foundation (ECF), said at the event.

“Blending hydrogen into existing gas pipelines is not going to be a good use of a scarce resource, which hydrogen will always be” Acke, European Climate Foundation

The ECF is looking for a set of standards, definitions and third-party certification that is based on robust lifecycle emissions analysis. These would “guarantee that the markets we are creating, the hydrogen we are supporting, actually contribute to climate mitigation… that is the essential point.”

The end uses for hydrogen are as important as how it is made. Those targeting net-zero need to “create demand in the right end-use sectors where it is really necessary, for the hard-to-abate, hard-to-electrify sectors”, says Acke.

He says that some uses are “clear ‘no regrets’ applications for hydrogen”, such steelmaking, but there is “much more of a question” about others such as mobility, even heavy trucks. “We should always prioritise electrification as much as we can because it is a much more efficient way of decarbonising,” he says.

Likewise, for buildings and residential heating, “blending hydrogen into existing gas pipelines is not going to be a good use of a scarce resource, which hydrogen will always be”.

Government support

It is a view shared by some in the banking sector. “It is very clear that we are not going to get very far if you want to produce electricity with hydrogen as it is a lot cheaper with solar and wind,” says Bert van der Toorn, global lead mid/downstream oil & gas, biofuels & hydrogen at Amsterdam-based ING Bank. “Focusing on industries or sectors that electricity cannot get to easily makes much more sense.”

In addition, “have to be careful” where hydrogen is made from steam methane reforming as it produces many multiples of CO₂ for each tonne of hydrogen, he adds. “We should not kid ourselves about the challenges.”

One point where there is certainly no disagreement is the need for government support, especially in creating a stable investment environment that accounts for decarbonisation.

“Subsidies are good for short-term capital expenditures… and that makes it much more financeable,” says van der Toorn. “Solar and wind are good examples of how to get this moving,” he adds. “If it is subsidised in one way or another, banks can come in and then at least get sufficient liquidity into the market… [as] a lot of money is needed just to get the infrastructure in.”

From the policy and financial perspective “what can really help to unblock projects is a long-term offtake agreement and compensation for the green premium for decarbonised hydrogen production,” says Alena Fargere, principal of responsible investment at private equity house Swen Capital. “And I see things moving in a good direction.”

The main constraint on the green hydrogen value chain is likely to be the availability of excess wind and solar power. While capacity is expanding rapidly in many places, it is “way too slow” to satisfy the potential power demands of electrolysers, according to Acke. “We all know that we will really need dedicated wind and solar farms for electrolysers if we want to have not-too-expensive hydrogen. It cannot just be based on excess renewables.”

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