Fatih Birol, IEA executive director, explains why now is the opportune time to integrate clean hydrogen with transport and energy networks
Transforming the global energy system to ensure a sustainable future means taking advantage of all the fuels and technologies we have at our disposal. As the world’s largest economies, G20 members will be crucial in leading the transition and pioneering the use of emerging technologies such as hydrogen.
This is an important year for hydrogen, a flexible clean energy solution that can be used in a wide range of areas – including trucks, shipping and heavy industry – that have few alternatives to their current fuels.
After several cycles of hype and disappointment over the past few decades, hydrogen is back in focus. And this time, its huge potential could become reality if we seize the opportunity.
At the request of Japan’s G20 presidency, the International Energy Agency has produced an in-depth study on the state of play for hydrogen, its economics and potential roles. The intention of the report is to help public and private decision makers around the world identify how hydrogen can support their energy and environment goals.
The challenge is to create a springboard for hydrogen to reach its full potential in the years ahead. That means building confidence in it as a business strategy, showing what it can do in the real world and starting to drive down costs.
Hydrogen has a lot to offer as we seek to address the massive challenges presented by climate change.
It can replace some higher-carbon materials used in industry, including the building blocks of the chemical sector, which is the fastest-growing source of oil demand. It can also store energy created by renewables. That is important as solar photovoltaic and wind become major power sources because their fluctuating output is often ill matched with patterns of demand.
Hydrogen can also be traded between sectors, countries and continents. It potentially enables sunshine to be exported (as hydrogen carried by ships) from regions such as Australasia, the Middle East and Latin America to other regions that receive less sun.
Cost is a key stumbling block at the moment. Hydrogen from renewable sources is two or three times as expensive as hydrogen produced from natural gas, which produces a lot of emissions.
Lower renewable energy costs are key to making clean hydrogen more affordable. But electrolysers – the technology that turns water into hydrogen without producing carbon emissions – need to be produced on a much greater scale to make the process cheaper.
Capturing and storing the carbon produced from natural gas may also be an attractive option to decarbonise hydrogen at scale in the nearer term. Hydrogen produced this way is currently significantly less expensive than hydrogen from renewable sources.
Governments are central to the challenge of expanding the use of clean hydrogen around the world. Long-term policies and strategies are needed for sustainable, resilient energy systems to provide confidence that investing in hydrogen will be good business for years to come.
There is already low-hanging fruit where public and private money can be most effectively put to use in order to drive cost reductions, scale up manufacturing and build on hydrogen’s newfound momentum. These areas include integrating clean hydrogen into coastal industrial hubs, blending hydrogen into gas grids and building out transport solutions through fleets and high-use routes.
The coming years will also be important for kick-starting the international hydrogen trade with the first shipping routes. Japan already has several important pilot projects to determine the best way to ship clean hydrogen over long distances.
Governments need to identify which opportunities fit their situation and put in place pragmatic policies that stimulate demand for hydrogen, mitigate some of the key investment risks, remove regulatory barriers and coordinate international standards and levels of ambition. The breadth of sectors and regions where hydrogen can make a difference demands action at a global scale – the G20 is the perfect forum.
If we develop the right policies and business strategies, investments will become self-sustaining. Through collaboration and coordination, costs will decline faster. Clean hydrogen’s wide range of applications means that what each country or sector does will help others. It is time to act and make hydrogen part of our clean energy future.