Green hydrogen production will be able to compete on cost with fossil-fuel hydrogen by 2030 in Australia, Germany and Japan – but only if renewable energy prices continue to tumble or more policy levers are pulled.
That is the chief finding of a report published today by Scottish analyst Wood Mackenzie, which predicted the 252 MW of green hydrogen production capacity expected worldwide this year will expand to 3,205 MW by 2025.
The urgent need for renewable-energy produced hydrogen was explained by WoodMac not only as an energy storage grid balancing alternative to fossil fuel power plants but also because of the hugely damaging CO2 emissions created during the production of hydrogen at present for use in other sectors.
With hydrogen required for oil refining, steelmaking and the production of ammonia and methanol, oil and gas are the dominant fuels used in its creation, especially in China and the U.S.
Carbon intensive
WoodMac said green hydrogen makes up less than 1% of global production of the element at present and estimated 830 megatons of CO2 was emitted by the hydrogen production industry in 2017, more than the carbon footprint of the German economy (797 Mt) or global shipping (677 Mt).
The WoodMac report predicts interest in green hydrogen in east Asia, and among “international stakeholders”, will be sufficient to drive the expected expansion of production capacity to 2025 and increased deployment will lower capital expenditure costs.
For sustainable hydrogen to compete with its fossil fuel equivalent, however, renewable energy will have to continue its rapid cost decline. For instance, solar and wind power purchase agreement prices would have to fall from $53-153/MWh in Australia, Germany and Japan today to around $30/MWh to create a level playing field for green hydrogen in those markets in 11 years’ time.
WoodMac senior analyst Ben Gallagher pointed out, however, the sustainable version of the element could be helped along by more ambitious policy support, such as carbon accounting, as well as by introducing incentives for grid flexibility services.
This article was amended on 23/10/19 to amend the carbon footprint figures given to megatons, rather than tons, as originally stated.
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It is my understanding that here in the UK the cost of construction of renewables such as wind power has just fallen to the same cost as gas powered generation. However the roll-out of green hydrogen to replace fossil fuels will depend on its generation from renewables. Here in the UK we already have some hydrogen dispensing stations that are entirely from renewables, eg the ITM Power site near Sheffield. Meanwhile we must continue to develop green electricity, and a key part of this is likely to be nuclear fusion power which should start producing electricity by 2040. (see iter.org and tokamakenergy.co.uk/
These things will not happen overnight, but we must have a plan to gradually phase out electric power from any fossil fuel in an orderly manner, while also meeting other environmental targets such as the pollution from transport, especially from diesel engines. Shipping is probably the most significant producer of both C02 and particulates, and is ideal for hydrogen power.
830 megatons, not tons.
Hi Fredrik, You are absolutely correct, at least according to International Energy Agency figures, and this represents us blindly reproducing an error in the press release published by WoodMac. Many apologies for the error, which will be rectified in the copy forthwith.