Green Hydrogen
Hydrogen-based fuels offer the possibility to deliver energy from renewables across vast distances. Green hydrogen is a game changer.
What exactly is green hydrogen, and why do we need it?
The moment has come to capitalize on green hydrogen and its potential to play a significant role in addressing crucial energy concerns. Moreover, recent advances in renewable energy technologies and electric cars have shown that policy and technological innovation can create a global clean energy shift.
Hydrogen-based fuels offer the possibility to deliver energy from renewables across vast distances – from locations with ample renewable energy resources to energy-hungry areas thousands of miles or kilometers away. As such, hydrogen is emerging as one of the top choices for storing energy from renewables.
Global hydrogen policies & origins
Green hydrogen was included in several promises to reduce emissions at the UN Climate Conference, COP26, to decarbonize heavy industries, long-distance freight, shipping, and aviation. As a result, hydrogen is now recognized as a crucial component of a net-zero economy by both governments and businesses.
United Nations recognizes power of green hydrogen
A United Nations program, the Green Hydrogen Catapult, has its sights set on lowering the cost of green hydrogen, recently reported that hydrogen is almost tripling its target for green electrolyzers from 25 gigawatts established last year to 45 gigawatts by 2027.
Nations gear up for the (green) hydrogen economy
In addition, the European Commission has developed a package of legislative recommendations to decarbonize the EU gas market by enabling the use of renewable and low-carbon gases such as hydrogen to maintain energy security for all European residents. The United Arab Emirates meanwhile is also raising its ambitions, with a new hydrogen strategy that aims to capture one-fourth of the global low-carbon hydrogen market by 2030. In addition, Japan has recently announced a $3.4 billion investment from its green innovation fund to accelerate research and development promoting hydrogen use over the next ten years. The United States Department of Energy published its Hydrogen Program Plan in 2020 outlining it will make substantial investments into hydrogen production, infrastructure, and transition to strengthen the US economy.
KPMG's recent National hydrogen strategies report summarizes recent developments like this: "The world has witnessed a significant increase in announced and planned national hydrogen policies in the last 2 years. In early 2019, preliminary work on hydrogen was announced by only a handful of countries, such as China, France, Japan and South Korea. Two years later, more than 10 countries — now including Australia, Chile, Finland, Germany, Norway, Portugal and Spain, plus the European Union (EU) — have developed detailed hydrogen strategies, while nine more countries are expected to unveil strategies in the near future."
The many colors of hydrogen
The terms 'grey', 'blue', and 'green' are frequently used when discussing hydrogen technology. The production process is the decisive factor in determining the hydrogen’s ‘color’. When burnt, hydrogen only emits water. Its production, however, may be carbon-intensive. Therefore, depending on the type of synthesis, hydrogen may be grey, blue, or green — and sometimes pink, yellow, or turquoise. On the other hand, green hydrogen is the only form generated in a climate-neutral way, making it crucial to achieve net-zero by 2050.
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What exactly is green hydrogen? How does it vary from conventional, high-emissions 'grey' and 'blue' hydrogen?
The simplest and smallest element in the periodic table is hydrogen. It produces the same carbon-free molecule regardless of the production process. However, the methods of making it are very distinctive, as are the emissions of greenhouse gases such as carbon dioxide (CO2) and methane (CH4).
Distinguishing the different types
There are methods (e.g., methane pyrolysis) that offer the promise of high capture rates (90-95 percent) and successful long-term storage of CO2 in solid form, possibly much superior to blue and deserving of their own color in the "hydrogen taxonomy rainbow", turquoise hydrogen. But on the other hand, methane pyrolysis is still at the pilot stage.
Still, green hydrogen is quickly scaling up based on two main technologies: renewable power (particularly solar PV and wind, but not exclusively) and electrolysis.
Electrolysis for green hydrogen generation must be significantly scaled up and reduced in cost by at least thrice over the next decade or two to be commercially viable. However, unlike carbon capture and storage and methane pyrolysis, electrolysis continues to become more commercially accessible.
Renewable natural gas as green and carbon-negative alternative
It is important to note that the world currently produces a significant amount of grey hydrogen, emitting substantial amounts of CO2 and methane. Our priority must be to decarbonize existing hydrogen demand, for example, by replacing natural gas with biomethane.
Producing H2 from biomethane is generally overlooked in the sometimes excited discussion about green H2 from electrolysis.
A solution that works now
Renewable energy technologies have already matured to the point that they can provide competitive renewable power all over the globe, which is required for competitive green hydrogen synthesis.
On the other hand, electrolyzers are still implemented at a very modest scale, requiring a three-order-of-magnitude scale up over the next three decades to lower their cost thrice.
Note: Biomethane sourced from animal manure can be highly carbon negative, reducing emissions by up to 300% compared to fossil natural gas.
Biggest advantage of using renewable natural gas: carbon-negative hydrogen
Indeed, the advantages of using biomethane instead of natural gas for the production of hydrogen are manifold:
Use existing assets
Utilization of existing industrial-scale technology assets: the most widely used technology for producing grey hydrogen today is Steam Methane Reforming (SMR); existing assets could be used as-is without modification as biomethane is chemically identical to fossil natural gas.
Highest GHG emission reduction
The highest GHG emission reduction potential is biomethane produced from various sources of biogas, from agricultural and municipal waste to wastewater sewage treatment plants. Biomethane sourced from animal manure can be highly carbon negative, reducing emissions by up to 300% compared to fossil natural gas.
Decentralize & democratize
Cost competitiveness is a huge factor. Recent market price fluctuations for natural gas have shown that biomethane can be cheaper than natural gas even when subsidies are excluded. As biomethane can be produced in a decentralized way, it helps to become independent from natural gas production and imports and the geopolitics that come with it.
Want to learn more about biomethane / renewable natural gas? Read our explainer on biomethane here.
Green hydrogen outlook
What can we expect for the future?
What hydrogen-related energy technologies could we see by 2030?
For example, will the transport sector be fueled exclusively by hydrogen? Many questions are floating up as we embark on this leg of the energy transition journey.
There is an enormous potential for the quick acceptance of green hydrogen in the coming decade in areas where there is already a need for hydrogen, such as decarbonizing ammonia, iron, and other current commodities.
Countries in both North and South America can play an important role as exporters, and this can be seen in a number of ambitious strategies supported by diverse players. There is significant progress in the US at the state level, in particular California. The impact of the Biden presidency on the US’s role in hydrogen is unclear, but recent months indicate an increasing focus on offshore wind.
KPMG National hydrogen strategies report
Is shipping and aviation next?
In addition, many industrial processes that employ hydrogen may replace grey with green or blue if CO2 is priced appropriately or other mechanisms for decarbonization of those sectors are implemented.
The scenario is somewhat different in shipping and aviation. Drop-in fuels, based on green hydrogen yet virtually equivalent to jet fuel and methanol derived from oil, may be used in current aircraft and ships with little to no modification.
However, those fuels include CO2, which must be gathered from someplace and added to the hydrogen before it can be released during combustion: this decreases but does not eliminate the issue of CO2 emissions.
Synthetic fuels may be implemented before 2030 if the appropriate incentives are in place to justify the additional expense of reduced (rather than eliminated) emissions.
Ships may transition to green ammonia, a fuel made from green hydrogen and nitrogen from the air that does not emit CO2, in the near future. However, solid investments are required to replace engines and fuel tanks. Additionally, green ammonia is, to date, disproportionately more costly than traditional fuels like Diesel and oil.
Hydrogen (or ammonia) planes are further away. These will essentially be new aircraft that must be designed, built, and sold to airlines to replace existing jet-fuel-powered planes. This does not appear to be feasible by 2030. That said, green jet fuel produced using a combination of green hydrogen and sustainable bioenergy is a solution that can be deployed much sooner.
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