Hydrogen is the oldest, lightest and most abundant element in the universe. But it wasn’t until 1766 when the world learned of its potential as a power source.
In a groundbreaking experiment, the English scientist Henry Cavendish isolated the gas by mixing metal and acid to produce what he called the “inflammable air” that emitted water when burned.
Unfortunately, the world’s greatest minds haven’t made much progress since.
Efforts to turn hydrogen into a source of clean energy have been persistently stymied by the costs involved. The gas has been prohibitively expensive to produce, store and transport, which is why many experts have overlooked it as a viable alternative to fossil fuel.
Yet, recent signs suggest this view no longer holds sway.
From Europe to Asia and the Pacific, governments and businesses – electricity and gas producers, utilities and carmakers – are stepping up investment to develop new hydrogen-based technologies.
Soon, hydrogen production costs could fall as steeply as those of wind and solar power, making it easier to integrate hydrogen into the carbon-free energy mix.
Many colours of hydrogen
Hydrogen might be the most abundant of gases, but it doesn’t exist in its pure form in the atmosphere.
There are only a few ways to extract it, all of which are complicated and costly.
Today, some 95 per cent of hydrogen is “brown” or “grey” – extracted through a process in which it is stripped out of coal or natural gas by reforming methane or hydrocarbon.
These industrial processes are estimated to produce as much as 11kg of carbon dioxide in indirect emissions to generate just 1kg of hydrogen.
This is where "blue" hydrogen – which has a much smaller carbon footprint - can help. The process used to produce blue hydrogen begins in the same way as that for grey hydrogen. But the blue variety then deploys carbon capture and storage (CCS) technology which buries the carbon bi-product in underground reservoirs to reduce emissions.
Blue hydrogen is not cheap, not is it emission-free. Experts say the blue method begins to become cost-competitive if carbon prices – or a cost applied to carbon polluters – are set at around EUR60-70 tonnes of CO2 and if the industry scales up commercial CCS technology.
Making hydrogen greener
Given all the environmental shortcomings of brown, grey and blue hydrogen, it is “green” hydrogen that perhaps offers the most sustainable solution.
Green hydrogen comes from water electrolysis, a process which splits water into oxygen and hydrogen, using an electric current generated by renewable sources such as wind and solar. The process produces zero carbon emission, that’s why it’s known as “green”.
Worldwide, green hydrogen capacity has increased from 1MW in 2010 to 25MW in 2019, the International Energy Agency says, thanks to a dramatic decline in renewable energy costs.
The problem is that the process accounts for less than 0.1 per cent of total hydrogen production today.
But with investment in the technology growing, the picture could change dramatically in the next decade.
The EU, which has an ambitious CO2 reduction goal, is aiming to install 6GW of green hydrogen capacity at an estimated cost of €5-9bn, scaling that up to 80GW by 2030.
Cumulative investments in renewable hydrogen in Europe could be up to €470bn by 2050 which would take the share of hydrogen in Europe’s energy mix to 13-14 per cent by 2050 from less than 2 per cent today.
Green hydrogen may also be a viable, long-term and large-scale solution to store excess renewable energy production, which could become a growing challenge in the coming decades as the energy mix shifts away from fossil fuels.
Due their intermittent nature, renewable energy sources will increasingly face an issue known as “curtailment”. This happens when grid operators are forced to dial back renewable electricity generation as network and storage infrastructure cannot cope with a rush of supply during a period that is exceptionally sunny or windy.
Batteries may work as a short-term storage. For longer-term needs though, grid operators have used pump storage, which typically stores and generates energy by moving water between two reservoirs at different elevations.
But the infrastructure is costly and there’s a limit to how many large-scale storages of this kind the world can build.
Hydrogen, on the other hand, can be used to capture an oversupply of renewable energy.
Electrolysers can work around the clock to produce green hydrogen using surplus renewable energy that would otherwise be “curtailed”. Hydrogen can be stored either as a gas or liquid in a high-pressure or cold tank ready to be deployed.
While much progress is still needed for hydrogen storage to become competitive, we expect this could become an important niche for hydrogen in the energy mix.
Hydrogen cars on the road
Today’s mandates and policies – around 50 are in place globally – mainly focus on introducing green hydrogen into transport sector, which accounts for about a fifth of annual emissions and is the main cause of pollution in cities.
Advances in fuel cells – which work like batteries but do not need charging – are vital as that would speed up the use of hydrogen in vehicles.
But this is where hydrogen enthusiasts may need to temper their optimism.
Fuel cells typically convert hydrogen as a fuel into electricity, which then powers vehicles. However, the energy efficiency of fuel cells – measured by how much final electricity they can extract for 100 units of typically renewable power – stands at a poor 26 per cent.
This compares with batteries’ 69 per cent efficiency (albeit fuel cells are superior to internal combustion engines, which operate at 13 per cent efficiency.)
Fuel cells are at disadvantage due to the power loss they suffer during conversion processes, such as transmission, electrolysis and transport, as well as electric motor and mechanical applications.
Still, fuel cell system costs are falling dramatically thanks to improving technology and economies of scale.
A few years ago, it cost more than $1,000 to produce a single kilowatt of power from hydrogen fuel cells. By 2019, the cost had dropped to just $53 per kilowatt, according to the US Department of Energy.
This should promote the application of hydrogen fuel cells in niche medium- and heavy-duty segments such as busses and trucks, where batteries cannot compete due to long charging times. Experts say fuel cell vehicles could achieve total cost of ownership parity with diesel by 2028-2033.
In China, the number of refuelling stations increased threefold in 2019 to 61. Chinese authorities are exploring further possibilities for hydrogen-fuelled rail after a successful pilot programme in 2019.
Hydrogen has routinely overpromised and underdelivered. But a fierce race to develop new technologies, backed by big government investments, is changing the calculus.
A battle against climate change through decarbonisation is a challenge that requires an all-hands-on-deck approach. Hydrogen may soon play a credible part in such a transition.
Xavier Chollet is co-manager of Pictet Clean Energy. The views expressed above are his own and should not be taken as investment advice.