A combination of private-sector collaboration and policy support can see the initial ramp up of clean hydrogen production and use reach 50mn tonnes by 2030, a report has said.
On 27 April, the Energy Transitions Commission (ETC) published Making the Hydrogen Economy Possible, setting out how clean hydrogen is set to play a complementary role in decarbonising sectors where direct electrification is not possible, such as in long-distance shipping or steel production. It forms part of a wider series of ETC reports, all focused on how to scale up clean energy in the next 30 years to realise a net zero economy.
In a 2050 net zero economy, between 500mn and 800mn tonnes of clean hydrogen will be used per annum, with green hydrogen likely the most cost-competitive and, as a result, major production route in the long-term. By 2050, it could account for 85% of total production. However, to realise this, a rapid ramp-up of production and use is needed during the 2020s to unlock cost reductions, bringing clean hydrogen below $2/kg.
While 85% of investments to ramp up hydrogen production will be for renewable electricity provision – over $80tn will be required globally over the next 30 years towards this – an additional $2.4tn is needed for hydrogen production facilities and transportation and storage. Even when clean hydrogen becomes cheaper than grey hydrogen, using it in industry and transport sectors will still impose a “green cost premium” compared to current high carbon technologies. This makes public policy crucial to driving uptake of clean hydrogen at pace, while pulling demand forwards during the 2020s.
It mapped out actions to take across the value chain to realise this, such as public support and collaborative private sector action to bring key technologies to market; directing investment support and access to low cost capital for clean hydrogen industrial clusters; adapting and expanding existing regulatory and safety frameworks for hydrogen and ammonia; and carbon taxes of $100/tonne by 2030, with further increases until 2050.
It also recommended sector specific policies to create early demand; financial support mechanisms for investments and to overcome the cost premium; improvements to electrolyser technology; the development of rock caverns and depleted gas fields for large-scale hydrogen storage; and efforts to improve the technological readiness of hydrogen use in heavy industry and transport fuels.