When the leaders of the world’s economic powerhouses meet at this year’s G20 in Japan, two important decarbonization options are expected to finally garner the attention they deserve: carbon capture and hydrogen. The urgent need to reduce CO2 emissions means these two technologies – together and on their own – will be necessary alongside accelerated efficiency, exponential renewables growth and nuclear power.
Hydrogen is a rising star. Versatile and environmentally friendly, hydrogen produces no CO2 when combusted, only water and heat. It can be used to decarbonise electricity, heating, transport and industry. A clean energy vector, hydrogen is easily transported, stored and blended with current fuels.
To many, hydrogen remains elusive; it is thought of as an energy source of the future. However, proven large-scale and low-emission hydrogen production is already here through hydrogen production from natural resources coupled with carbon capture and storage (CCS), a suite of emission-reduction technologies that store CO2 underground. As such, alongside other key mitigation options, the large-scale deployment of hydrogen production can kickstart the energy transition.
Hydrogen can be produced from a variety of sources, a fact that confers both security and diversity of supply. Natural gas reforming (SMR) provides half of all hydrogen produced globally. Electrolysis, a process in which excess clean energy produced from renewables or nuclear is used to produce hydrogen, become important as a form of energy storage, and will enable greater integration of renewables.
Governments need to support both electrolysis and carbon capture hydrogen. The Australian Government estimates global hydrogen demand at 530 million tonnes per annum (mtpa) by 2050. To put this number into context: to produce 500 mtpa of hydrogen, 25,000 terawatt hours (TWh) of electricity will be required from nuclear and renewables – more than 2.5 times as much as the total electricity produced from nuclear and renewables combined in 2018. Hydrogen production with carbon capture is also currently cheaper, and has been demonstrated to be half to two-thirds the price of electrolysis.
However, a carbon capture and storage scale-up is not only necessary for hydrogen production, but also to eliminate CO2 from industrial processes, as well as power plants. The International Energy Agency (IEA) in its 2018 World Energy Outlook said existing and under-construction infrastructure accounts for almost all the carbon budget left, and along these lines emphasises the necessary scale-up of carbon capture. The IEA’s Sustainable Development Scenario estimates that roughly 2,000 CCS facilities are necessary by 2040, up from 18 today, to limit global warming. Currently, four of those 18 CCS facilities produce hydrogen, while two are under construction in Canada, with a total production capacity of close to 1.5 million tonnes of hydrogen annually.
Innovators are also hoping to integrate the Allam Cycle, a promising and groundbreaking carbon capture technology in demonstration – essentially a zero-emission natural gas power plant – with hydrogen production.
That Japan chose to highlight hydrogen and carbon capture at the G20 is not a surprise. Dependent on fuel imports, yet committed to fighting climate change, the country is a pioneer in hydrogen technology and a champion for carbon capture and storage. Looking ahead to 2050, hydrogen is the fuel of choice for its quest to reduce emissions from all sectors. Its car manufacturing industry, along with other industry players, has demonstrated a commitment to a hydrogen-powered future. Carbon capture facilities globally are using Japanese technologies to catch CO2. Japan has also teamed up with the Australian government to produce hydrogen in Australia for import to Japan. Next year, Japan is hosting the Summer Olympics, also dubbed the Hydrogen Olympics, and is expected to show great progress.
Others are following suit. In the UK, carbon capture hydrogen has gained lots of attention from climate advocates and is expected to decarbonise the heating of millions of businesses and homes. In other European countries, multiple hydrogen projects are under way. Germany has its first hydrogen-fuelled train on the tracks. The Chinese government, an ardent supporter of nascent clean-energy technologies, is rumoured to be looking at ways to boost the fuel cell car market. This would be a great opportunity to tackle air pollution in cities around the world, as hydrogen produces near-zero lifecycle pollutants. In aviation and shipping industries, the smart money is going on hydrogen becoming the zero-emission fuel of the future.
A new hydrogen economy that will support the energy transition will not happen overnight. It will need government support. The IEA found that more than 70% of all investments in the energy transition will either come directly by governments, or will be driven by government policy. Hence, policymakers must take the lead for an effective and successful energy transition.
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Where it has not been introduced to-date, a value on carbon is the first policy mechanism necessary to signal commitment to a zero-carbon economy. Second, policymakers should evaluate options for a government-backed infrastructure rollout to support the deployment of clean-energy technologies. Third, incentive mechanisms are needed to establish demand.
California’s Low Carbon Fuel Standard (LCFS), a credit mechanism seeking to limit emissions from the state’s transportation sector, is a great example. The LCFS was amended only recently, and seeks to reduce the carbon intensity of the state’s fuels by 20% by 2030. The LCFS provides a value on carbon currently trading at roughly $190/tonne of CO2; in doing so, it has created a way for companies that produce hydrogen via SMR with carbon capture to generate credits, while also incentivising the roll-out of hydrogen-fuelling capacity – thus eliminating one of the barriers to adoption. Thanks to some of these policies, California has helped the US become the world leader in hydrogen fuel cell vehicle deployment.
With the energy transition still in its infancy, and progress discouragingly slow, Japan’s leadership is timely. G20 leaders should pay close attention to Japan’s experiences in building a hydrogen-fuelled society. A large-scale carbon capture hydrogen build-out offers a window of opportunity to accelerate global decarbonisation efforts.