Energy Transition

What is green hydrogen and why do we need it? An expert explains

Britain's Prince Charles walks next to a train powered by green hydrogen

Green Hydrogen might be the fuel of the future Image: REUTERS/ Jane Barlow

Abhinav Chugh
Content and Partnerships Lead, World Economic Forum
Emanuele Taibi
Head, Power Sector Transformation Strategies, International Renewable Energy Agency (IRENA)
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  • Green hydrogen could be a critical enabler of the global transition to sustainable energy and net zero emissions economies.
  • There is unprecedented momentum around the world to fulfil hydrogen’s longstanding potential as a clean energy solution.
  • Dr Emanuele Taibi lays out where things with hydrogen stand now and how it can help to achieve a clean, secure and affordable energy future.

The time is right to tap into hydrogen’s potential to play a key role in tackling critical energy challenges. The recent successes of renewable energy technologies and electric vehicles have shown that policy and technology innovation have the power to build global clean energy industries.

Hydrogen is emerging as one of the leading options for storing energy from renewables with hydrogen-based fuels potentially transporting energy from renewables over long distances – from regions with abundant energy resources, to energy-hungry areas thousands of kilometers away.

Green hydrogen featured in a number of emissions reduction pledges at the UN Climate Conference, COP26, as a means to decarbonize heavy industry, long haul freight, shipping, and aviation. Governments and industry have both acknowledged hydrogen as an important pillar of a net zero economy.

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The Green Hydrogen Catapult, a United Nations initiative to bring down the cost of green hydrogen announced that it is almost doubling its goal for green electrolysers from 25 gigawatts set last year, to 45 gigawatts by 2027. The European Commission has adopted a set of legislative proposals to decarbonize the EU gas market by facilitating the uptake of renewable and low carbon gases, including hydrogen, and to ensure energy security for all citizens in Europe. The United Arab Emirates is also raising ambition, with the country’s new hydrogen strategy aiming to hold a fourth of the global low-carbon hydrogen market by 2030 and Japan recently announced it will invest $3.4 billion from its green innovation fund to accelerate research and development and promotion of hydrogen use over the next 10 years.

You might encounter the terms ‘grey’, ‘blue’, ‘green’ being associated when describing hydrogen technologies. It all comes down to the way it is produced. Hydrogen emits only water when burned but creating it can be carbon intensive. Depending on production methods, hydrogen can be grey, blue or green – and sometimes even pink, yellow or turquoise. However, green hydrogen is the only type produced in a climate-neutral manner making it critical to reach net zero by 2050.

We asked Dr Emanuele Taibi, Head of the Power Sector Transformation Strategies, International Renewable Energy Agency (IRENA) to explain what green hydrogen is and how it could pave the way towards net zero emissions. He is currently based with the IRENA Innovation and Technology Center in Bonn, Germany, where he is responsible for assisting Member Countries in devising strategies for the transformation of the power sector, and currently managing the work on power system flexibility, hydrogen and storage as key enablers for the energy transition. Dr Taibi is also a co curator for the World Economic Forum’s Strategic Intelligence platform, where his team developed the transformation map on Hydrogen.

Green hydrogen technologies

What motivated you to develop your expertise in energy technologies and how does your work at IRENA contribute to it?

It was during my Master’s thesis. I did an internship in the Italian National Agency for Energy and Environment (ENEA), where I learnt about sustainable development and energy, and the nexus between the two. I wrote my thesis in management engineering about it and decided this was the area where I wanted to focus my working life. Fast forward almost 20 years of experience in energy and international cooperation, a PhD in Energy Technology and time spent in private sector, research and intergovernmental agencies, I currently lead the power sector transformation team at IRENA since 2017.

My work at IRENA is to contribute, with my team and in close cooperation with colleagues across the agency and external partners such as the World Economic Forum, in supporting our 166 Member Countries in the energy transition, with a focus on renewable electricity supply and its use to decarbonize the energy sector through green electrons as well as green molecules like hydrogen and its derivatives.

What is green hydrogen? How does it differ from traditional emissions-intensive ‘grey’ hydrogen and blue hydrogen?

Hydrogen is the simplest and smallest element in the periodic table. No matter how it is produced, it ends up with the same carbon-free molecule. However, the pathways to produce it are very diverse, and so are the emissions of greenhouse gases like carbon dioxide (CO2) and methane (CH4).

Green hydrogen is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity. This is a very different pathway compared to both grey and blue.

Grey hydrogen is traditionally produced from methane (CH4), split with steam into CO2 – the main culprit for climate change – and H2, hydrogen. Grey hydrogen has increasingly been produced also from coal, with significantly higher CO2 emissions per unit of hydrogen produced, so much that is often called brown or black hydrogen instead of grey. It is produced at industrial scale today, with associated emissions comparable to the combined emissions of UK and Indonesia. It has no energy transition value, quite the opposite.

Blue hydrogen follows the same process as grey, with the additional technologies necessary to capture the CO2 produced when hydrogen is split from methane (or from coal) and store it for long term. It is not one colour but rather a very broad gradation, as not 100% of the CO2 produced can be captured, and not all means of storing it are equally effective in the long term. The main point is that capturing large part of the CO2, the climate impact of hydrogen production can be reduced significantly.

green hydrogen and other colours
Depending on production methods, hydrogen can be grey, blue or green – and sometimes even pink, yellow or turquoise Image: International Renewable Energy Agency

There are technologies (i.e. methane pyrolysis) that hold a promise for high capture rates (90-95%) and effective longterm storage of the CO2 in solid form, potentially so much better than blue that they deserve their own colour in the “hydrogen taxonomy rainbow”, turquoise hydrogen. However, methane pyrolysis is still at pilot stage, while green hydrogen is rapidly scaling up based on two key technologies - renewable power (in particular from solar PV and wind, but not only) and electrolysis.

Unlike renewable power, which is the cheapest source of electricity in most countries and region today, electrolysis for green hydrogen production needs to significantly scale-up and reduce its cost by at least three times over the next decade or two. However, unlike CCS and methane pyrolysis, electrolysis is commercially available today and can be procured from multiple international suppliers right now.

Green hydrogen energy solutions

What are the merits of energy transition solutions towards a ‘green’ hydrogen economy? How could we transition to a green hydrogen economy from where we are currently with grey hydrogen?

Green hydrogen is an important piece of the energy transition. It is not the next immediate step, as we first need to further accelerate the deployment of renewable electricity to decarbonize existing power systems, accelerate electrification of the energy sector to leverage low-cost renewable electricity, before finally decarbonize sectors that are difficult to electrify – like heavy industry, shipping and aviation – through green hydrogen.

It is important to note that today we produce significant amount of grey hydrogen, with high CO2 (and methane) emissions: priority would be to start decarbonizing existing hydrogen demand, for example by replacing ammonia from natural gas with green ammonia.

Recent studies have sparked a debate about the concept of blue hydrogen as a transition fuel till green hydrogen becomes cost-competitive. How would green hydrogen become cost competitive vis-à-vis blue hydrogen? What sort of strategic investments need to occur in the technology development process?

The first step is to provide a signal for blue hydrogen to replace grey, as without a price for emitting CO2, there is no business case for companies to invest in complex and costly carbon capture system (CCS) and geological storages of CO2. Once the framework is such that low-carbon hydrogen (blue, green, turquoise) is competitive with grey hydrogen, then the question becomes: should we invest in CCS if the risk is to have stranded assets, and how soon will green become cheaper than blue.

The answer will of course differ depending on the region. In a net zero world, an objective that more and more countries are committing to, the remaining emissions from blue hydrogen would have to be offset with negative emissions. This will come at a cost. In parallel, gas prices have been very volatile lately, leaving blue hydrogen price highly correlated to gas price, and exposed not only to CO2 price uncertainty, but also to natural gas price volatility.

For green hydrogen, however, we might witness a similar story to that of solar PV. It is capital intensive, therefore we need to reduce investment cost as well as the cost of investment, through scaling up manufacturing of renewable technologies and electrolysers, while creating a low-risk offtake to reduce the cost of capital for green hydrogen investments. This will lead to a stable, decreasing cost of green hydrogen, as opposed to a volatile and potentially increasing cost of blue hydrogen.

Renewable energy technologies reached a level of maturity already today that allows competitive renewable electricity generation all around the world, a prerequisite for competitive green hydrogen production. Electrolysers though are still deployed at very small scale, needing a scale up of three orders of magnitude in the next three decades to reduce their cost threefold.

Today the pipeline for green hydrogen projects is on track for a halving of electrolyser cost before 2030. This, combined with large projects located where the best renewable resources are, can lead to competitive green hydrogen to be available at scale in the next 5-10 years. This does not leave much time for blue hydrogen – still at pilot stage today – to scale up from pilot to commercial scale, deploy complex projects (e.g. the longterm geological CO2 storage) at commercial scale and competitive cost, and recover the investments made in the next 10-15 years.

Several governments have now included hydrogen fuel technologies in their national strategies. Given the rising demands to transition towards decarbonization of the economy and enabling technologies with higher carbon capture rates, what would be your advice to policymakers and decisionmakers who are evaluating the pros and cons of green hydrogen?

We will need green hydrogen to reach net zero emissions, in particular for industry, shipping and aviation. However, what we need most urgently is:

1) energy efficiency;

2) electrification;

3) accelerated growth of renewable power generation.

Once this is achieved, we are left with ca. 40% of demand to be decarbonised, and this is where we need green hydrogen, modern bioenergy and direct use of renewables. Once we further scale up renewable power to decarbonise electricity, we will be in a position to further expand renewable power capacity to produce competitive green hydrogen and decarbonise hard-to-abate sectors at minimal extra cost.

This diagram shows how green hydrogen can be produced, converted and used across the energy system.
How green hydrogen can be produced, converted and used across the energy system. Image: International Renewable Energy Agency

The future of green hydrogen

Where do you see energy technologies relating to hydrogen evolving by 2030? Could we anticipate hydrogen-powered commercial vehicles?

We see the opportunity for rapid uptake of green hydrogen in the next decade where hydrogen demand already exists: decarbonising ammonia, iron and other existing commodities. Many industrial processes that use hydrogen can replace grey with green or blue, provided CO2 is adequately priced or other mechanisms for the decarbonisation of those sectors are put in place.

For shipping and aviation, the situation is slightly different. Drop-in fuels, based on green hydrogen but essentially identical to jet fuel and methanol produced from oil, can be used in existing planes and ships, with minimal to no adjustments. However, those fuels contain CO2, which has to be captured from somewhere and added to the hydrogen, to be released again during combustion: this reduces but does not solve the problem of CO2 emissions. Synthetic fuels can be deployed before 2030, if the right incentives are in place to justify the extra cost of reduced (not eliminated) emissions.

In the coming years, ships can switch to green ammonia, a fuel produced from green hydrogen and nitrogen from the air, which does not contain CO2, but investments will be needed to replace engines and tanks, and green ammonia is currently much more expensive than fuel oil.

Hydrogen (or ammonia) planes are further away, and these will be essentially new planes that have to be designed, built and sold to airlines to replace existing jet-fuel-powered planes – clearly not feasible by 2030: in this sense, green jet fuel – produced with a combination of green hydrogen and sustainable bioenergy – is a solutions that can be deployed in the near term.

In conclusion, the main actions to accelerate decarbonisation between now and 2030 are 1) energy efficiency 2) electrification with renewables 3) rapid acceleration of renewable power generation (which will further reduce the already low cost of renewable electricity) 4) scale up of sustainable, modern bioenergy, needed - among others - to produce green fuels that require CO2 5) decarbonisation of grey hydrogen with green hydrogen, which would bring scale and reduce the cost of electrolysis, making green hydrogen competitive and ready for a further scale up in the 2030s, towards the objective of reaching net zero emissions by 2050.

The World Economic Forum is a longstanding supporter of the clean hydrogen agenda since 2017, having helped -inter alia- with the creation of the Hydrogen Council, the establishment of a hydrogen Innovation Challenge in partnership with Mission Innovation, and the creation, together with the Energy Transitions Commission, of the Mission Possible platform to help transition hard-to-abate sectors to net zero emissions by 2050. Read more on the Accelerating Clean Hydrogen Initiative here.

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