The “electrify everything” movement—the push by activists, nonprofits and some governments to power as many machines as possible with electricity instead of fossil fuels—is an important part of the energy transition. But, like all climate solutions, direct electrification isn’t a panacea. Our electric grids aren’t terribly clean, so electrification only makes sense as a climate solution when the demand is synchronized to a renewable resource, no easy feat for industrial processes. More importantly, it’s not possible to electrify everything: some of the world’s most energy- and carbon-intensive processes require other high-emission inputs besides electricity.
By some estimates, half of global greenhouse gases (GHGs) come from sectors we don’t know how to power with renewable electricity. The largest share of those un-electrifiable emissions can be traced to industry—sectors like heavy manufacturing, cement, steel, and fertilizer. These sectors and others like them account for one quarter to one third of global carbon emissions and 40% of global energy demand, and they are integral to our civilization. We can’t just give them up, so how can we operate them responsibly so that they don’t exacerbate climate change? The most promising answer is green hydrogen. It’s a fuel for high-temperature heat, it’s a chemical input to vital processes, and it’s an energy carrier that can be stored for later use. With some technical ingenuity, hard work, and scaling, it will soon be possible to produce vast quantities of hydrogen from cheap renewable power. This carbon-free, “green” renewable hydrogen is the key to slashing the GHGs from these sectors.
Green hydrogen or bust
Hydrogen fuel produces heat energy when it’s burned, with the only byproduct being water. In other words, hydrogen is a zero-emissions fuel at the point of use—that’s why it’s been touted by business and political leaders as an important part of a low-carbon economy for decades (President George W. Bush called for a “hydrogen economy” in his 2003 State of the Union address). Although it’s a zero-carbon fuel, hydrogen as it is made today has hefty upstream carbon emissions. Most hydrogen is made by steam methane reforming (SMR), which produces hydrogen from methane (also known as natural gas or fossil gas). Between its feedstock’s status as a powerful GHG with a tendency to leak out of storage and transmission infrastructure and the intrinsic carbon emission of the process itself, SMR has no place in a low-carbon world. Nevertheless, more than 95% of global hydrogen production–a $120 billion industry today–is from SMR. Clearly, the time has come for the hydrogen industry to go green, and to do it in a big way.
“Green” hydrogen (the renewable stuff), in contrast to the “gray” hydrogen produced using SMR, can be manufactured without producing GHGs, making it a zero-carbon resource with zero-carbon origins. If done right, it takes advantage of today’s scalable, low-cost clean energy sources by making hydrogen from water and renewable electricity in a process called electrolysis. There are many other hydrogen “colors” assigned to variations on SMR and other production methods, but none can match the potential for global scale and zero carbon offered by green hydrogen.
Solving for cost, intermittency and scale
For green hydrogen to fulfill its promise and bring zero-carbon energy and chemistry to the world’s biggest industries, it must become cost-competitive with more polluting alternatives. The cost of energy inputs is the biggest determinant of the overall cost of hydrogen, usually measured in dollars per kilowatt-hour (kWh) of energy contained in the fuel. Luckily, in many parts of the world the cheapest-available electricity is generated by clean resources like wind and solar. The sources of this electricity are nearly infinite, but are intermittent—only “ on” part of the time when the sun is shining or the wind is blowing. New technologies aimed at making green hydrogen competitive must be built around the intermittent nature of clean power since storing electricity (called “firming”) is too expensive. The reality of producing hydrogen from clean power is that you can only count on your power source 25% to 50% of the time, a big adjustment from current hydrogen production, which usually runs around-the-clock. We need green hydrogen solutions that can be operated economically from intermittent energy resources. This implies that the cost of the equipment to produce it has to be a lot lower than it is today
In 2020, the lowest system capital expenditure for green hydrogen production was about $1,000 per kilowatt (kw) of production capacity. In order to be competitive with gray and other forms of hydrogen in the near term, that capex must come down to about $300 per kw. A 70% reduction in the cost of building a hydrogen electrolysis plant in just a few years sounds impossible, but it’s not if you consider the scale of the opportunity to re-tool industrial heat and chemistry. The SMR hydrogen industry, though already large, is and has been relatively narrow–it’s primary applications are in industrial processes like oil refining and fertilizer production. Many other small-scale applications like fuel for small vehicles and commercial fuel cells exist, but are niche and may not keep up with alternatives like battery electric vehicles. The scale at which hydrogen must be deployed to decarbonize the broader spectrum of hard-to-abate sectors is orders of magnitude larger than the scale at which it is used today. Think about the scale of natural gas globally–this is the scale hydrogen will need to reach to decarbonize the broader array of hard-to-abate industries. If the right technological innovations are applied to hydrogen production with that massive scale in mind and we begin building renewable hydrogen plants to match it, that $300 per kw capex will be within reach. From there, the overall cost of hydrogen can be further reduced through learning, and continuing declines in the cost of clean electricity.
A report from IHS Markit last year found that green hydrogen costs are falling fast, and noted a 50% cost decline from 2015 to 2020; it concluded that green hydrogen would reach price parity with gray hydrogen by 2030. That’s all good news, but not good enough or fast enough. We can’t make the required progress on emissions reductions without tackling the industries that produce a third of the world’s GHGs during this decade. Price parity with fossil fuel-based hydrogen is the only way to trigger the widespread adoption of green hydrogen in the time required to avert disproportionate climate costs. And that adoption must begin in the next few years.
Not a silver bullet, but a powerful arrow in the quiver
The way to make green hydrogen a reality is to think big, plan big and act big. The industries and use cases that would benefit most from large-scale, affordable green hydrogen are some of the largest in the world by any measure. The green hydrogen innovators of today and the investors and policymakers who choose to support them can’t take a piecemeal approach. It’s too late for that. New models and new technologies, built from the ground up for the express purpose of retooling some of the biggest, most important industries of the last century, will mark the only pathway to industrial decarbonization that happens fast enough.
To highlight that pathway, stakeholders in the debate over a low-carbon future, from the news media to investors to regulators, must provide the proper context and set aside small thinking around applications for hydrogen that are better served through direct electrification. With a clear vision for decarbonizing industry and infrastructure with green hydrogen, the big thinkers and doers who will facilitate this revolution can really get to work.