For China and India, both of which import most of their gas supplies, coal-based hydrogen tends to be the cheapest option. Several European countries have already implemented their gas transport systems or are currently testing their compatibility with hydrogen. Snam is the first European energy company to successfully test a blend of 5% and 10% hydrogen and natural gas in its transmission network in 2019. According to the company, about 70% of the gas network in Italy is ready for hydrogen, and this share can be further increased by implementing some modernizations of the system. In 2020, Ukraine also began testing its gas network to transport a mixture of natural gas and hydrogen. According to IRENA, although renewable hydrogen is currently expensive, it can be cost-effective under optimal conditions with hydrogen based on fossil fuels equipped with CCS. This makes hydrogen «essential» to achieving net zero, says Dr David Joffe, head of carbon budgets at the UK`s Climate Change Advisory Committee. He told Carbon Brief: As renewables provide more and more energy around the world, hydrogen advocates see gas as an essential component of «deep decarbonization» that provides electricity when the sun and wind aren`t enough. «If you were to eliminate a ton of CO2, it would make more sense to put hydrogen in the steel or ammonia sector than to worry about the last 10% of the decarbonization of electricity demand.» Similarly, Micheal Liebreich, a senior contributor at BloombergNEF, wrote in a recent article: «On the surface, [hydrogen] seems to be the answer to any energy question.
But he adds: «Unfortunately, hydrogen has an equally impressive list of drawbacks. At the launch of the energy outlook, BP Group chief economist Spencer Dale said focusing exclusively on green hydrogen would «limit the pace at which the hydrogen economy can grow.» Aviation is another industry that is difficult to decarbonise in which hydrogen could play a central role, says Dr. Ahmad Baroutaji, an engineer at the University of Wolverhampton, who published an overview of the topic last year. He tells Carbon Brief: Professor Ferdinand Dudenhöffer, director of the Automotive Research Center at the University of Duisburg-Essen, told Carbon Brief that he has always been skeptical of hydrogen cars: As for industrial processes that already rely heavily on hydrogen, although efficiency improvements may dampen some of their demand, it is expected to grow overall. This means that companies must look for low-carbon sources of hydrogen in order to decarbonize. While hydrogen could still play a role in long-haul trucks, most of the future market for buses, light commercial vehicles and cars is likely to be electric, and launching a fuel cell industry would require $105 billion in subsidies by 2030. Today, hydrogen comes in two forms: blue, which depends on fossil fuels, and green, the zero-carbon version. If hydrogen is to help the world achieve the goals of the Paris Agreement, it must evolve from blue to green. This has implications for how Europe will build a hydrogen economy.
Another important factor when considering the cost of hydrogen is transportation, as moving gas is more difficult and expensive than moving methane. One of the main announcements was the European Commission`s «Hydrogen Strategy for a Climate-Neutral Europe» published in July 2020, which includes an ambitious target of 40 gigawatts (GW) of European electrolyzer capacity to produce «green» hydrogen by 2030. In a hydrogen economy, hydrogen would be used instead of fossil fuels, which currently account for four-fifths of the world`s energy supply and emit the majority of global greenhouse gas emissions. Many industry players are delighted that hydrogen is succeeding in the transport sector, and it is already being used in some niche markets. About 25,000 forklifts are now powered by hydrogen. For climate experts, green or renewable hydrogen – produced from the electrolysis of water fed by the sun or wind – is essential for climate neutrality. «From my point of view, we make the system work,» van Wijk explains. «As the demand for hydrogen increases and green hydrogen becomes cheaper, it will complement and replace this fossil hydrogen.
Japan, which invested in hydrogen long before climate neutrality was on the agenda, is working with its main supplier, Australia, to switch from grey to blue to green. «Green hydrogen will ultimately be cheaper than grey hydrogen because of the very cheap electricity from the wind and sun,» van Wijk explains. .