The World Energy Council has recently released its report on “Regional Perspectives on Low-Emission Hydrogen Scale Deployment”. Although each region presents its own distinctive challenges and opportunities, the deep dives revealed that the “regional paths” provide new insights into the global scaling up of low-carbon hydrogen in the coming years.

What is Low-Emission Hydrogen?

The generation of hydrogen is done through a chemical process known as electrolysis, a method that uses electrical current to separate hydrogen from oxygen in water. Depending on how electricity is obtained, hydrogen is classified:

• Grey: produced from fossil fuels, such as methane gas or coal.
• Blue: It is also produced from fossil sources, but the CO₂ emissions are captured for later storage or reuse.
• Green: produced from electricity from renewable energies. No CO₂ is emitted and therefore it is positioned as a key decarbonisation tool.

Together, green and blue hydrogen are known as “Low Emission Hydrogen”. This fuel can be used in various ways, such as for the generation and/or storage of electricity, or as fuel for vehicles or industries.

Long Term Potential

The council’s report stresses that based on the early deployment of the technology that is currently taking place, by 2040 the demand for low-carbon hydrogen could exceed the current demand for grey hydrogen. Low-carbon hydrogen opens up opportunities for new end-use applications in a decarbonising world: moving from pilot projects to scale-up in sectors such as medium and heavy ground transportation, petrochemicals, metallurgy, rail transport and maritime and aviation. In some parts of the world, low-carbon hydrogen, pure or blended with natural gas, could also take off as a fuel for power generation, industrial processes and heating.

The high cost of transporting hydrogen means that most hydrogen will be consumed in the country or region where it is produced. The two largest energy markets, China and the United States, are likely to be more or less self-sufficient in hydrogen. However, there is potential for significant global trade flows in hydrogen and hydrogen-based fuels/chemicals to develop between now and 2030, if sufficient regional and global cooperation emerges in the near future. The World Energy Council trade map highlights the potential for two major import hubs, one centred in Northern Europe and the other around Japan and South Korea. The main exporting regions are divided into those based on the abundance of cheap fossil fuels and CCUS opportunities (Australia, Canada, the Middle East and Russia), and those based on the abundance of renewable resources (Africa, Latin America and the Middle East).

Promotion of Hydrogen at a Global Level

Interest in low-carbon hydrogen continues to grow rapidly: as 22 countries have published and established a national strategy (including 11 strategies as of January 2021), more than 400 low-carbon hydrogen projects have been announced to date and there are growing interest from investors and financial institutions.

The cost of low-carbon hydrogen production technologies is declining around the world, with hydrogen produced from renewables in particular reaching parity with hydrogen produced from fossil fuels in places where current gas prices they are elevated.

The current military conflict in Ukraine has brought security of energy supply back to the top of political agendas. Hydrogen produced from renewable resources or nuclear electricity could play an increasingly important role in energy plans to support supply and supplier diversification. In the short term, this could translate into more nuclear and renewable energy projects, greater support for R&D of alternative fuels and energy carriers, and the development of new bilateral agreements between countries for possible future trade in hydrogen under in carbon. Regarding hydrogen derived from natural gas with CCUS, uncertainties arise regarding its role in the short term due to the current volatility in the stability of supply and the price of natural gas.

Although the momentum for low-carbon hydrogen is growing around the world, each region is taking a different route in its deployment, and different paths will continue to exist to accommodate the specificities of each region, country and city. Differences in low-carbon hydrogen adoption between regions are due to differences in market opportunities and priority actions by stakeholders. The versatility of hydrogen makes it relevant in many countries, but applications and supply chain development must be tailored to each specific context. As regional similarities and potential synergies emerge, further regional cooperation in hydrogen development should be seen.

Key Takeaways:

1. Low-carbon hydrogen can play a significant role by 2040 across the world by supporting countries’ efforts towards achieving Paris Agreement goals, whilst contributing to the diversity and security of their energy portfolios. This would require significant global trade flows of hydrogen and hydrogen-based fuels.
2. The momentum for hydrogen-based fuels is continuing to grow worldwide, but differences are seen between regions – based on differing market activities and opportunities.
3. Today, moving from “whether” to “how” to develop low-carbon hydrogen highlights significant uncertainties, which need to be addressed if hydrogen is to reach its full potential.

Enabling low-carbon hydrogen at scale would notably require greater coordination and cooperation amongst stakeholders worldwide to better mobilise public and private finance, and to shift the focus to end-users and people. 

By Francisco José Galtieri, a former Senior Manager of the World Energy Council and an MPA graduate in Energy and Environment from the Columbia University, New York.