World Transition Towards Net-Zero
The World’s Transition Towards Net-Zero Emissions
As the world moves closer to net-zero energy, clean hydrogen will play a greater role in the economy.
Green hydrogen is an alternative that minimizes emissions while also being environmentally friendly. One of the goals that countries throughout the world have set for 2050 is to decarbonize the planet. Decarbonizing the production of an element like hydrogen, resulting in green hydrogen, is one of the keys to achieving the established goals, as hydrogen now accounts for more than 2% of total global CO2 emissions. In a zero-emissions economy, clean hydrogen is in high demand.
Falling Production Costs and Their Implications for Decarbonization Costs
Any hydrogen used to hasten decarbonization must be produced in an environmentally friendly manner. This might be accomplished by the so-called "green" way of electrolyzing water with zero-carbon electricity. Alternatively, low-carbon (but not zero-carbon) hydrogen can be produced using the "blue" route, which involves extracting hydrogen from natural gas methane while minimizing methane leakage (a potent greenhouse gas) to almost zero throughout the natural gas production, processing, transport, and use processes.
Because the blue route adds a step (carbon capture and storage) to the underlying production process, it will always be more expensive than creating grey hydrogen (i.e., from methane or coal with unabated CO2 emissions) in the absence of a carbon price. Green hydrogen costs may, in the medium run, undercut grey hydrogen in many regions due to potential declines in the price of renewable electricity and electrolyzers. As a result, the green production route is expected to win out in the long run, with blue hydrogen playing a key role in the transition and in a few key areas.
As a result, the expenses of producing clean hydrogen in quantities significantly exceeding today's levels will be lower in comparison to grey hydrogen. However, it is crucial to highlight that, in some situations, employing hydrogen in end-use applications may still incur a "green cost premium" compared to present high-carbon technologies, necessitating the employment of public policy to accelerate decarbonization.
Options for Zero-Carbon Hydrogen Production
Most of the hydrogen is now produced through natural gas Steam Methane Reforming (SMR) or coal gasification technologies. Currently, only a small percentage is generated in a low/zero-carbon manner.
Many prospective methods for delivering very low/zero-carbon hydrogen are still in the early phases of development, have intrinsic drawbacks, or, in the case of methane pyrolysis, rely on large sales of a carbon black by-product to be cost-effective. Due to generally limited resources of sustainable biomass, hydrogen production methods from biomass are unlikely to play a significant role; however, they may provide pathways to negative emissions via CO2 sequestration.
There are several potential clean hydrogen generation paths, however, two are anticipated to dominate hydrogen scale-up in the next decade.
While new developments are possible, one of the two technologies is expected to dominate the path to zero-carbon hydrogen:
- The electrolysis of water used to produce green hydrogen is a long-proven process that accounted for the majority of hydrogen generation before natural gas became widely available. There are several electrolyzer technologies to choose from:
- alkaline, proton exchange membrane (PEM), and solid oxide electrolyzer cell (SOEC) – each with its own set of benefits in various applications. As technology advances, critical performance criteria such as energy efficiency and flexibility in response to varying electricity loads are gradually improving. The carbon intensity of hydrogen produced by electrolysis is determined by the carbon intensity of the energy consumed during operation as well as the carbon intensity of the electrolyzer manufacturing process. It can theoretically become zero if all of the electricity is generated from carbon-free sources;
- “Blue” hydrogen production entails adding carbon capture and storage (CCS) to either SMR (Steam Methane Reforming), ATR (Auto Thermal Reforming), or POX (Partial Oxidation) of natural gas. The technologies differ in terms of their ability to achieve high CO2 capture rates, with at least 90% being considered as a minimum for low-carbon hydrogen:
- SMR + CCS can capture around 60% of the produced CO2 at moderate additional cost and around 90% with significant retrofitting and at a significantly higher cost;
- ATR + CCS and POX + CCS are the more likely technologies of choice for greenfield blue hydrogen projects since they provide much higher capture rates exceeding 95 percent at moderate costs;
- Leakages of methane from natural gas must be avoided during production, transportation, storage, processing, and usage, in addition to absorbing CO2 emissions during blue hydrogen generation.
Green Hydrogen Has Greater Potential for Cost Savings
The cost of producing blue hydrogen is currently lower than that of producing green hydrogen, and the cost of producing grey hydrogen (SMR without CCS) is even lower. Green production costs, on the other hand, have the potential to go below grey prices in some areas, although blue costs are unlikely to decline significantly. The cost of green hydrogen is primarily determined by two factors: the cost of zero-carbon electricity and the cost of electrolyzers. Both are expected to drop rapidly (Figure 3):
- Over the previous decade, the levelized cost of renewable electricity has dropped by 70-90 %, with recent auctions resulting in lower prices in some regions, and more cost reductions are unavoidable.
- Costs of electrolyzers can be considerably reduced as the sector obtains efficiencies of scale and learning curve effects.
- As a result, green hydrogen prices could fall in favorable regions (i.e., those with access to low-cost variable renewable energy generation) by 2030. The rate of cost reduction will be determined by the rate of quantitative ramp-up, although some initiatives have already been undertaken with the goal of lowering costs in the upcoming years.
Today's production prices vary depending on local costs: clean production pathways are more expensive, with green hydrogen costing about 2-4 times as much as grey hydrogen.
Green hydrogen from electrolysis is projected to become the cheapest clean production pathway in the long run, and it could be competitive with blue hydrogen in favorable areas.
Because the addition of CCS to the underlying SMR or ATR process is needed, blue hydrogen costs are expected to exceed grey hydrogen costs at no carbon price. Blue hydrogen with a 90% capture rate would be cost-competitive with grey hydrogen. Costs will tend to decrease as production scale grows, although at a considerably slower rate than in green production:
- Reforming technologies (SMR, ATR, POX) are established and widely used, limiting the possibility of further cost savings.
- CCS capital expenses account for almost half of the cost of a blue hydrogen plant, but this has a limited impact on total production costs, which are highly influenced by the energy inputs (natural gas) to the blue hydrogen process.
- By 2030, the cost of blue hydrogen is expected to drop by only 5-10%. The selection between SMR and ATR technologies, as well as whether SMR reactors are already in place or are being developed, will influence blue hydrogen costs.
- On a newbuild basis, the costs of ATR and POX plus CCS (reaching a 95%+ capture rate) are comparable and will be less (10-15%) than the cost of SMR plus CCS (getting a 90% capture rate).
- In some cases, retrofitting CCS to existing SMR reactors may be cost-effective. While minor retrofits can achieve a 60 % capture rate, this is unlikely to be considered clean hydrogen. Higher-capture-rate retrofits are more expensive and necessitate major adjustments. In many circumstances, switching to greenfield ATR/POX would be preferable (or green hydrogen).
- As a result, ATR/POX (and to a lesser extent SMR) plus CCS will play a cost-effective role in decarbonizing existing hydrogen facilities (noting that this may necessitate new production facilities), as well as new greenfield plants in certain very-low-cost gas locations.
Aside from costs, the green and blue production procedures have their own set of characteristics for clean hydrogen use:
- Blue hydrogen is generated in a steady-state flow that is required for industrial processes, whereas green hydrogen production may operate sporadically depending on load hours, necessitating more storage.
- For PEM fuel cells in transportation applications, the high purity of hydrogen produced by electrolyzers is critical. Additional purification stages and expenses are required to achieve the same purity hydrogen using the blue production technique.
- Land purchase, planning, and permitting processes often delay the installation of renewable power, however, comparable problems are anticipated to be linked with the development of CCS for blue hydrogen, which involves significant permitting procedures.
- In densely populated countries, land area constraints for renewable electricity production may limit green output.
In the long run, green hydrogen is projected to outperform grey hydrogen in most areas, with the price of green hydrogen falling below that of grey hydrogen in areas with very low-cost renewables. If methane leakage is substantially minimized, blue production may still play a major role in areas with lower gas prices. Figure 5 shows a prediction of blue and green hydrogen costs by region in 2050, with each subject to a range based on the cost of zero-carbon power (for green) and the cost of gas (for blue). In most cases, green is likely to be more cost-effective, even if in regions with quite low gas prices, such as Saudi Arabia, the United Arab Emirates, and the United States, blue production may remain competitive.
However, blue hydrogen must only be used in a way that allows for near-total CO2 absorption and in situations where methane leakage in the natural gas supply chain is significantly decreased compared to current levels. The implications of uncaptured CO2 and methane leakage for the tonnes of CO2eq of GHG (Greenhouse Gas) produced by blue hydrogen generation are shown in Figure 6.
- Even with 95% capture, uncaptured CO2 would amount to 0.4 tonnes per tonne of hydrogen produced.
- If methane leakage were 1.5 % (the current estimated average for the global natural gas industry), each tonne of blue hydrogen would emit an additional 3 tonnes of CO2eq.
If all of the 800 Mt of hydrogen expected for 2050 were produced in a blue way, this would result in almost 2 Gt of CO2eq emissions per year (at a 95 % capture rate with 1.5 % methane leakage). If 15% of the 800 Mt hydrogen produced per year is created via the blue route, at a capture rate of 95%, approximately 50 Mt of uncaptured CO2 emissions are produced, with an additional 25 Mt CO2eq emitted at a 0.1 % methane leakage rate. Any generation of blue hydrogen must be accompanied by pledges to collect more than 90% of CO2 emissions and limit methane leakage to extremely low levels.
Green production is anticipated to cost less in most areas by 2050, although blue production may have a longer-term role in certain low-cost natural gas regions.
Blue hydrogen's total GHG emissions comprise CO2 from production as well as methane leakage from natural gas production and transportation.
Accelerating clean hydrogen production and use in the 2020s By 2025 and 2030 we must...
We are highly optimistic that net-zero carbon emissions may be achieved sooner, considerably enhancing the chances of keeping global warming below 1.5°C. Actions made in the coming decade will be important in putting the global economy on track to meet this goal. This will not only prevent the severe effects of climate change but also promote prosperity and higher living standards, as well as provide significant environmental advantages in the surrounding areas.
Green hydrogen can have a critical impact on the upcoming fundamental change of the global energy system, alongside vast clean electrification. Policymakers, investors, innovators, producers, buyers, and the public and private sectors, in general, are invited to cooperate and take action at all levels to accelerate the development of the clean hydrogen economy. If the energy used in operation and electrolyzer production still emits CO2, then green hydrogen will have residual CO2 emissions. However, green hydrogen may be created carbon-free if all electricity used in the supply chain is also carbon-free.
Green hydrogen will also entail some residual CO2 emissions, if the electricity used in operation and electrolyser manufacturing still involves some CO2 emissions. But, in principle green hydrogen can be made truly zero-carbon if all electricity used is also zero-carbon in the entire supply chain.