The ETC is a coalition of more than 45 public and private sector energy organizations “committed to achieving net-zero emissions by mid-century.” It includes ArcelorMittal, BP, Iberdrola, Ørsted, Shell, Tata Group and Volvo Group, as well as financial and academic institutions and NGOs.
Green hydrogen, produced via electrolysis of water with renewable power, is “likely to be the most cost-competitive and therefore the major production route in the long-term, due to falling renewable electricity and electrolyzer equipment costs,” it said.
“It could account for approximately 85% of total production by 2050,” it said.
Blue hydrogen, produced from natural gas with carbon capture and storage, would be an important transition solution, and could play a role “in some specific very low-cost gas locations.”
The increase in demand would come from decarbonizing sectors that were hard or expensive to directly electrify, such as steel production, industry and shipping, the ETC said. The current global hydrogen market is almost entirely supplied from fossil fuel sources.
The report said private-sector collaboration coupled with policy support could support renewable and low-carbon hydrogen markets to reach 50 million mt by 2030.
S&P Global Platts Analytics expects 2021 global pure hydrogen demand to reach 74.1 million mt, up 4.2% on the year, it said in March.
Pure hydrogen demand “will approach 79 million mt by 2025 on the back of increased refinery runs, a greater call on ammonia, and a budding demand for hydrogen in alternative sectors,” it said.
“Platts Analytics’ H2 Production Database identifies 1.85 million mt H2/year of announced electrolyzer capacity set to come online by 2025,” on the back of national hydrogen production targets, with much of the growth in industrial applications and chemicals production, it said.
The ETC report said 50 GW of electrolysis capacity globally would unlock green hydrogen production costs of $2/kg in “average” locations, making it competitive with blue and some conventional hydrogen. The EU’s target alone is for 40 GW of electrolysis by 2030.
Renewable electricity costs accounted for 85% of green hydrogen production costs, the ETC said. It identified a further $2.4 trillion of investment needed until 2050 for production facilities, transportation and storage.
Platts last assessed the cost of producing hydrogen via alkaline electrolysis in the Netherlands (including capex) at Eur3.46/kg April 26. PEM electrolysis production was assessed at Eur4.43/kg, while blue hydrogen production by steam methane reforming (including carbon, CCS and capex) was Eur1.89/kg.
ETC chairman Lord Adair Turner said there were no “inherent” barriers to achieving the production volumes set out, but “strong public policy support and visionary private investment is needed to drive clean hydrogen growth at the fast pace now required.”
The ETC said a number of mechanisms were needed to achieve the early demand growth that could emerge. These included carbon pricing, sector-specific policies and financial support, electrolyzer capacity targets, developing hydrogen industrial clusters and establishing standards on safety, purity and GHG intensity.
“Green hydrogen made from renewable electricity will be the best complement to deep electrification to achieve a sustainable and decarbonized energy sector,” Iberdrola Chief Innovation and Sustainability Officer Agustin Delgado said. “Policy commitments to scale up this new economy are necessary and will bring important economic and environmental benefits in the years to come.”
The ETC said achieving a net-zero GHG emissions economy by 2050 was technically and economically feasible, and the growth in renewable electricity supply needed — from 10% of current total generation to 40% by 2030 and over 75% by 2050 – was “undoubtedly within reach if clear national strategies for decarbonization are put in place and appropriate power market design unlocks private financial flows.”