Is green H2 better than blue? Is gray going away? As the world transitions from “black gold” to greener alternatives, many questions are being raised about hydrogen (H2) and its role in the current and future energy mix.
H2 was among the “hot topics” during the 2021 CERAWeek by IHS Markit held virtually in March. The global energy research firm estimated that hydrogen currently costs $200 to $250/bbl to produce—as much as five times the cost to produce a barrel of oil. Low-carbon hydrogen has a tiny share of the global energy market today, but investors are betting on its long-term potential, according to Wood Mackenzie, who said shares with meaningful exposure to hydrogen have been among the best-performing of energy transition stocks in the past few months. By 2050, low-carbon hydrogen will constitute 7% of global energy demand—211 Mt—from practically zero today.
For this and other reasons, many oil companies are researching and investing in hydrogen projects. IHS Markit believes that energy companies will invest $5 billion to $10 billion in hydrogen of various colors over the next 5 years, helping to develop breakthrough technologies that will reduce its cost and increase its competitiveness, not only with renewables such as wind and solar, but eventually with oil and natural gas.
Paul Browning, president and chief executive officer of Mitsubishi Power Americas, said, “What’s really driving green hydrogen is net zero, from regulators to shareholders. There is no way to get to net zero without long-term storage, and for that, we need hydrogen,” he said. “Green H2 will be used as storage first. Then its cost will decline enough to make it a fuel.”
But green won’t be the only player. Blue and green are at the basis of different perspectives of a potential hydrogen society, according to a paper recently published in an environmental research journal Sustainability. Blue hydrogen, integrated with carbon capture and storage, can provide the scale and reliability needed by industrial processes. It can also play an essential role in decarbonizing hard-to-electrify industries and driving down the cost of the energy transition. And it can represent a useful option in the short and medium term by helping pave the way for green hydrogen at a later stage (Fig. 1).
Armin Schnettler, executive vice president of new energy business for Siemens Energy, said at CERAWeek, “Short-term color isn’t important. What is important is a hydrogen economy, dedicated to green H2. In the short term, we should be ready to support all colors.”
Moving From Talk to Action
Hydrogen’s potential role in national and international decarbonization strategies is growing for sectors ranging from industry to transport. Already used as a feedstock in industrial applications, it is now being proposed as a potential energy carrier to support wider deployment of low-carbon energy.
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