Future Cleantech Architects’ new report provides policymakers with guidelines for the development and deployment of clean hydrogen to decarbonize industrial processes and heavy transport. It aims to encourage clean hydrogen use where it can achieve significant emissions reductions or serve as an essential industrial feedstock. The report recommends key parameters for consideration, such as techno-economic analysis and lifecycle greenhouse gas emissions assessment, to evaluate hydrogen’s effectiveness against other climate solutions. These insights are intended to inform public policy design and ensure subsidy schemes for clean hydrogen that result in the most efficient use of public funds.
Hydrogen is an indispensable industrial feedstock for many crucial industries such as fertilizers (ammonia), fuel production, and clean steel production. Hydrogen consumption is expected to reach 100 Mt in 2024, yet its production remains predominantly from fossil fuels, mostly through natural gas followed by coal, which are carbon-intensive processes with significant climate impact. Hydrogen’s annual emissions amount to ~1.3 Gt of CO2eq, or ~2.5% of global emissions. Only a symbolic volume of hydrogen, less than 1%, is produced from renewable electricity or with carbon capture and storage (CCS). According to the IEA, a fourfold increase in hydrogen demand is expected by 2050 if it is used throughout the economy. As it is so energy intensive to produce, hydrogen does not lead to energy security; therefore, it should first be deployed in those sectors in which it is needed as an indispensable feedstock (fertilizers, steel, or fuels production) i.e. in industries that already consume hydrogen today, before considering novel sectors and uses.
All low-carbon or renewable hydrogen production pathways come with challenges pertaining to scalability, cost, and/or energy consumption, resulting in less than 5% of announced renewable hydrogen projects in 2024 receiving final investment decisions (FID). Additionally, hydrogen faces upstream challenges in handling, transport, and storage. The current natural gas infrastructure is incompatible with pure hydrogen streams, and low emissions savings would be achieved if hydrogen were to be blended with natural gas. Finally, hydrogen is not a drop-in fuel that can replace other hydrocarbon fuels in all applications. Hydrogen is more prone to explosions and fires, takes up more storage space, provides lower energy per unit volume, and differs in its flame properties when compared to hydrocarbon fuels.
As clean hydrogen will continue to remain scarce in the near future, and the main green production pathway is dependent on clean electricity, hydrogen must first be prioritized for sectors that are currently or will be dependent on it as a feedstock, such as refineries, chemicals, and steel.
Hard-to-abate sectors with limited direct electrification potential, such as aviation and shipping, should receive priority access to clean hydrogen once hydrogen-dependent sectors have transitioned to clean hydrogen.
Sectors where electrification will deliver the most effective decarbonization solution, such as road transport, buildings, and power generation, should be excluded from hydrogen deployment strategies or public funding support as direct electrification brings about the most effective emissions savings with the lowest carbon abatement costs in these cases.
Clean hydrogen‘s critical role in facilitating emissions reductions in sectors such as refining, chemicals, and steel must be prioritized. A facts-based allocation of scarce resources, such as renewable electricity and green hydrogen, that prioritizes sectors currently dependent on hydrogen is key. Ramping up renewable electricity deployment to bring down green hydrogen costs and supplementing supply with low-carbon and novel hydrogen sources can help reduce bottlenecks. It is necessary to assess the feasibility of decarbonizing existing hydrogen production assets through the deployment of carbon capture and storage paired with strict methane emissions control.
Clean hydrogen will play a key role in sectors where direct electrification is not a viable decarbonization option, such as long-haul aviation and shipping. In these sectors, hydrogen will be used as a feedstock for the production of sustainable alternative fuels. Clear national strategies for clean hydrogen deployment that prioritize hard-to-abate sectors, with targets that provide long-term visibility for hydrogen and alternative fuels coupled with incentives to close the commercialization gap, are needed.
Science-based guardrails are needed to prevent the use of hydrogen in sectors where other more effective and efficient decarbonization strategies can be deployed (e.g., road transport, heating). To this end, national strategies should exclude hydrogen-incompatible sectors and avoid technology openness in sectors where effective decarbonization solutions, such as direct electrification, have been established. Awareness must be raised amongst all stakeholders on the challenges and limitations of clean hydrogen.
Investing in RD&D is crucial to closing the commercialization gap and ramping up clean hydrogen production to help meet current and future hydrogen needs. It is crucial to fund commercially viable clean hydrogen production pathways, invest in innovative supplementary pathways, and accelerate RD&D to overcome upstream challenges, and ensuring public funds are invested in hydrogen projects that will supply hydrogen to industries where it is an indispensable feedstock or fuel.
When designing public policy frameworks to support hydrogen development and deployment in sectors beyond the highest priority areas, the following guardrails should be applied. If these criteria reveal that hydrogen results in the highest total carbon abatement cost and an inefficient use of clean energy, policymakers should avoid allocating public funds to hydrogen in those sectors, as this would lead to a wasteful use of both public resources and decarbonized energy.
A techno-economic analysis, based on the levelized cost of hydrogen (LCoH), lifecycle GHG emissions reductions, and the total carbon abatement cost of deploying hydrogen versus heat pumps should be included in any public policy framework that seeks to support hydrogen deployment to decarbonize buildings.
A detailed analysis, based on the total cost of ownership of the vehicle, lifecycle analysis, and the total carbon abatement cost of deploying hydrogen versus direct electrification should be included in any public policy framework that seeks to support hydrogen deployment to decarbonize road transport.
A techno-economic analysis, based on the levelized cost of electricity (LCoE), lifecycle emissions reduction, and the total carbon abatement cost of deploying hydrogen versus direct electrification should be included in any public policy framework that seeks to support hydrogen deployment to decarbonize the grid of the economy.