There are certain scientists that go on to believe that hydrogen energy may be a much cleaner and more effective way so as to power the world. Hydrogen happens to be a naturally occurring gas and, as a matter of fact, the most abundant substance in the entire universe. When being used alongside other technologies like renewable power as well as biofuels, hydrogen happens to have the potential of decarbonizing many industries, even those that happen to be the biggest of the emitters when it comes to greenhouse gases. As per a McKinsey analysis, in all possibilities, the demand for hydrogen is bound to grow a minimum of 2-4 times by 2050. The growth happens to be quite significant, but it is lower than the one that was last anticipated because of certain basic cost increases and also certain continuous uncertainty revolving around regulation, which is kind of delaying adoption across certain regions.
Still, hydrogen’s potential contribution when it comes to achieving net-zero is not at all lost on organizations or even the governments. As of December 2023, more than 1400 large-scale hydrogen projects have already got announced across the world, which are $570 billion worth in terms of direct investments. In Europe alone, where $193 billion worth of investments have already been made, McKinsey anticipates hydrogen to play a very pivotal role when it comes to meeting the decarbonization objectives.
Renewable Hydrogen – What Is It?
Renewable hydrogen happens to be derived from water and is created by way of a process called electrolysis in which electricity from the renewable sources gets used so as to split the hydrogen molecules away from oxygen in the water itself.
How is it possible that hydrogen makes numerous high-emissions sectors meet their respective climate objectives?
It is well to be noted that as of now, the hydrogen demand happens to be driven by refining industries as well as fertilizers. Going forward, industries that happen to depend quite heavily on fossil fuels, like the heavy industries and also long-haul transport, may as well benefit the most from hydrogen energy within the short term.
The steel sector, which happens to account for 8% of the worldwide yearly emissions, happens to represent an opportunity. McKinsey has gone on to study how players within the European steel sector can also decarbonize by way of converting plants to run on the foundation of renewable hydrogen. It is worth noting that by 2030, hydrogen-driven steelmaking can account for almost 20% of emissions that are avoided through hydrogen.
It is worth noting that even the aviation industry also happens to face a precarious pressure to go ahead and meet its decarbonization goals by 2050. This is where hydrogen energy can help. The sector is anticipated to account for almost 15% of hydrogen-driven energy demand by 2050 because of the very high requirement of synthetic kerosene, which can very well be used as a jet fuel.
In case of the long-haul sector, hydrogen combustion engine can also in all probability help in meeting the regulatory issues. Although there is still a long way to go for hydrogen adoption, hydrogen combustion engines could go on to represent a comparatively easier switch from the internal combustion engines as against the engines that happen to run on fuel cell technology.
In addition to this, these engines can also draw on the existing supply chains of the automotive sector, the capacities in production, as well as skills and also knowledge when it comes to their own workforce.
Challenges that prevent the widescale hydrogen adoption
There are quite a few value chain segments that are not developing at the same rate, and for those that happen to be developing quickly, keeping up to date can indeed be an issue.
There also happens to be a prominent degree of uncertainty surrounding hydrogen demand when it comes to new applications. These sets of uncertainties come from a dearth of clarity when it comes to initiatives from the government, slow infrastructure development, and also competition creeping in with other technologies related to decarbonization.
In addition to this, hydrogen energy doesn’t produce emissions at all, but the amount goes on to vary and is also easier to control as compared to other methods of energy production. The reason why green hydrogen isn’t at present making a meaningful investment is due to too little investment. By the end of this decade, $460 billion more investment in hydrogen is going to be needed so as to attain the pathway to net-zero.
This sort of a gap in investment can as well be broken down into three categories:
- Clean hydrogen production requires approximately 150 billion when it comes to investments all through 2030.
- Investment in transmission, distribution, as well as storage happens to be critical to help access to cost-competitive supplies of hydrogen. These might as well include developing the refueling infrastructure for vehicles or also building pipelines so as to supply to industrial plants. The investment gap happens to be at present over $165 billion.
- Meeting the projected demand across various end uses of hydrogen applications, such as steel and transportation, is going to be needing an extra investment of $145 billion.
Elements needed for hydrogen energy market to scale
The following issues will need to be addressed by hydrocarbon-rich nations so as to fulfill massive potential when it comes to hydrogen energy.
The hydrocarbon-rich countries have to scale up the green as well as blue hydrogen. Blue hydrogen may be slightly easier to scale, while green hydrogen will need a larger market share right from medium to long term as it goes on to become increasingly viable economically.
So as to create a very healthy hydrogen ecosystem, there will indeed be a need for local markets for hydrogen apart from major exports. Regulations with regards to clean air and also decarbonization can also help to stimulate this demand.
Hydrogen happens to be challenging to transport, be it by pipeline or through the sea. When it gets shipped, it has to be either in the form of liquid or it should be transformed into ammonia. Both the processes happen to be expensive, and the liquefaction of hydrogen is quite a steep task too, as it needs to be cooled down to -252 degrees Celsius.