As Europe races ahead with its hydrogen plans, many other parts of the world are looking to develop their own hydrogen markets. But IRENA warns that the expansion of the hydrogen market must be carried out strategically to ensure it supports the transition away from fossil fuels to renewable alternatives.
Australian firms are now planning to establish a green hydrogen hub, using solar and wind energy to power operations. Fortescue Future Industries (FFI) announced this month that it is partnering with Windlab to develop the North Queensland Super Hub. This project will focus on green hydrogen production and is expected to be up and running by 2027. The firms hope to establish over 10GW of wind and solar power to support green hydrogen production. The 800MW Prairie Wind Farm and another 1,000MW project will provide energy for the facility if approved.
BP, backed by the Australian Renewable Energy Agency, carried out a feasibility study in 2020 for the production of hydrogen in Australia. The study concluded that “the production of green hydrogen and green ammonia using renewable energy” had become technically feasible at scale in Australia. Until now, green hydrogen development had been “constrained by the lack of renewable supply to power the process of extracting hydrogen from water through electrification,” according to FFI. However, the firm pointed out, Australia has significant potential to develop its wind and solar assets over vast areas of land.
Australia’s not the only country looking to catch up to Europe’s rapidly expanding green hydrogen developments, as the U.S. looks to establish a market of its own. President Biden’s Inflation Reduction Act (IRA) is expected to boost interest and funding in green hydrogen projects across the U.S. through the investment of $369 billion in renewable energy and climate change programmes. Andy Marsh, the CEO of Plug Power, an American green hydrogen producer, stated that tax credits from the IRA will provide “a major inflexion for the world to achieve net zero by 2050 and for hydrogen, especially green hydrogen, to provide 20percent of the world’s energy.”
The development of the Hydrogen and Fuel Cell Technologies Office (HFTO), under the Department of Energy (DoE), has helped the U.S. to begin to build its hydrogen market. Until recently it has been lagging behind Europe and Asia in the development of its green hydrogen capacity. However, IRA funding, supported by HFTO research and development in hydrogen production, is expected to help the U.S. rapidly expand its green hydrogen production.
Despite optimism around the development of new green hydrogen markets, The International Renewable Energy Agency (IRENA) is now saying “Indiscriminate use of hydrogen could therefore slow down the energy transition,” it added. “This calls for priority setting in policy making.” Hydrogen use by the G-7 powers is expected to increase by between four and seven times by 2050, compared to 2020. This jump is in response to net-zero carbon emissions targets worldwide. Both IRENA and the International Energy Agency (IEA) agree that hydrogen will play a major role in the global transition away from fossil fuels to renewable alternatives. But it may not be so simple as just rolling out large-scale hydrogen projects in various parts of the world.
IRENA published an analysis this month that suggested hydrogen production must be managed mindfully to support net-zero aims. At present, much of the world’s hydrogen is powered by fossil fuels, with projects using waste carbon from oil and gas operations to power facilities. In addition, while there are grand plans for hydrogen use, its use in carbon-heavy industries, such as aviation, steel, shipping, and chemicals, is still limited, with more research and testing required to support a shift to hydrogen use.
IRENA believes that not just any hydrogen project will support global net-zero aims, rather the world must develop its green hydrogen capacity, powered by renewable energy sources such as wind and solar power. At the recent COP27 climate summit, German Chancellor Olaf Scholz explained how hydrogen is “one of the most important technologies for a climate-neutral world.” However, he added, “Of course, green hydrogen is still an infant industry, its production is currently too cost-intensive compared to fossil fuels.”
While there are high hopes for the wide-scale rollout of green hydrogen projects and the development of a global green hydrogen market and supply chain, work on the clean energy source is only just beginning. It will require a substantial level of public and private investment around the world to ensure that green hydrogen is welcomed by those currently relying on fossil fuels. Scholz suggested, “There’s also a ‘chicken and egg’ dilemma of supply and demand where market actors block each other, waiting for the other to move.”
As green hydrogen markets are beginning to be developed in multiple countries around the globe, there are still significant limitations to the use of the energy source. Governments must rapidly develop their green hydrogen markets, supporting industries looking to switch from fossil fuels to hydrogen. In addition, greater incentives need to be made available to encourage green hydrogen projects over grey or brown hydrogen output to meet mid-century climate targets.
By Felicity Bradstock for Oilprice.com
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