Hydrogen Is The Golden Goose Of Clean Energy

Clean hydrogen could go a long way toward decarbonizing some of the trickiest parts of the global economy.

Solving climate change is surprisingly easy…for the most part. In many parts of the economy, decarbonized options are either quite viable already or will soon be viable. In many cases, like cars, this hinges on using electricity powered by clean energy rather than internal combustion powered by fossil fuels.

But the world economy is complex, and some things that we need in the modern world will be tough to decarbonize. For all of the flaws of fossil fuels, they are pretty darn useful and, more to the point, nearly irreplaceable in a lot of cases. In essence, one big thorny climate problem is that for at least a while, until technological innovation advances beyond a certain threshold, we will likely need some sort of fuel (or fuels) with similar characteristics to fossil fuels but without their downsides. This might seem like a pipe dream. Fuels and fossils go hand-in-hand, right? 

What fuels do we use in our day-to-day lives that aren’t fossil fuels? This notion of replacing fossil fuels with cleaner fuels on a scale sufficiently broad and quick enough to decarbonize some of the trickiest parts of the global economy - isn’t as far-fetched as you might think. It turns out there’s an abundant source of fuel that fits the bill. It’s not just abundant; it’s literally the most abundant element in the universe– that fuel comes from hydrogen. As the clock ticks on humanity’s ability to avert catastrophic climate change, hydrogen might be the missing link between our messy, carbon-heavy world and a clean, decarbonized future.

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How Can Hydrogen Replace Fossil Fuels?

While hydrogen is everywhere on Earth, it only exists in compound forms with other elements. The most famous of those forms is, of course, water. Regardless, in order to be used, hydrogen must be separated from other elements. From an economic perspective, there are three main types of hydrogen: blue hydrogen, gray hydrogen, and green hydrogen. The colors in these names have nothing to do with what these forms of hydrogen actually look like. Rather, they correlate to how each form of hydrogen is produced. Gray and blue hydrogen are derived from natural gas. Blue hydrogen is essentially the same as gray hydrogen, but the carbon dioxide emissions are captured during production rather than being emitted into the atmosphere. 

The easiest way to industrially produce hydrogen is to pass electricity through water, which splits the hydrogen and oxygen atoms. If the electricity used to do this comes from clean sources like solar or wind, then the process - called electrolysis - is clean, and the result is green hydrogen. The hype surrounding green hydrogen is not new; it’s been promised for decades but has never been broadly adopted. Electrolysis was discovered in 1800– it’s literally older than trains, planes, and automobiles. Sadly, only a small fraction of today’s hydrogen production comes from renewable energy or even from fossil fuel plants equipped with carbon capture technology. The vast majority of it – 98% according to one estimate – is sourced from fossil fuels.

Green hydrogen is still a long way away from broad adoption. Producing all of today’s dedicated hydrogen output solely with renewable energy would require more electricity than what the European Union generates annually. Clearly, expanding renewable energy capacity will precede any widespread adoption of green hydrogen. Furthermore, direct electrification can decarbonize much of the global economy. Energy use from buildings and transport represents about a third of carbon dioxide emissions. Buildings can switch from fossil fuels to heat pumps to meet their heating and cooling needs. Many forms of transport (think passenger vehicles and light freight vehicles) can switch from internal combustion engines to electric motors. Industrial activities that don’t require high temperatures (for instance, agriculture and paper) can be electrified as well.

For almost all of the global economy, we can rely on energy efficiency, renewables, and direct electrification to draw down greenhouse gas emissions. These are the “surprisingly easy” things referred to earlier. Once those key steps – efficiency, electrification, etc. – have been taken at scale and excess renewable energy capacity exists that cannot be easily applied, that’s when green hydrogen enters the picture. For the rest of the global economy, mainly comprising aviation, shipping, long-distance trucking, and concrete and steel manufacturing, reducing emissions is hard. These sectors require high energy density fuel or intense heat. Nuclear power can meet some of those needs. But of the four activities listed above, three involve moving things. And unless you’re ok with having radioactive planes, ships, and trucks, you don’t want to use nuclear power for those things. Broadly speaking, nuclear power is best used to generate some of the clean, reliable, round-the-clock electricity needed for most of the global economy.

As a result, by process of elimination of sorts, hydrogen will fulfill a small but sizable chunk of our energy needs. The hope is that hydrogen is deployed where it’s most advantageous and can be produced cheaply enough to apply those advantages throughout the economy.

Why Is Hydrogen So Advantageous?

In a nutshell, hydrogen is so advantageous because it replicates some of the best features of fossil fuels with added benefits and without pollution. The foremost advantage of hydrogen is its abundance. The word abundance doesn’t quite do this justice; remember, 75% of the universe is hydrogen! By default, nothing else is more abundant. That means its supply is effectively unlimited.

One of the major benefits of fossil fuels is their energy density, particularly when compared to the major energy sources relied upon before industrial times: wood and animal power. Hydrogen is even better; per unit of mass, hydrogen is about three times as energy-dense as conventional fossil fuels. That gives hydrogen heaps of potential to improve our energy landscape. Certain industrial activities - cement and steel production, for example, require a high level of heat that is simply hard to produce without some sort of fuel. Hydrogen would make decarbonization a lot smoother in these sectors.

Similar to fossil fuels, hydrogen can store a lot of energy for a long time. It can be stored in existing gas pipelines to meet household energy needs. We can use hydrogen as an alternative to batteries that can be stored in vast underground caverns for as long as needed, replicating natural gas power plants. This technology is far away from commercial viability but presents the best use case for hydrogen to meet long-term energy needs.

We can use hydrogen as an alternative to batteries that can be stored in vast underground caverns for as long as needed, replicating natural gas power plants.

Hand-in-hand with hydrogen’s potential as a clean replacement for fossil fuels, hydrogen can make good use of the expensive fossil fuel infrastructure that has been built and honed around the world for decades. Hydrogen can corrode metal, but overall, it can flow through the same pipelines and other infrastructure that we currently use to move fossil fuels around the world.

In general, clean energy can’t be transported easily. From solar to wind to geothermal to nuclear, most sources of clean energy entail running stationary plants whose energy must be converted into electricity and transmitted over long distances to be used by humans. 

In contrast, like fossil fuels, hydrogen is highly portable. It can power essentially anything that uses electricity if used with fuel cells which, unlike batteries, don’t need to be recharged and don’t degrade over time. Fuel cells generate electricity through a non-combustion chemical reaction and do not produce pollution. Powering a truck or a plane with a hydrogen tank and fuel cell would weigh less, take up less space, and have a refueling time similar to gas or diesel.

As you can see, hydrogen has many use cases. It’s often called the Swiss Army knife of energy precisely because of its versatility. Hydrogen can replace fossil fuels in power plants, transportation, buildings, and certain industrial processes that are currently hard to do without fossil fuels. All told, some optimistic hydrogen industry experts project that hydrogen could one day meet almost a fifth of global energy demand. The bottom line is that hydrogen can be used for basically everything that we use fossil fuels for with greater efficiency, unlimited supply, and practically zero pollution.

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Why Making Cheaper Hydrogen Is The Key

Of course, there are reasons why hydrogen hasn’t hit the mainstream. For one, hydrogen is very explosive. Look no further than the Hindenburg explosion as the most famous proof of what happens when hydrogen is mishandled. Hydrogen also leaks easily and can embrittle metal, making it hard to transmit via pipelines and other means. 

But by far, the biggest hindrance to widespread hydrogen adoption is cost. Making hydrogen from natural gas (gray or blue hydrogen) currently costs about $1.50 to $2 a kilogram. Green hydrogen, in contrast, costs about $4 to $8 a kilogram. As such, if the status quo persists, profit-seeking companies will use gray or blue hydrogen since they’re much cheaper than green hydrogen.

There is good news, though. It seems that just as solar, wind, and batteries are following learning curves that have lowered costs, green hydrogen is also doing that.

One key feature of green hydrogen from a cost perspective is that while hydrogen is ultimately a fuel just like fossil fuels, green hydrogen is a technology that depends on electrolysis separating water into hydrogen atoms and oxygen atoms. 

This matters because, over the long run, technologies improve, which tends to make them cheaper. In contrast, fossil fuels are resources whose fundamental economics don’t tend to improve over time. The price of renewable energy, ultimately driving green hydrogen production, will fall over time. The price of fossil fuels swings wildly based on supply and demand dynamics, as recent events have proven emphatically.

In a world where renewable energy is getting exponentially cheaper, it’s quite plausible – if not likely – that green hydrogen will also get much cheaper to produce, especially in sunny and/or windy areas with abundant, cheap renewable energy. Industry experts predict that the cost of green hydrogen may fall in half by 2030, which would imply that green hydrogen will be commercially viable at scale within the next five to 10 years.

As with many nascent technologies, government policy can go a long way by tilting the playing field. In 2021, the U.S. Department of Energy launched a program called the Hydrogen Shot, which aims to reduce the cost of clean hydrogen by 80% to $1 per one kilogram in one decade. 

The DOE sees three primary ways to meet this goal. One is to improve the efficiency, durability, and manufacturing volume of electrolyzers. Another is to improve pyrolysis, which generates solid carbon instead of carbon dioxide as a byproduct. The last is “advanced pathways,” which is a bit of a catch-all for experimental technologies. One example is the photoelectrochemical approach (PEC), where sunlight and specialized semiconductors are used to break water into sunlight and hydrogen.

Making hydrogen from natural gas (gray or blue hydrogen) currently costs about $1.50 to $2 a kilogram. Green hydrogen, in contrast, costs about $4 to $8 a kilogram.

Federal legislation has helped as well. The bipartisan infrastructure bill passed last year allocates $8 billion to create four “clean hydrogen hubs” that would demonstrate its production and use in four different applications. A November 2021 report published by Hydrogen Council in collaboration with McKinsey predicted that by 2050, between 60 and 80% of hydrogen production would be powered by renewables, and 18% of the world energy market would consist of hydrogen. 

Since that report was published, the U.S. dropped a game-changer on green hydrogen: the Inflation Reduction Act. It contains notable incentives for hydrogen production, most notably a nifty tax credit that could level the hydrogen playing field considerably. If hydrogen is produced without releasing any carbon emissions, this hydrogen production tax credit is maxed out at $3 per kilogram of hydrogen produced. It scales down proportionally as more emissions are generated to produce hydrogen. That credit immediately makes green hydrogen cost-competitive with gray and blue hydrogen. 

As electrolysis technology advances, by the end of this decade, it will likely become much cheaper than gray and blue hydrogen and cheap enough relative to other energy sources to use green hydrogen on a massive scale. Bloomberg recently projected that installations of electrolyzers are set to grow from two gigawatts currently to 242 gigawatts over the next eight years, representing nearly a doubling of capacity every year between now and then. 

Even the most ardent green hydrogen advocate would concede that it’s currently not commercially viable at the scale needed to supplant fossil fuels in areas like aviation, shipping, and heavy industry. But with continued technological advancement and government support, this paradigm might shift within a few short years.

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The Future Of Green Hydrogen

Governments are well aware of green hydrogen’s tantalizing potential. For instance, more than 20 countries recently committed to tripling the annual production of low-emission hydrogen (which includes blue hydrogen produced from natural gas) by 2030. But it’s critical to only use green hydrogen for some of the hardest-to-decarbonize aspects of the economy. That’s largely because the process of converting hydrogen into something useful for humans is both expensive and inefficient. To break the chemical bond needed to isolate hydrogen, an immediate energy loss of about 30% occurs. After electrolysis, further inefficiencies will occur depending on how the hydrogen is deployed. Normally, about half of the initial energy in renewable electricity is lost.

Thus, hydrogen won’t really translate into exciting innovations the way that many renewable energy sources will. Instead, it will replace fossil fuels in some of the boring but complicated economic sectors that might take a long time to be powered by fully renewable energy – more time than we have to avert catastrophic warming.

One sector that is almost universally agreed upon as a prime candidate for green hydrogen is fertilizer production. The traditional way of making ammonia, a common form of fertilizer, is to strip hydrogen from natural gas using steam (producing carbon dioxide as a byproduct) and then combine that hydrogen with nitrogen from the air at high pressure and temperatures. This is called the Haber-Bosch process; it’s a bedrock of civilization that won’t go away anytime soon. If the hydrogen can instead be isolated with electrolyzers rather than natural gas, the carbon dioxide emissions of fertilizer production could be drastically cut. Seeing as every ton of usable ammonia produces about two tons of carbon dioxide emissions, green hydrogen would go a long way toward decarbonizing a foundational piece of the global economy.

Another great way to use hydrogen is for long-term energy storage, which would open up the ability of intermittent but abundant renewable energies like solar and wind to be deployed at scale around the world. For instance, a solar plant that produces excess electricity could convert the excess to make more hydrogen with an electrolyzer. Hydrogen reserves could supplement the grid in times of lower solar energy supply.

Beyond those use cases mentioned, green hydrogen could radically reduce emissions from heavy-duty transport. 

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Conclusion

Relative to other aspects of the energy transition, green hydrogen is far from the most pressing. We need to reduce energy consumption, increase energy efficiency, and replace fossil fuels with cleaner sources of energy for most of the global economy. And we must electrify as much of our world as possible to hasten the deployment of cheap renewable energy. In the absence of those steps, we will careen toward a climate catastrophe.

Furthermore, skepticism abounds that Big Oil will use green hydrogen to stay relevant and prolong the lifespan of its existing dirty assets. Green hydrogen can replace the gray and blue hydrogen that oil companies already use at their refineries, and green hydrogen could unlock new markets for Big Oil, which would help keep their profits churning as the oil industry’s future turns murkier by the day. Plus, fossil fuel companies can dangle the carrot of one day being able to operate a new plant with green hydrogen in order to gain government approval for dirty projects. 

The bottom line is that hydrogen might entrench the business models of fossil fuel companies that would be displaced as a nice byproduct of transitioning to renewable energy. Whether or not that happens, the critical decarbonization steps needed to enable widespread hydrogen adoption are inevitable. It will take much longer than it should have because economics are the driving force behind this transition rather than physics, but it’s now a matter of time rather than desire.

Speaking of economics, it will not be economical to substitute renewables like solar and wind for fossil fuels in certain parts of the economy. Once the electrolysis technology needed to harness hydrogen at scale can be generally powered by renewables, producing hydrogen can be a cherry on top of the energy transition sundae. Even the possibility of doing so at scale would imply that we have thankfully met the climate challenge head-on by almost entirely ridding ourselves of fossil fuels.

That moment is a long way away, and we have a lot of work to do collectively to get there. We cannot lose sight of the most time-sensitive actions we must take to keep the planet as habitable and stable as possible. 

But a world that cleanly harnesses the universe’s most abundant element to power some of our society’s most advanced activities is coming into view.

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Key Takeaways
  • Even the most ardent green hydrogen advocate would concede that it’s currently not commercially viable at the scale needed to supplant fossil fuels in areas like aviation, shipping, and heavy industry. But with continued technological advancement and government support, this paradigm might shift within a few short years.
  • Government policy - such as the Inflation Reduction Act in the U.S. - will go a long way toward making green hydrogen cheaper and more widely available, so voting for climate-conscious lawmakers will help.
  • Since green hydrogen will go hand-in-hand with the widespread adoption of clean energy, ditching fossil fuels from your individual carbon footprint as much as possible can help ignite the global transition to green hydrogen.
  • Hydrogen might not be as visible in a green future, seeing as it won’t power consumer technologies to the degree of renewables like wind and solar. But it will nonetheless play a critical role in global decarbonization efforts.