Governments around the world need to take decisive action on a wide range of policy measures to enable low-carbon hydrogen to fulfil its potential while helping the world reach net zero emissions alongside energy security, the International Energy Agency has indicated.

Current statistics show that global production of low-carbon hydrogen continues to remain minimal. Its cost is not yet competitive and its use in promising sectors such as industry and transport remain limited.

Nonetheless, there are pockets of encouraging signs that low-carbon hydrogen is on the trajectory of significant cost declines and widespread global growth, according to the IEA’s Global Hydrogen Review 2021.

The IEA’s Executive Director, Fatih Birol observed:

“We have experienced false starts before with hydrogen, so we can’t take success for granted. But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable and more available for use across different sectors of the economy.
“Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net zero emissions by 2050.”
Fatih Birol

Hydrogen’s wide range of applications to several sectors

Most of the hydrogen use in 2020 was for refining and industrial applications. But there are many more applications to the use of hydrogen than are common today, the report highlights. As an important element, it is used in sectors where emissions are particularly challenging to reduce. These include chemicals, steel, long-haul trucking, shipping and aviation.

Hydrogen is light, storable and energy-dense, and its use as a fuel produces no direct emissions of pollutants. The main hurdle to the extensive use of low-carbon hydrogen is the cost of producing it.

Hydrogen can be produced from water using large amounts of electricity. If produced from fossil fuels, it can be obtained through carbon capture technologies. This notwithstanding, almost all hydrogen produced today comes from fossil fuels without carbon capture. This results in close to 900 million tonnes of CO2 emissions, equivalent to the combined CO2 emissions of the United Kingdom and Indonesia, the report notes.

Closing the price gap

That said, the price gap between hydrogen and emissions-intensive hydrogen produced from fossil fuels need to be closed. Producing hydrogen from renewables can cost between 2 and 7 times as much as producing it from natural gas without carbon capture. And this depends on the prices of natural gas and renewable electricity.

Countries with hydrogen strategies have committed at least US$37 billion to the development and deployment of hydrogen technologies. Also, the private sector has announced additional investment of US$ 300 billion.

According to IEA estimates, putting the hydrogen sector on the path consistent with global net zero emissions by 2050 requires US$1200 billion of investment between now and 2030.