Making Green Hydrogen competitive with fossil fuels: a four-point plan

Hydrogen is an unprecedented climate and business opportunity, and we can make it cheaper than fossil fuels in many applications within five years.

?The key to the energy transition will be to move vast amounts of intermittent and seasonal solar and wind energy from where it is ample and cheap (e.g. deserts and oceans) to where it is consumed (e.g. cities and industrial clusters), and to store it during sunny and windy days for use during dark, windless winters. Converting this energy into hydrogen (by passing a renewable current through water) gives us a clean molecule which can be cheaply piped or shipped over long distances and stored over long periods, especially where it can leverage existing infrastructure. It is the cheapest, and often the only, option to fully decarbonise heavy industry, long-distance mobility and winter heating, and also to provide the resilience and flexibility the energy system so badly needs to avoid extreme price volatility and blackouts.

Hydrogen will make up between 15 and 25% of our net-zero energy mix, giving rise to a $20 trillion infrastructure investment opportunity which will generate new technologies, companies and jobs, and ultimately deliver a cheaper energy system than the one we have now. The cost of producing green hydrogen has already fallen from $600 per MWh in 2010 to around $100 today. Our goal is to get it to below $50 by 2026, cheaper than fossil fuels in many applications, and by 2030 to below $25 per MWh ($1/kg), cheaper than using coal, the cheapest of fossil fuels. Hydrogen costs are coming down anyway, but we are seeking to accelerate this by a decade, saving 40Gtons of CO2 emissions and over $2.5 trillion in abatement costs.

To do this, we must cut the cost of electrolysers used to make hydrogen from water. And this means scaling up the market for them, by delivering: (1) a global standard and certification mechanism defining what counts as “clean” hydrogen, in order to make it tradeable across markets; (2) hydrogen demand visibility through specific targets, mandatory quotas or incentives; (3) significant infrastructure investments particularly in those areas which have ample space, sunlight or wind, often in developing economies; and (4) a system of “eco-labeling” so consumers can choose to pay the extra 1% required to make cars with green steel, or to ship jeans in hydrogen-powered vessels. Policy will help, but most important are investors with the appetite, balance sheet and competences to develop new hydrogen projects. Snam, one of the largest gas infrastructure companies in the world, is an early mover and has done extensive research along the hydrogen value chain.

We should take a leaf out of Franklin Delano Roosevelt’s book. When he created the Rural Electrification Administration, in 1935, electricity had been around for 50 years, yet only 11% of homes in the US countryside had access to it. By 1959, 90% of the US had been electrified. In 15 years, FDR unleashed a technology that had been hampered by inertia, and with it changed the face of America and the world. With hydrogen, we can do it in five.

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