Why hydrogen for home heating would miss the big picture on Net Zero

Welcome back to the Net Zero Roundup, from the Carbon Trust’s Net Zero Intelligence Unit.

This month, the World Meteorological Organisation estimated that global warming will likely exceed 1.5C in the next few years, confirming that the world is not moving fast enough towards Net Zero.

Prioritising the most impactful decisions to achieve Net Zero has never been more important, so click subscribe to stay up to date with global Net Zero developments in the decade of action.

Under the spotlight

Clean hydrogen resources will be scarce. They must be prioritised to ensure system-level progress towards Net Zero.

In recent years, the potential role of clean (or low carbon) hydrogen in achieving Net Zero has captured the attention of policy makers and industry players around the world. In 2020 alone, nine governments published strategies earmarking a role for clean hydrogen in everything from buses to power generation. Industry initiatives have also promised the likes of hydrogen-powered jet engines and hydrogen-heated homes. As the hype around hydrogen reaches a fever pitch it would be easy to forget that still less than 1% of current global hydrogen production is clean. In most modelled scenarios for Net Zero, clean hydrogen is also expected to remain so expensive throughout the 2020s that its usage will need to be carefully prioritised.

In particular, a lively debate surrounds the use of hydrogen for home heating. On the surface, the prospect of blending hydrogen into gas heat networks seems an attractive solution. Blue hydrogen (where carbon capture and storage technology is used to abate most of the CO2 emissions) or green hydrogen (produced using entirely renewable energy) could be piped into home boilers using existing gas infrastructure.

However, when assessing how best to deliver an efficient, low-cost Net Zero transition for the whole energy system, hydrogen’s potential to provide wide-scale home decarbonisation pales in comparison to mature electrification alternatives, such as heat pumps and domestic storage heat.

The overwhelming majority of evidence indicates that hydrogen boilers would be less efficient and more expensive to run than electrified heat. Retrofitting hydrogen heating infrastructure would also be highly complex and cost intensive, even in the UK where there is an existing gas network for home heating. There may be a limited number of applications for hydrogen-based heating as part of a regional cluster approach, for example where hydrogen is mainly used by industry. However beyond this, the Carbon Trust’s systems-led view is that hydrogen should not be pursued as the primary route to decarbonisation of home heating.

Where the Carbon Trust sees hydrogen as holding greater promise for Net Zero is when it is deployed in sectors where a mature electrification solution does not already exist. Take steel manufacturing for example. The coal-fired blast furnaces used to produce steel currently account for a significant proportion of industrial emissions. Clean hydrogen could be used as a replacement reducing agent. Other challenging sectors, such as long-haul aviation and shipping, are almost impossible to electrify due to battery limitations. Clean hydrogen and hydrogen-derived fuels could support decarbonisation of these sectors, though there is a real need for innovation and cost reduction to make solutions scalable and to de-risk investment. ?

In essence, the hype around clean hydrogen must be approached with caution by policy makers and industry players to ensure that the most effective applications of this scarce resource are prioritised.??

You can read the full Carbon Trust vision for the role of clean hydrogen in Net Zero here:

To learn more about the potential of clean hydrogen in the UK, join the Carbon Trust’s webinar on 14 June: Unlocking the potential of clean hydrogen Tickets, Wed 14 Jun 2023 at 10:00 | Eventbrite

Quick intelligence?

Policy: unlocking employment benefits of Net Zero requires more action from UK government?

New analysis finds that the Net Zero transition could create 135,000 to 725,000 net new jobs in the UK by 2030, while diversifying the workforce and driving growth in economically deprived areas. Similar analysis has shown that, in the US , new roles in low-carbon industries would outweigh fossil fuel job losses in a Net Zero economy. However, the UK’s climate change advisors stress that stronger policies are needed to reap these rewards and manage risks. In some sectors, such levels of growth will only be possible if low-carbon supply chains are based in the UK. The UK is therefore in sore need of an industrial strategy to rival the US’ Inflation Reduction Act and the EU’s Net Zero Industry Act.??

In addition, upskilling and retraining efforts will be needed. The Carbon Trust’s recent assessment of the employment potential within Japan’s offshore wind industry concluded that a regionally targeted, four step approach is essential to plugging skills gaps and delivering a just transition to Net Zero: baselining, planning, implementing and evaluating. Policymakers working in different regions and markets can use this strategic approach to realise the employment benefits of new technologies, ensuring the Net Zero transition drives wider socio-economic benefits.?

Business: evolution in SBTi rules could be needed to avoid greenwashing risk??

A recent article in the MIT Technology Review considers criticisms that the Science Based Targets Initiative's (SBTi) rules are not strict enough. Among other concerns, critics argue SBTi’s current rules allow companies to overstate progress. In particular, businesses can count investments in renewable energy towards their own emissions reductions and can choose a baseline year for targets in which emissions were particularly high, providing a head start. As the go-to standard-setter for corporate climate targets, the SBTi must continually evolve to be fit for purpose. Addressing these issues will be a top priority for its incumbent technical council.??

However, the SBTi alone cannot uphold the integrity of corporate climate action. Stronger governance mechanisms are needed to ensure high standards of transparency and accountability for Net Zero targets. Companies themselves must also recognise that targets are only the first step in a decarbonisation journey. As the Net Zero Intelligence Unit outlined when assessing the credibility of the beauty sector's Net Zero pledges, SBTi-verified targets are a positive step towards credible Net Zero action. But these must be backed up by robust transition plans which follow evolving best practice from the International Sustainability Standards Board.?

Finance: breakdown of Net Zero Insurance Alliance points to need for clearer justification of global financial sector’s transition

A spate of large global insurers have quit the Net Zero Insurance Alliance (NZIA) in quick succession, following threats of legal action from US lawmakers. US critics of the NZIA claim that withholding insurance from fossil fuel projects could violate anti-trust laws. NZIA’s parent initiative, the Glasgow Finance Alliance for Net Zero (GFANZ), is encouraging jurisdictions to follow the European Commission’s lead by relaxing anti-trust rules for organisations cooperating on climate issues. However, the root cause of the exodus is widely speculated to be what GFANZ deems ‘political attacks’, referring to a broad anti-ESG movement in the US.??

The collapse of the NZIA could deal a blow to the larger financial sector’s Net Zero transition as research suggests that collective action is linked to stronger performance on climate action . The saga also points to a need for collaborative financial initiatives to anticipate and manage accusations of legal misalignment early and with collective confidence. As with all aspects of the financial sector’s Net Zero transition, the pricing of climate risk needs to be justified. This requires a clear and transparent narrative on the sheer scale of the risk, and must then be carried out using methodical and credible processes which are more resilient to external attacks.

From the Net Zero Intelligence Unit:?

Catch up on the latest from the Net Zero Intelligence Unit below. You can also read more here .?

??For more on financing Net Zero, read our recent article on how transition financing mechanisms can be reformed to deliver genuine emissions reduction progress for high-emitting sectors??

For a quick insight into what the World Meteorological Organisation report on 1.5C means for Net Zero, take a look at our recent Twitter thread:

??Using and reusing mobile devices could help to deliver a Net Zero future. Our recent insight outlines the Carbon Trust’s experience-led view on how the right approach to carbon accounting could incentivise action. ???

?Need to remind yourself (or your colleagues) why Net Zero matters, and the five key conditions for enabling progress? These might come in handy: ?????

On our radar

A British company, Oxford PV , has broken the world record for the most efficient solar cell, meaning that it can convert more of the sun’s energy into electricity than any other cell of the same size. This could make solar energy more affordable and reduce land-use. It also comes as global investment in solar is expected to overtake upstream oil spending this year for the first time ever.?

More broadly, investment in clean energy is rising faster than for fossil fuels. In 2023, for every $1 invested in fossil fuels, roughly $1.7 will be channelled towards clean energy technologies such as renewables, electric vehicles, heat pumps, energy storage, electricity grids and energy efficiency measures.?

This is a vast improvement from five years ago when the ratio was 1:1. However, fossil fuel investment must halve by 2030 to reach Net Zero. By that time, investment in clean energy technology will need to be nine times higher than fossil fuel investment.

This month’s edition of the Net Zero Roundup was written by Nina Foster and Chloe St George.

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The Net Zero Intelligence Unit produces experience-led insights to accelerate global progress towards Net Zero. If you’re a journalist or event organiser and would like to get in touch with us, please email [email protected] or [email protected] .