Low-carbon hydrogen is a key ally to electrification

The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy

The hydrogen market will play a significant role in the energy transition and should be technology-neutral when it comes to powering production, as long as it is low carbon

Hydrogen represents a significant resource for the future of energy. Europe, pursuing carbon neutrality by 2050, wants to make it an ally of its decarbonisation. The European Union has rarely seen such a hype as the bloc aims to become a global leader in hydrogen. In contrast with these commitments, 96% of today’s hydrogen is produced by steam methane reforming. Production of one kilogram of hydrogen emits ten kilograms of CO2. The breath of fresh air that the EU is desperately seeking with its enhanced climate targets will clearly have to come from a different technology.

Oxygen on the one hand, hydrogen on the other and a massive reduction in CO2 emissions: this is precisely what is on offer with electrolysis from low-carbon electricity. Twenty years ago and before the craze, EDF developed a hydrogen research and development site with its European Institute for Energy Research (EIFER) in Germany. Hynamics is betting on electrolysis to produce renewable and low-carbon hydrogen for industry and transport.

With EDF’s energy mix composed of more than 90% carbon-neutral electricity, it is possible to produce large volumes of very low carbon hydrogen. Producing large amounts of hydrogen in Europe also requires setting up an industry to produce electrolysers; this is the reason why EDF invested in McPhy, a leading electrolyser manufacturer in France and Europe.

The massive increase of capacity and decrease of costs in wind and solar photovoltaic power is a major part of the solution to fight global warming by avoiding the use of fossil fuels. However, due to their intermittent nature and space limitations, renewables will not always be sufficient to produce the volumes needed to meet the EU’s hydrogen needs.

This ever-increasing demand calls for all carbon neutral electricity sources, such as nuclear power and hydro power to supply electrolysers. This is an opportunity that exists in many member states and is already contributing to push down greenhouse gas emissions. If the EU is to be at the forefront of the fight against climate change while being in the race for industrial leadership, it needs an arsenal of carbon neutral and cutting-edge technologies and none should be overlooked.

BUSINESS MODELS

In order to decarbonise industrial processes and feedstock in hard-to-abate sectors and heavy and long-distance transport, hydrogen produced using low carbon electricity is an excellent ally. To achieve this, it is critical to support new forms of hydrogen production based on their CO2 emissions and to envisage financial support in the coming years to allow projects to take off and reduce costs. Currently, low carbon hydrogen production using electricity costs two-and-a-half times more than hydrogen produced using fossil fuels.

In this context, the hydrogen production business model is all the more viable when the number of operating hours is maximised. A high production time is possible if the electrolysers benefit from a connection to the grid and therefore from uninterrupted electricity supply at all times. Analyses show that production costs can be reduced from around €6/kg when the electrolyser produces for 4000 hours per year, down to €4.5/kg when it produces 6000 hours per year. A direct connection to the grid is beneficial both in terms of profitability and for the safety of the installations.

Being connected to the grid also makes it possible to locate electrolysers close to consumption sites, such as industrial and transport hubs offering an onsite solution to produce according to the needs. Limiting the need for hydrogen transport and storage infrastructure also allows for much needed savings and minimises losses.

European electricity is already 66% carbon neutral today and it is due to be totally carbon neutral well before 2050. As a result, the average emissions from hydrogen production by electrolysis are set to decrease. In a number of countries, CO2 emissions from electricity production are already very low, such as France, with under 50gCO2/kWh.

Here, the production of low carbon hydrogen is already possible by simply plugging electrolysers into the grid. In countries where electricity still has a higher carbon intensity it should be possible to combine a range of solutions including power purchase agreements with renewable production sites, direct connections and supply from the grid with electricity guarantees of origin.

RESEARCH AND DEVELOPMENT

By banking on the massive deployment of electrolysis projects while supporting research and innovation, Europe can build up its industrial know-how, which would rapidly lead to a reduction in production costs and foster technology exports. Beyond achieving ambitious climate targets, it is nothing more than the EU’s leadership in hydrogen that is at stake.

Renewable and low-carbon hydrogen is a nascent market which should not be foreclosed by regulated investments. Market players are always on the lookout for the best opportunities. If the EU establishes the conditions for healthy competition, this will help to attract investment and reduce the costs of the technology.

To ensure transparency for consumers and develop a liquid hydrogen market further down the road, renewable and low-carbon hydrogen should be clearly identified. The EU-supported Certif’HY project aims to implement hydrogen traceability in several Member States through a system of guarantees of origin.

The energy transition is leading to the progressive end of the use of fossil fuels. Low-carbon hydrogen represents an opportunity for Europe to be energy visionary and at the same time a pioneer in global decarbonisation. If the European Union is up to its ambitions, it must be technology open and allow for innovative business models.

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