Hydrogen is gaining traction as an energy carrier that can potentially help us achieve a net zero carbon emissions future. The concept of a ‘hydrogen economy’ has been around for over a hundred years, but its modern reiteration surfaced in 1970 in a technical report by the University of Michigan. Use cases for hydrogen range from ground transportation to petrochemicals, with different types of hydrogen – gray, blue, and green – depending on the carbon emissions generated during its production.
Despite being the most commonly produced form of hydrogen, gray hydrogen (produced from natural gas through steam methane reforming) is not carbon neutral. Blue hydrogen, produced with carbon capture and storage, and green hydrogen, generated through water electrolysis with renewable power, both offer lower emissions. However, these forms of hydrogen still make up less than 1% of global production as of 2022, necessitating a shift towards more sustainable practices for hydrogen to play a meaningful role in a net-zero economy.
Efforts to promote green hydrogen production and use have been on the rise, with nearly 40 countries announcing policy and development initiatives in the past five years. The International Energy Agency predicts a significant increase in green hydrogen production capacity by 2030, but many challenges remain. Most current green hydrogen projects are still in a pre-commercial phase and require significant investments in infrastructure to be viable for widespread consumer and industrial use.
The upcoming Hydrogen Americas Summit in Washington D.C. is expected to shed light on the global response to rising hydrogen demand and the need to lower costs to make a significant impact on carbon emissions by 2030. Policymakers and industry leaders are debating the best approach to promote green hydrogen at the heart of the hydrogen economy, with discussions ranging from taxation and subsidies to allowing free markets to drive the transition towards greener energy sources.
Initiatives such as the U.S. Inflation Reduction Act, the European Hydrogen Bank, and a series of government contracts for green hydrogen development in countries like the UK, Australia, and Middle Eastern nations demonstrate increasing support for green hydrogen production. Multilateral financial institutions are also investing in green hydrogen projects in Latin America, signaling a growing interest in transitioning towards more sustainable energy sources.
While the private sector has shown interest in investing in the green hydrogen industry, significant investments and infrastructure upgrades will be needed to transition industries towards using hydrogen as a heat source in a net-zero future. Tax incentives and subsidies are currently essential to attract private sector investment, but a mix of financial incentives, private investments, and free market dynamics could propel the green hydrogen industry into a trillion-dollar business by 2030. Ultimately, the goal is to allow the spirit of private enterprise to drive the market towards a more sustainable energy mix.
