Industrial, Sourcing Renewables  -  April 1, 2020

Clean hydrogen has potential to replace natural gas, report finds

A new report released March 30 by BloombergNEF finds that increasing the production of hydrogen from wind and solar power can be a powerful tool for reducing global greenhouse gas emissions by 2050.

The falling cost of hydrogen use is a key factor in the role it can play to lowering global emissions, “Hydrogen Economy Outlook” says. BNEF predicts that clean hydrogen could cut global emissions by 34% if policies are put in place to support its adoption as soon as possible.

The report suggests that clean hydrogen could be produced for $0.8 to $1.6/kg in most parts of the world before 2050, which makes it competitive in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis, based on equivalent current natural gas prices at $6-12/MMBtu. Considering the cost of storage and pipeline infrastructure, it could be delivered in China, India and Western Europe for nearly $2/kg in 2030 and $1/kg in 2050.

“Hydrogen has potential to become the fuel that powers a clean economy,” Kobad Bhavnagri, head of industrial decarbonization for BNEF and lead author of the report, said in a statement. “In the years ahead, it will be possible to produce it at low cost using wind and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills.”

According to BNEF, the cost of creating renewable hydrogen has fallen by 40% in the last five years and can also be made using fossil fuels in a more expensive process that entails capturing and storing carbon. The report also estimates that $637 billion in storage infrastructure would need to be built, tripling or quadrupling current capacity, by 2050 to provide the same level of security as natural gas. Cost-efficient large-scale options would be able to reduce the costs for industrial customers.

“This needs policy coordination across government, frameworks for private investment, and the roll-out of around $150 billion of subsidies over the next decade,” Bhavnagri added. “That may sound daunting but it is not, in fact, such a huge task – governments around the world currently spend more than twice that every year on fossil fuel consumption subsidies.”

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