The shift to a decarbonized Hydrogen-based economy that can achieve Carbon Neutrality by 2050 in line with the objectives of the Paris Agreement, requires swift and extensive expansion of renewable and low-carbon hydrogen production. This will require massive investments and appropriate policy support, according to a new UN Policy Brief released today.
The potential of H2 to decarbonize the economy
Hydrogen (H2) is a bulk chemical that is used primarily today in petroleum refining and in the production of ammonia (for fertilisers) and methanol. When used as a fuel, it does not generate direct emissions of pollutants or greenhouse gases.
Because of its potential as a feedstock, energy carrier and storage medium, hydrogen offers the prospect to decarbonize the energy sector and large sectors of the economy, such as transport, industry, power generation and municipal heating. It also opens interesting perspectives in hard-to-abate sectors, such as energy intensive industries or long-haul trans-port, where electrification is only partially possible.
The move to a hydrogen economy would bring annual global demand for hydrogen in 2050 to some 650 Mt, from the current 70 Mt, representing around 14% of the expected world total energy demand. According to the EU Hydrogen Strategy, cumulative investments in renewable hydrogen in Europe by 2050 would need to be in the range from €180-470bn and, for low-carbon hydrogen (fossil-based with CCUS), in the range from €3-18bn.
However, today, about 95% of hydrogen is produced from natural gas or other hydrocarbons resulting in emissions of between 70 - 100 Mt CO2 annually in EU countries alone (the IEA estimates global emissions at 900 million tonnes of CO2).
For hydrogen technologies to contribute to carbon neutrality, the current production of hydrogen needs to shift from fossil-fuel to fossil fuels with Carbon Capture Use and Storage (CCUS), renewable electricity, nuclear power or grid-connected electricity through electrolysis using low-carbon electricity. But currently, clean hydrogen is 2-3 times more expensive to produce. Public and private investments in clean hydrogen research and development have been growing over the past 4 years to address this issue. However, significant challenges must still be overcome.
"Many countries in the region have launched experiments, adopted hydrogen strategies and mobilized billions of dollars of financing. Many more are expressing interest. The region is well placed to become a major player in the future hydrogen economy. But this will require public and private investment on a massive scale and sustained political commitment" said UNECE Executive Secretary Olga Algayerova. "UNECE will continue to facilitate policy dialogue on hydrogen and the development of norms and regulations for the safe transport, storage and use of hydrogen, which are needed for the shift to a hydrogen economy."
State of play in the region
Interest for hydrogen is high on the political agenda across the UNECE region. Various countries, including Austria, France, Germany, the Netherlands, Sweden and the UK, are among the global leaders in implementing large-scale hydrogen projects. The Brief provides an assessment of countries' readiness across the region.
The European Union published a wide-ranging Hydrogen Strategy in mid-2020. It aims at delivering 1 million tonnes of renewable hydrogen by 2024 and 10 million tonnes by 2030.
Europe's mature and regulated network of gas infrastructure (the European transmission grid for natural gas is approximately 200,000 km long and the distribution grid is double that size) is a key enabler for the deployment of a hydrogen economy.
Sustained policy commitment will be needed
The Policy Brief identifies a series of actions that policymakers and regulators will need to adopt for a hydrogen economy to materialize:
Promote all clean hydrogen technologies
Research and innovation in all clean hydrogen technologies is required to unlock all sustainable production pathways and to move away from fossil-fuel production.
Build on existing gas infrastructure
The natural gas transmission network can be used to integrate hydrogen in a cost-efficient way at 10-15% of the cost of a newly built hydrogen pipeline.
Accelerate deployment of electrolysers
The development of electrolysers cannot wait until 100% of electricity is from renewable sources. Support is needed for the deployment of electrolysers connected to the electricity grid and low carbon generation plants.
Scale up hydrogen projects by 2030
Long-term offtake commitments for clean hydrogen produced for industrial, transportation, heating and synfuels projects are necessary. A clear regulatory framework and supportive mechanisms that promote, scale and de-risk investments are required.
Promote projects of common regional interest
By 2030, investments in electrolysers in Europe could range between €24-42bn and around €11bn in retrofitting half of the existing coal and gas-powered plants with CCUS. Investments of €65bn will be needed for hydrogen transport, distribution and storage and hydrogen refuelling stations, manufacturing and intellectual property.
