Third — and this is possibly the most critical incentive for a green hydrogen economy — governments are buying into it. In July 2020, we saw the European Union make its European Hydrogen Strategy the centerpiece of its Green Deal, which in turn was folded into its fiscal stimulus response to the pandemic.
The Green Deal is tremendously ambitious and provides an instant source of demand, which is bound to be a catalyst for further innovation and cost reduction, not to mention enormous infrastructure development. Europe isn’t the only place thinking along these lines. Australia, Japan, China, the UK and Korea all have green hydrogen strategies and/or targets.
Apart from spurring demand for green hydrogen and infrastructure development, government policy can be critical in lowering the cost of green hydrogen and non-renewables for certain industries, in the form of incentives like carbon pricing, as well as subsidies. At their outsets, solar and wind projects also needed government subsidies, and their cost competitiveness was improved over time by efficiencies and new technologies.
Q: When will individuals see their lives change because of green hydrocarbon?
A: Gray hydrogen could potentially transition over to green hydrogen by the end of this decade. At that point, green hydrogen will play its biggest role in infrastructure and industries like steel and industrial gases.
But it won’t be long before it is working to improve the inconsistent availability of solar power in the winter. Over the coming decades, you could see green hydrogen playing a role in heating our homes and powering fuel cells for our cars, trains, ships and planes.
Initially, it’ll be more cost-competitive for long-haul transportation. Auto companies are already working on green hydrogen-fueled trucks and buses. Hydrogen-powered fuel cells are likely to be more expensive than battery-powered vehicles for now, so it will be a while before we see as many hydrogen-fueled passenger cars on the road as electric vehicles. That said, there are automakers in Asia producing hydrogen-powered fuel cell vehicles already, with more expected to be launched.
Q: What are some of the other industries that stand to benefit?
A: Sectors we think could be clear beneficiaries include renewable energy, given that demand is likely to grow 10 times by 2050 to service the needs of green hydrogen alone.2 Utilities will play a role in converting gas grids so that they can carry hydrogen blended with natural gas. Companies that develop electrolyzers and fuel cells stand to benefit, and the chemicals and industrial gases industry is likely to play a large role, given its expertise in using and transporting hydrogen.
Q: What do you see as green hydrogen’s ultimate role in our energy future?
A: It will be a long road and we’re not going to get there tomorrow, or even in 10 years. We’re talking about a long-term transformation of the global energy system, which will challenge some industries and benefit others. But I’m confident that green hydrogen will become part of human life, like fossil fuels are today. I think the pandemic has made government and industry leaders realize they should take heed when there’s overwhelming evidence that environmental challenges are looming.
In addition, the emergence of stakeholder capitalism and surging interest in environmental, social and governance (ESG) investing is making it easier, rather than harder, for companies to set zero-carbon targets. What’s more, there’s an unlimited source of hydrogen. No one country can use the supply of green hydrogen as a geopolitical negotiating tool. Hydrogen is everywhere.