As Europe moves forward with its hydrogen plans, many other parts of the world are trying to develop their own hydrogen markets. However, IRENA warns that hydrogen market expansion needs to be strategic to ensure it supports the transition from fossil fuels to renewable alternatives.
Australian firms are now planning to set up a green hydrogen hub that will use solar and wind power to operate. Fortescue Future Industries (FFI) announced this month that it is working with Windlab to develop the North Queensland Super Hub. This project focuses on the production of green hydrogen and is scheduled to be operational by 2027. The companies hope to build over 10 GW of wind and solar power to support green hydrogen production. The 800MW Prairie Wind Farm and another 1,000MW project will provide power for the facility if approved.
BP conducted a feasibility study for hydrogen production in Australia in 2020 with support from the Australian Renewable Energy Agency. The study closed that “large-scale production of green hydrogen and green ammonia with renewable energy” has become technically feasible in Australia. To date, green hydrogen development has been “constrained by the lack of renewable supply to power the process of harvesting hydrogen from water through electrification,” according to the FFI. However, the company pointed out that Australia has significant potential to develop its wind and solar assets on vast expanses of land.
Australia isn’t the only country trying to catch up with Europe’s rapidly expanding green hydrogen developments as the US looks to carve out a market of its own. President Biden’s Inflation Reduction Act (IRA) is expected to increase interest and funding for green hydrogen projects in the US through the investment of $369 billion for renewable energy and climate change programs. Andy Marsh, CEO of Plug Power, an American producer of green hydrogen, specified that tax credits from the IRA “will provide a major boost for the world to reach net zero by 2050 and that hydrogen, particularly green hydrogen, will provide 20 percent of world energy.”
The development of the Office of Hydrogen and Fuel Cell Technologies (HFTO), under the Department of Energy (DoE), has helped the US begin building its hydrogen market. Until recently, it lagged behind Europe and Asia in developing its green hydrogen capacity. However, IRA funding, backed by HFTO research and development in hydrogen production, is expected to help the US rapidly scale up its green hydrogen production.
Despite optimism about the development of new markets for green hydrogen, the International Renewable Energy Agency (IRENA) now says that “an indiscriminate use of hydrogen could therefore slow down the energy transition,” she added. “That requires prioritization in policy making.” This jump is in response to the world’s net-zero carbon emissions goals. Both IRENA and the International Energy Agency (IEA) agree that hydrogen will play an important role in the global transition away from fossil fuels towards renewable alternatives. But it might not be that easy to just get big hydrogen projects off the ground in different parts of the world.
IRENA released an analysis this month suggesting that hydrogen production needs to be carefully managed to support net-zero targets. Currently, much of the world’s hydrogen is fueled by fossil fuels, with projects using waste carbon from oil and gas operations to power equipment. Additionally, while there are big plans for using hydrogen, its use in carbon-intensive industries such as aerospace, steel, shipping and chemicals is still limited as more research and testing is needed to support a shift to using hydrogen.
IRENA believes that not just any hydrogen project will support the global net-zero goals, but that the world needs to develop its green hydrogen capacities, powered by renewable energy sources such as wind and solar power. Chancellor Olaf Scholz spoke at the most recent COP27 climate summit explained how hydrogen is “one of the most important technologies for a climate-neutral world”. However, he added: “Of course, green hydrogen is still a young industry, its production is currently too expensive compared to fossil fuels.”
While great hopes are pinned on the large-scale rollout of green hydrogen projects and the development of a global green hydrogen market and supply chain, work on the clean energy source is just beginning. It will require a significant level of public and private investment around the world to ensure that green hydrogen is embraced by those currently reliant on fossil fuels. Scholz suggested, “There’s also a ‘chicken-and-egg’ dilemma of supply and demand, where market players block each other and wait for the other to move.”
As green hydrogen markets begin to develop in several countries around the globe, there are still significant limitations in the use of the energy source. Governments must quickly develop their green hydrogen markets and support industries looking to switch from fossil fuels to hydrogen. Also, stronger incentives need to be provided to encourage green hydrogen projects gray or brown hydrogen emission to meet mid-century climate targets.
By Felicity Bradstock for Oilprice.com
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