GREEN HYDROGEN COST REDUCTION
16
As the deployment of renewable energy sources
increases all over the globe in the power sector,
solutions that leverage renewable electricity to
decarbonise end-use sectors using power-to-gas
strategies, or to convert electricity into high-value
chemicals or fuels, need to be quickly introduced
(IRENA, 2020c). In addition, as electricity needs
to increase from around 20% of final energy
consumption to around 50% by 2050 (IRENA,
2020b), there is still a need to decarbonise
applications for which direct electrification is
more challenging (the so called “hard-to-abate”
sectors).
Hydrogen is only one option in decarbonising
hard-to-abate sectors. Energy eciency is key
to reducing the energy supply and renewable
capacity upstream, while bioenergy might be
suitable, not only in the form of biofuels for those
transport sectors that have limited fuel alternatives
(especially aviation), but also as a source of carbon
for synthetic fuels. Direct electrification is more
ecient from a systems perspective, leading
to lower cost, with this already commercially
deployed in many areas (e.g. heating or passenger
vehicles). Carbon capture and storage (CCS) might
be attractive for existing assets that are still in
early stages of their lifetime (the case for many
assets in Asia) and process emissions (e.g. from
cement production). Even for the most ambitious
scenarios, these technological choices might not
be enough, however, and behavioural changes
might be needed to push energy demand even
lower. Thus, for energy transition, hydrogen is one
solution amongst others and should be tackled in
parallel. Hydrogen is part of a wider technology
portfolio to be adapted to domestic conditions in
each country, with this report further exploring this
pathway.
Green hydrogen (i.e. hydrogen produced from
renewable electricity) links renewable electricity
with a range of end-use applications acting as a
complement of electrification, bioenergy and direct
renewable energy use (IRENA, 2018). The potential
for green hydrogen is much higher than fossil
fuels, since it is linked to solar and wind potential,
which far exceeds global energy demand today
and in any future scenario. Most importantly, in the
context of decarbonisation, green hydrogen is the
only zero-carbon option for hydrogen production,
as carbon capture in CCS is 85%-95% at best and
significantly lower to date.
Once produced at scale and competitive cost,
green hydrogen can also be further converted
into other energy carriers, such as ammonia,
methanol, methane and liquid hydrocarbons. As
a fuel, hydrogen can be used in fuel cells (i.e. an
electrochemical device that combines hydrogen
with oxygen from the air and produces electricity),
but also combusted in engines and turbines. Fuel
cells can be used for stationary applications in
large-scale power plants, microgrid or backup
generation (e.g. in data centres), or for a wide range
of transport applications – as is already done in
fuel cell electric vehicles (FCEV), trucks, light-duty
vehicles, forklifts, buses, ferries and ships. As a
chemical, green hydrogen can reduce greenhouse
gas (GHG) emissions from sectors where hydrogen
from fossil fuel is widely used today, including oil
refining, methanol and ammonia production.
Green hydrogen is only one of the production
pathways. Hydrogen can also be produced from
bioenergy, methane, coal or even directly from
solar energy. Most of the production today is
based on methane and coal (about 95%) (IRENA,
2019a) and could be made low carbon with the
use of CCS. CCS might be suitable for regions with
low-cost natural gas and suitable underground
reservoirs. In the short term, CCS might also be
a good fit for large-scale applications in industry,
given the relatively small scale of deployment for
electrolysis.
Low-carbon hydrogen can also be produced from
methane pyrolysis, where the carbon ends up
as solid rather than as CO
2
, with 4-5 times lower
electricity consumption than electrolysis and
potentially lower hydrogen production cost. Each
pathway has its own limitations. Bioenergy might
be best suited for other applications, considering
its limited nature and the low inherent hydrogen
yield. CCS does not lead to zero emissions,
requires significant infrastructure for the CO
2
, does
not enable sector coupling, is still exposed to the
price fluctuations characteristic of fossil fuels, and