Fri 03-06-2022 08:53 AM
RIYADH, 3rd June, 2022 (WAM) -- Hydrogen can play a key role in decarbonising the energy system, but scaling-up will require vast investments across the supply chain, broad collaboration, and government support, according to a new report published by the International Energy Forum (IEF).
The "Hydrogen Market Pathways" report, written by the IEF with Anne-Sophie Corbeau of the Columbia Centre on Global Energy Policy, comes at a critical time in the evolution of the industry, as many countries have recently announced more ambitious production targets to meet climate goals.
"The current market crisis has accelerated the targets for hydrogen across the world, and new large-scale projects are announced almost on a daily basis," said IEF Secretary-General Joseph McMonigle.
"This report provides essential guidance to policymakers, especially regarding regulation, carbon management and efficiency," he added.
Hydrogen is expected to play a key role in sectors where electrification doesn't work, such as high-temperature industrial processes, heavy road transportation, and shipping, the report found.
It said the industry must develop a new carbon intensity scale and move beyond the current over-simplified system of colour designations, such as "green hydrogen" when it is made with renewable energy and "blue hydrogen" when it is made from natural gas.
Measuring and tracking carbon intensity will need to be standardised and 'green' certifications and guarantees of origin will be important elements enabling international trade.
Electrification, as in the case of electric vehicles, is the preferred way to decarbonise the energy sector because low-carbon electricity can be made from sources such as nuclear, renewables or natural gas with carbon capture filters. But electrons are difficult to store and transport.
As a molecule, Hydrogen has an important advantage over electrons in that it can transfer energy over time and distances and can be stored more efficiently.
Hydrogen can unlock otherwise stranded energy assets such as remote and isolated renewable energy sites. It can connect places with ample renewable energy resources but no effective means of delivering it to markets. The report said that infrastructure and transportation developments will be needed to unlock these arbitrage opportunities.
The report found that the Hydrogen market is still in its infancy, and development is needed along the entire supply chain.
Low-carbon hydrogen production and utilisation must increase from about 1 million tons per annum (Mtpa) today to hundreds of Mtpa by 2050. This will involve expansion and development in production, transportation, storage, and end-use.
"Scaling-up hydrogen will require new business models, pricing, contracts, regulations, standards, certificates, and policies," the report said.
International partnerships will be an essential component of developing the hydrogen economy, providing off-take certainty, and enabling scale. Broad-based collaboration within and across industries and governments will be needed as well as a commitment to capital and sharing resources and technology, the report stated.
Despite parallels between Hydrogen and other market development pathways such as liquefied natural gas, they should not be regulated in the same way, the report noted.
"There is still room for innovation in hydrogen technology and business models that over-regulation could hinder. Regulation that is "fit for purpose" can help mitigate the risk inherent in a new market, particularly in attracting investment," the report stated.
"A delicate balance is needed to ensure hydrogen helps in the energy transition but is also competitive and cost-effective."