Session 5: A new push for hydrogen

Noé van Hulst, Chair of the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), moderated this session that explored the role of low-carbon hydrogen in the net-zero transition.

Timur Gül, Head of Energy Technology Policy Division at International Energy Agency (IEA), opened his scene-setting presentation by highlighting that hydrogen is not a new vector in the energy system: 94 million tonnes of hydrogen were produced in 2021, primarily for refineries and the chemical industry. The new push is about producing low-carbon hydrogen and favouring its adoption in “hard to abate” sectors. The IEA data shows that the pipeline of announced lowcarbon hydrogen projects is growing fast: annual production could reach 24 million tonnes by 2030, which is equivalent - if all announced projects were to be realised - to 70% of the annual lowcarbon hydrogen production needed to reach government net-zero pledges. He highlighted the role of international trade for the adoption of lowcarbon hydrogen, and that Japan and Australia have spearheaded efforts on this front with a first shipment of liquefied hydrogen from Australian to Japan in February 2022. He concluded by underlining that lack of infrastructure, of clear trade rules and regulations are among the key barriers for the growth of international trade in low-carbon hydrogen.

Eiji Ohira, Strategy Architect at the Fuel Cell and Hydrogen Technology Office of the Japanese New Energy and Industrial Technology Development Organisation (NEDO), underscored the long-standing support to hydrogen R&D in Japan, which started in 1970s and currently builds on a roadmap to 2050. The roadmap envisages to sensibly increase low-carbon hydrogen production in Japan by 2030 by focusing on two main pillars. First, increasing the number of liquid hydrogen tankers and, second, scaling-up of hydrogen production through different technologies, including water electrolysation. He highlighted the importance of scaling up hydrogen use in the transport sector, in particular for heavyduty and commercial vehicles. Finally, he underlined ongoing initiatives to support the development of a regional hydrogen energy system in conjunction with local governments, akin to the European Hydrogen Valley initiative.

Angel Caviedes, Head of New Energies Unit at the Chilean Ministry of Energy, stressed that lowcarbon hydrogen plays a crucial role in achieving carbon neutrality in Chile by 2050: projections show that hydrogen could contribute 25% of the required emissions reductions. He reported that the government has set up an inter-ministerial committee for the development of a low-carbon hydrogen industry, and described key milestones and challenges to support domestic growth of this industry. First, the need to grow domestic demand from 52 000 tons per year today to 5 million tons by 2050, which would represent just over 1% of expected global demand. Second, the creation of high-value local employment, increasing R&D, and technology transfer. Third, ensuring that the development of this industry is respectful of the environment, and integrates local communities in a fair and balanced manner. He concluded by highlighting the importance of strengthening domestic export capacity, and that first exports of low-carbon hydrogen are expected by around 2030.

Christelle Werquin, Director at Hydrogen Europe, highlighted the three main pillars of the French hydrogen strategy. First, decarbonising “traditional” industrial users of hydrogen (e.g. refineries and the chemical industry) by increasing electrolyser production capacity up to 680 000 tons by 2030. Second, promoting hydrogen adoption in new sectors, including transport with heavy duty vehicles. Third, investing in research and innovation, skills, job adaptations and training. She also highlighted the importance to shift from a discussion of the energy used to produce hydrogen (e.g. renewables, nuclear, natural gas) to one on total greenhouse gases (or GHG) emissions, and recalled that EU Taxonomy for Sustainable Activities sets the GHG emissions thresholds for “sustainable hydrogen” production. Finally, she argued that the US Inflation Reduction Act is a game changer for the industry, and underlined the need of setting clear standards and regulations in Europe to support domestic industry. She concluded that France will launch a mechanism to offset the higher production costs of low-carbon hydrogen in 2023.

Antoine Dechezleprêtre, Senior Economist at the OECD Science, Technology and Innovation Directorate, highlighted that most of OECD countries have set deployment capacity rather than cost reduction targets for hydrogen, and argued that latter type of targets should be at the centre of national hydrogen strategies. He also stressed that the need for coordination and harmonisation across countries on regulations on guarantee of origin and purity of hydrogen. Such changes are need for the creation of an international hydrogen market, which is likely to lead to important economy of scale in hydrogen production. The possible risk of slowing down the decarbonisation of the power sector due to competing use of low-carbon energy source to produce hydrogen should be carefully considered.

In the open discussion, speakers focused on the challenges and policy solutions to promote cost reduction in hydrogen production. Timur Gül stressed that electrolysers are a technology ready for market deployment, therefore policies should support their commercialisation while also continuing to support R&D. Christelle Werquin highlighted the projects under the EU “Important Projects of Common European Interest” (or IPCEIs) framework have the potential to reduce the cost of electrolysers by a factor of 4. Eiji Ohira remarked the importance of considering both capital (i.e. CAPEX) and operating (i.e.OPEX) cost, including maintenance cost when evaluating hydrogen projects. Antoine Dechezleprêtre stressed that much could be learnt from the policies to promote innovation in solar and wind energy technologies to identify the optimal policy mix for bringing down the cost of low-carbon hydrogen. Angel Caviedes underscored that energy prices are a key component of the levelised cost of hydrogen.

Key takeaways and knowledge gaps

• If all planned projects are built, the production of low-carbon hydrogen could reach 24 million tonnes per year by 2030.

• Research could look at the successful experience of solar and wind energy innovation to identify the optimal policy mix for promoting hydrogen adoption.

• International trade is needed to unlock the potential of hydrogen. Further research is needed to understand the costs of transport, logistics, and relative bottlenecks. The geopolitical implications of dependence on imported hydrogen should be carefully considered.

• Low-carbon hydrogen could initially tap into the existing market for hydrogen, such as for refineries and the chemical industry. Further research is needed to evaluate barriers and opportunities for low-carbon hydrogen adoption also in potential new markets, including transport and heavy industry.