High Cost, Infrastructural Issues Limit Green Hydrogen’s Role in Energy Transition: Study

Green hydrogen is recognised as a viable solution for reducing greenhouse gas emissions and transitioning away from fossil fuels for “hard-to-abate” sectors. The supply chain for hydrogen, however, is not yet fully developed. Several barriers, such as the high cost of green hydrogen compared to non-renewable alternatives and the lack of dedicated infrastructure, are still impeding hygrogen’s full contribution to the energy transition.

A report titled “Green Hydrogen Supply: A Guide to Policy Making,” released by International Renewable Energy Agency (IRENA), aims to provide a basis for understanding these challenges and the solutions available. It highlights the range of policy options available, complemented by country examples.

Policies presented in this report include measures to support electrolyser capacity deployment; ensure electricity is renewable and cost-competitive; increase green hydrogen demand; and develop a hydrogen transport infrastructure. The report separates policy recommendations into various stages to allow the formulation of appropriate policy pathways most suitable to a country’s level of deployment of green hydrogen.

The production of hydrogen is a century-old activity. Hydrogen can be produced in multiple ways from different sources. Green hydrogen is, for the scope of the report, hydrogen produced through water electrolysis fuelled by renewable-based electricity. Water electrolysers are devices that use electricity to separate water molecules into hydrogen and oxygen. Multiple water electrolyser technologies exist today. Four of them in particular hold promise for use in the near future: alkaline, proton exchange membrane (PEM), solid oxide electrolyser cells (SOEC) and anion exchange membrane (AEM). Alkaline and PEM technologies represent all the installed capacity today, while SOEC and AEM are at an earlier stage in the research funnel, but hold the promise of improved performance. PEM, AEM and alkaline electrolysers work at low temperatures (< 60-80°C), while SOEC work at a high temperature (> 700°C).

The report analyses the hydrogen strategies of European countries for this decade and shows that France (6.5 GW) leads the electrolyser capacity targets set for 2030. Germany and Italy follow with a 5 GW target each. Other European countries’ targets are as follows: Poland, 2 GW; Portugal, 2.25 GW; the Netherlands, 3.5 GW; Spain 4 GW. Further, 11.75 GW has also been set aside for EU strategy. In other words, Europe is targeting 40 GW electrolyser capacity by the end of this decade.

The transport of hydrogen is essential when electrolyser facilities are not close to locations where hydrogen is consumed. It can be transported in a variety of ways, including by truck, ship and pipeline. However, to efficiently transport hydrogen, it must either be compressed or liquefied or further synthesised into other energy carriers such as ammonia, methane, methanol, liquid organic molecules or liquid hydrocarbons, which have higher energy density and can be transported using existing infrastructure. Various barriers exist to the use of each of the transport modes or treatments. In general, each method is better suited to some specific end use and distance.

The storage of hydrogen is crucial to the uptake of green hydrogen, and hydrogen’s suitability for storage brings additional value to the whole energy sector. Hydrogen can provide seasonal storage for the power system, a service providable by a limited range of technologies; additionally, hydrogen storage is also essential to maintain a steady input to applications that operate continuously (e.g. the steel industry). Hydrogen can be stored in steel or composite tanks, or in underground geological formations.

The report explores the main barriers to the advancement of green hydrogen production and the development of the necessary infrastructure for its transport and storage. It provides a map of the policies needed in the future and aims to provide insights on the policy options. This forms a basis on which to understand future challenges, providing national examples and case studies to highlight effective policies.

Finally, it separates policy recommendations into various stages to help countries at varying levels of deployment address barriers and formulate suitable pathways.

This is the second in a series of reports designed to explore policies to support green hydrogen across the entire value chain. The first report “Green hydrogen: A Guide to Policy Making,” published in November 2020, identified the pillars needed for creating a policy framework for green hydrogen. Upcoming reports are expected to focus on industrial applications and long-haul transport.