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IEA: Decisive action by governments is critical to unlock growth for low-carbon hydrogen

Governments need to move faster and more decisively on a wide range of policy measures to enable low-carbon hydrogen to fulfil its potential to help the world reach net zero emissions while supporting energy security, the International Energy Agency (IEA) says in a new report.

Currently, global production of low-carbon hydrogen is minimal, its cost is not yet competitive, and its use in promising sectors such as industry and transport remains limited—but there are encouraging signs that it is on the cusp of significant cost declines and widespread global growth, according the IEA’s Global Hydrogen Review 2021.

When the IEA released its special report on The Future of Hydrogen for the G20 in 2019, only France, Japan and Korea had strategies for the use of hydrogen. Today, 17 governments have released hydrogen strategies, more than 20 others have publicly announced they are working to develop strategies, and numerous companies are seeking to tap into hydrogen business opportunities. Pilot projects are underway to produce steel and chemicals with low-carbon hydrogen, with other industrial uses under development. The cost of fuel cells that run on hydrogen continue to fall, and sales of fuel-cell vehicles are growing.

It is important to support the development of low-carbon hydrogen if governments are going to meet their climate and energy ambitions. We have experienced false starts before with hydrogen, so we can’t take success for granted. But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable and more available for use across different sectors of the economy. Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net zero emissions by 2050.

—Fatih Birol, the IEA Executive Director

Hydrogen is light, storable and energy-dense, and its use as a fuel produces no direct emissions of pollutants or greenhouse gases. The main obstacle to the extensive use of low-carbon hydrogen is the cost of producing it. This requires either large amounts of electricity to produce it from water, or the use of carbon capture technologies if the hydrogen is produced from fossil fuels. Almost all hydrogen produced today comes from fossil fuels without carbon capture, resulting in close to 900 million tonnes of CO2 emissions, equivalent to the combined CO2 emissions of the United Kingdom and Indonesia.

Investments and focused policies are needed to close the price gap between low-carbon hydrogen and emissions-intensive hydrogen produced from fossil fuels. Depending on the prices of natural gas and renewable electricity, producing hydrogen from renewables can cost between 2 and 7 times as much as producing it from natural gas without carbon capture. But with technological advances and economies of scale, the cost of making hydrogen with solar PV electricity can become competitive with hydrogen made with natural gas, as set out in the IEA’s Roadmap to Net Zero by 2050.

Global capacity of electrolyzers has doubled over the last five years, with about 350 projects currently under development and another 40 projects in early stages of development. Should all these projects be realized, global hydrogen supply from electrolysers—which creates zero emissions provided the electricity used is clean—would reach 8 million tonnes by 2030. This is a huge increase from today’s level of less than 50,000 tonnes, but remains well below the 80 million tonnes required in 2030 in the IEA pathway to net zero emissions by 2050.

Practically all hydrogen use in 2020 was for refining and industrial applications. Hydrogen can be used in many more applications than those common today, the report highlights. Hydrogen has important potential uses in sectors where emissions are particularly challenging to reduce, such as chemicals, steel, long-haul trucking, shipping and aviation.

The broader issue is that policy action so far focuses on the production of low-carbon hydrogen while the necessary corresponding steps that are required to build demand in new applications is limited. Enabling greater use of hydrogen in industry and transport will require much stronger policy measures to foster the construction of the necessary storage, transmission and charging facilities.

Countries with hydrogen strategies have committed at least US$37 billion to the development and deployment of hydrogen technologies, and the private sector has announced additional investment of US$300 billion. But putting the hydrogen sector on path consistent with global net zero emissions by 2050 requires US$1,200 billion of investment between now and 2030, the IEA estimates.

The Global Hydrogen Review lays out a series of recommendations for near term-action beyond just mobilizing investment in research, production and infrastructure. It highlights that governments could stimulate demand and reduce price differences through carbon pricing, mandates, quotas and hydrogen requirements in public procurement.

In addition, international cooperation is needed to establish standards and regulations, and to create global hydrogen markets that could spur demand in countries with limited potential to produce low-carbon hydrogen and create export opportunities for countries with large renewable energy supplies or large CO2 storage potential.



Current natural gas prices mean at least the hydrogen from renewables have a smaller premium than formerly.

Costs need to be reduced in the right way, but still it is true that high NG prices have lowered the differential.

I wonder if at the moment there is much difference at all in , for instance, Germany?


"almost all..." of H2, is produced from fossil fuel without carbon capture.
Don't know how the oil companies get away with this polluting. And, they do the same thing when they are flaring wells.
I'm guessing their stand is no one's invented a way to do it and if you want the oil, gas and/or hydrogen, there will be byproducts of pollution, period.
This can be very discouraging to those who are developing H2 devices with the idea that the fuel is clean and non-polluting.



Yeah, who needs hydrogen anyway?

Clearly in your view if batteries can't deal with providing fertiliser, we should never have messed around feeding people using fossil fuels to do so, and unless electrolysers and renewables can replace the whole of the industry immediately, they are a waste of time.

And if steel and cement production, or shipping, can't have their fossil fuels replaced using batteries, we should not be attempting to use hydrogen but doing without all of them.

Presumably you would prefer a battery powered sun too,


I have no objection whatsoever to the production of GREEN HYDROGEN as long as REs remain outside of the equation.



' as long as REs remain outside of the equation.'

I have absolutely no idea what you are talking about.

And presumably the capture process for instance in Iceland where 95% of the CO2 is turned into stone, which perhaps is a reasonably secure storage solution, is worthless and should be abandoned, so we stick to no capture at all, or abandon fertiliser for agriculture currently emitting as much CO2 as the UK and Indonesia until we have a perfect solution?


@ Davemart:
Well, if you don't understand what I have written, there is no sense in a further detailed explanation because you wouldn't understand that either.


I don't speak gibberese.

If you cannot explain what you are talking about in normal English, is is unlikely that your thought process is any more coherent.

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