The production of blue hydrogen derived from fossil gas with carbon capture and storage (CCS) should be restricted due to the associated greenhouse gas emissions, high cost and the risk of “locking in” fossil-fuel use for decades to come, an independent climate think-tank has warned.

Even referring to blue hydrogen as “low-carbon” is misleading, says London-based E3G in a new report entitled Between Hope and Hype: a Hydrogen Vision for the UK.

“‘Blue’ fossil-based hydrogen is not zero emissions and risks a lock-in of high carbon infrastructure and jobs,” says the study, adding that continued reliance on fossil gas could cause the UK to exceed its carbon budget.

“Hydrogen derived from fossil fuels is not zero emissions, due to methane leakages along the value chain,” it says. “The International Energy Association (IEA) estimates that the oil and gas sector emitted around 70 million tonnes of methane in 2020 – over 5% of global energy-related greenhouse gas emissions.

“Methane is over 80 times more powerful, though shorter-lived greenhouse gas than CO2. Leakages are historically underestimated and underreported, with satellite technologies and site studies regularly revealing large, previously undetected plumes. The full costs of eliminating methane leakages is unknown, and the IEA estimates that even if all options were to be deployed across value chains, 25% of total oil and gas methane emissions would remain unaddressed.

The report, which is intended to influence the UK’s forthcoming hydrogen strategy, adds that there are also dangers of relying on CCS technology that cannot capture all the CO2 emitted by a project.

“Unprecedented progress would be needed on Carbon Capture and Storage (CCS) within the next decade if it is to play any meaningful role in the transition period.

“While carbon capture efficiencies are hoped to reach 85-95%, current flagship CCS projects achieve far lower capture rates. The Petra Nova project in the US captures just over a third of the flue gas from one of four coal-fired units, while the Boundary Dam project in Canada has an overall capture rate of 31%.

The argument for blue hydrogen

The oil & gas industry argues that it will be much easier and cheaper to produce clean hydrogen at scale using existing methane reforming technology (albeit with added CCS) than relying on renewables and water electrolysis.

It is also makes the point we will need all the renewables we can get our hands on just to decarbonise the power sector — so we will need to produce hydrogen another way.

“There are also questions around current practices in Carbon Capture Usage and Storage (CCUS), with the oil industry using captured CO2 gas injections as part of the enhanced oil recovery process. There need to be controls over how CO2 will be used and where it will be stored, so that it will not be used to extract more oil.”

The report adds: “As part of an approach which promotes more nuance and transparency, the UK should refrain from classifying blue hydrogen as ‘low carbon’, as this is misleading given the continued emissions associated with fossil-fuel-derived hydrogen.”

This notion is supported by a recent report from Canadian think-tank Pembina Institute, which estimated that each tonne of blue hydrogen produced in Canada would result in 2.3-4.1 tonnes of CO2 equivalent.

Twin-track approach

E3G says that the UK should “double down” on green hydrogen from offshore wind, rather than adopt its currently preferred “twin track” approach in which it supports development of both blue and green H2.

“There is growing recognition among academics and experts that fossil-based blue hydrogen will only have a limited role to play in the low carbon transition,” the study says.

There is concern that currently the discussion is dominated by those with vested interests in existing high carbon infrastructure

“As well as being essential for climate targets, there is also a strong economic case for a focus on green hydrogen from the start,” it adds, pointing to a recent study by German think-tank Agora Energiewende that found that green H2 will be cheaper than blue in the long run.

“A focus on blue could leave the UK dependent on fossil gas imports… Instead, a focus on North Seas offshore wind [to produce green hydrogen] could enable spending to be redirected into the domestic economy, supporting UK jobs, communities and supply chains.”

E3G warns that the oil & gas industry may be skewing the debate on blue hydrogen.

“There is concern that currently the discussion is dominated by those with vested interests in existing high carbon infrastructure. The UK government’s Hydrogen Advisory Council is chaired by Shell, and the membership contains a limited balance of views from across society.

“A more nuanced discussion on hydrogen is required, with greater transparency on the mandate and selection criteria of bodies close to government decision-making.”

The oil & gas sector often says that blue hydrogen can be quickly scaled up and should therefore be used as an interim solution until green hydrogen can be produced at scale.

But E3G warns that such an approach may be counterproductive and raises questions such as:

“Is a transitionary role for blue hydrogen enough to justify additional costs from CCS and elimination of methane leakages? Who should bear those costs – the polluter or the taxpayer?

“How to ensure incentives and tax structures ensure the smooth transition from one to the other? By when should that switch occur?”

If the UK government does pursue its twin-track approach, E3G says, mechanisms will be needed to avoid a lock-in of fossil fuels and ensure a later switch away from blue hydrogen to green, the report says. These should include “clear timelines and targets, accountability and transparency mechanisms, and regulations and standards which support the phase-out – for example, through a rising carbon intensity limit”.

“A ‘twin track' approach should not divert public funding resource away from the development of green hydrogen the scale and speed needed to get on track to zero emissions, and the government can commit to ensure all public support for hydrogen development and deployment are focused on green.”