The price of natural gas in Europe is currently so high that it would currently be cheaper to produce green hydrogen from renewable energy than grey or blue H2 from methane, according to new calculations.

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And the record high EU carbon price of €60 ($69) per tonne of CO2 means that grey hydrogen from unabated natural gas would currently be more expensive to produce than blue H2 (made in the same way but with carbon capture and storage) — although, of course, there is no blue hydrogen being produced in Europe yet.

Calculations by Australian maths-as-a-service company Keynumbers and the Energy Flux newsletter show that, under a realistic set of assumptions, the levelised cost of green hydrogen manufactured today would be €4.18 per kilogram, compared to €6.55/kg for grey H2 and €6.21/kg for blue.

Of course, such calculations depend on the assumptions used, including the cost of electricity and natural gas, capacity factors at renewables projects, capital and operating expenditure (capex and opex), interest rates, electrolyser efficiency, and carbon capture rate.

For these calculations, the following figures were used:

Gas price: $30/MMBtu
CO2 price (EUA): €60/tonne
Discount rate: 8%

For the green hydrogen price:

Dedicated renewable power cost: €40/MWh
Capex of alkaline electorlyser: €800/kW
Capacity factor: 23%
Electrolyser efficiency: 52kWh per kg of H2

For the grey hydrogen calcations:

Steam methane reforming plant capex: €222m
Hydrogen production rate: 8.988 tonnes per hour
Opex: €0.23/kg
Indirect CO2 emissions: 7.5%
Fugitive emissions: 1%

And for the blue hydrogen:

Cost of Steam methane reforming plant with CCS: €398.5m
CO2 capture rate: 95%
Other variables the same as grey.

Of course, if the price of fossil gas falls, this changes everything.

With a gas price of €5 per MMBtu — but with the same carbon price — grey hydrogen in Europe would cost €2.16/kg, and blue would be even cheaper at €1.83/kg.