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IEA: World needs major investment in clean hydrogen

Landmark report from International Energy Agency suggests widespread use of hydrogen may be essential to meeting global climate targets

A landmark report from the International Energy Agency suggests widespread use of hydrogen for renewable-energy storage, long-haul transport, heating and industrial processes may be essential to meeting global climate targets.

“This is a critical year for hydrogen,” says the introduction to the IEA’s The Future of Hydrogen report, released today. “It is enjoying unprecedented momentum around the world and could finally be set on a path to fulfil its longstanding potential as a clean energy solution.

“To seize this opportunity, governments and companies need to be taking ambitious and real-world actions now.”

The report explains that clean hydrogen — produced by electrolysers powered by renewable energy (or by fossil fuels with carbon capture) — can act as large-scale energy storage, increasing the amount of variable wind and solar that can be absorbed by the world’s grids.

“Hydrogen is one of the leading options for storing energy from renewables and looks promising to be a lowest-cost option for storing electricity over days, weeks or even months,” the report says.

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“At high proportions of solar and wind power, the variability of their output poses a challenge.

“Because hydrogen can be stored or used in a variety of sectors, converting electricity to hydrogen can help with the matching of variable energy supply and demand, both temporally and geographically, alongside alternatives such as pumped-storage hydropower, batteries and grid upgrades.”

The gas also “offers ways to decarbonise a range of sectors — including long-haul transport, chemicals, and iron and steel — where it is proving difficult to meaningfully reduce emissions”, the report explains.

“If renewable power generation becomes sufficiently cheap and widespread, it can be used not only to provide low-carbon electricity, but also to create low-carbon hydrogen that can displace fossil fuels in transport, heating and industrial raw materials, and indeed almost any application not susceptible to electrification.

“In an ambitious low-carbon context, such hydrogen trade would effectively enable trade and storage of wind and sunshine between different regions to overcome seasonal differences.”

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The IEA points out that the costs of electrolysers (which split water molecules into hydrogen and oxygen) and fuel cells (which convert hydrogen to electricity) are still relatively high, but with the right investment and government support, mass production could follow, resulting in price declines similar to those seen in wind and solar.

“For example, utility-scale solar PV capital costs are 75% lower than in 2010, and electricity from onshore wind is around one quarter cheaper today than it was ten years ago,” the report says.

It adds that the quality of the technology is not the main issue: “Many stakeholders today share the opinion that technologies such as fuel cells, water electrolysers, hydrogen refuelling and hydrogen turbines are now mainly waiting for large-scale demand and standardisation and not further technological development.”

The report — which was commissioned by the Japanese government for the G20 Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth, taking place this weekend in Karuizawa, near Tokyo — makes seven key recommendations:

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1)For governments to establish a role for hydrogen in long-term energy strategies to guide future expectations; and for the relevant industries to set clear long-term goals.

2) Stimulate commercial demand for clean hydrogen through policies that create sustainable markets. This is “needed to underpin investments by suppliers, distributors and users”, and to drive cost reductions.

3) Address the investment risks of first-movers through “targeted and time-limited loans, guarantees and other tools [that] can help the private sector to invest, learn and share risks and rewards”.

4) Government action to support R&D to bring down costs, including for fuel cells, hydrogen-based fuels and electrolysers.

5) Eliminate unnecessary regulatory barriers, share knowledge and harmonise standards across borders.

6) Engage internationally and track progress.

7) Focus on four key opportunities to further increase momentum over the next decade: turning ports into clean-hydrogen hubs; use existing gas infrastructure to spur new clean hydrogen supplies (hydrogen can be transported along existing modern gas pipelines and, to some extent, be added directly to the natural-gas supply); support transport fleets and freight to make fuel-cell vehicles more competitive; and to establish the first shipping routes to kick-start the international hydrogen trade.

The report also discusses transporting liquid hydrogen (or an easier-to-manage derivative such as ammonia) around the world on specialist vessels, in the same way as liquefied natural gas — with ships burning small amounts of its H2 cargo to power its journey.

“The next ten years will be critical to keeping hydrogen in the energy policy toolbox,” the report concludes.

“There is a clear long-term rationale for ensuring that the fullest possible range of options is available to help tackle multiple energy system challenges — including energy security, affordability, access and sustainability — for a growing global population and economy. Put another way, it seems foolhardy not to keep the option of large-scale, clean, flexible hydrogen on the table.

“‘Ambitious pragmatism’ will be essential to build momentum, to support the development of low-cost and low-carbon hydrogen on a large scale, and to help position hydrogen to be ready to compete and seize longer-term opportunities.”

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