A hydrogen economy powered by vast amounts of renewables could meet a quarter of the world’s energy needs by 2050 – but will need $11 trillion of spending on infrastructure and a $150bn subsidy kick-start, said BloombergNEF.

Hydrogen’s potential as a ‘clean molecule’ able to act as a fuel for transport, heating and heavy industry leaves it well placed to fill the gap left by oil and gas in sectors that can’t easily be reached by electrification, said a new report from the analyst group.

The study says falling costs of electrolysers and renewable generation can push down the cost of green hydrogen generated from renewables to between $0.80 and $1.60/kg by mid-century – its current level is at least $2.50/kg – making it competitive with gas in many markets.

The cost falls could open the way for hydrogen to meet 24% of the world’s energy needs by 2050, and cut up to a third of global emissions from fossil fuels and industry, said BloombergNEF – but only if a formidable list of conditions are met.

  • Policy support, which BloombergNEF’s analysts claim is currently thin on the ground despite hydrogen’s status as a “hot topic”. “Policy measures are generally focused on expensive road transport applications, and programmes are poorly funded.” The report reckons $150bn of subsidies by 2030 will be needed to spur a scaling-up of the market.
  • Infrastructure spending. The study puts an $11trn bill on achieving the production, storage and transport facilities needed for a hydrogen revolution. “For hydrogen to become as ubiquitous as natural gas, a huge, coordinated program of infrastructure upgrades and construction would be needed, as hydrogen is often incompatible with existing pipes and systems.”
  • A carbon price. “Hydrogen can enable a switch away from fossil fuels in many of these applications at surprisingly low carbon prices. For example, at $1/kg, a carbon price of $50/tCO2 would be enough to switch to renewable hydrogen in steel making,” said the study.
  • Vast renewable generation. BloombergNEF estimates 60,000TWh of non-hydro renewable output would be needed for hydrogen to meet 24% of energy demands – with electrolysers consuming more than half of that power – compared to a total 3,000TWh currently produced.
  • Storage. “Storing hydrogen in large quantities will be one of the most significant challenges for a future hydrogen economy. Low cost, large-scale options like salt caverns are geographically limited, and the cost of using alternative liquid storage technologies is often greater than the cost of producing hydrogen in the first place.”

The study offers a rebuff to hopes that green hydrogen could entirely vanquish the ‘blue’ variety produced using gas. BloombergNEF still sees a possible “significant role” in some markets for hydrogen produced from fossil fuels but decarbonised using carbon capture and storage, citing China and Germany as examples of countries “short on land for renewables but well-endowed with gas and coal”.

Recharge has reported extensively how green hydrogen has shot up the energy transition agenda, with sectors as diverse as aviation and offshore wind looking to tap into the potential of the fuel.