Global hydrogen markets are in for a “violent shakedown” this decade, as electrolyzer costs fall more than 85% and renewably-produced green hydrogen becomes more affordable than the fossil-derived variety within two years, according to new analysis by Rethink Energy.
The “promised economies of scale of this production buildout, as well as a plummeting cost of renewables and a rising cost of carbon” point toward a “violent shakedown of industries that have plodded on with a business-as-usual approach to decarbonization, without innovation,” wrote Rethink lead analyst Harry Morgan.
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The analysis suggests the cost of green hydrogen will fall from about US$3.70 per kilogram today to just over $1 in 2035 and about 75¢ by 2050. It projects a “learning rate” that has electrolyzer costs falling 14% every time global manufacturing capacity doubles.
“At the rate at which these facilities are being announced, the global production capacity is likely to be well in excess of 100 GW by 2030, which is more than enough to satisfy existing government or corporate targets,” Morgan said. The report has hydrogen supplying 95% of the world’s heavy-duty trucks, 22% of light commercial vehicles, and 2.4% of cars by 2050.
Recharge News contrasts Morgan’s optimism with a report last November by U.S. investment bank Jeffries that projected world-wide electrolyzer capacity of no more than 47 GW by 2030. That total would be “unlikely to be sufficient supply even for the proposed projects out to 2030, even in the lowest demand scenario,” the institution wrote.
But Morgan’s study said 35 gigawatts of new electrolyzer manufacturing have been announced since July 2019, Recharge News writes.
Interest in hydrogen among investors, businesses, and governments has skyrocketed over the last couple of years, resulting in duelling analyses from agencies that see a rapid shift to renewables to produce the fuel by electrolysis, or continuing reliance on natural gas as a feedstock. The end product is colour-coded as “grey” hydrogen when the resulting carbon dioxide emissions are just poured into the atmosphere, or “blue” if a producer pays extra to bolt on a carbon capture, utilization, and storage (CCUS) system.
But analysis last year found that even “blue” hydrogen has a higher carbon footprint than burning coal, while emitting far more climate-busting methane than producing the same amount of energy directly from natural gas.
“Natural gas is composed mostly of methane, and the methane in natural gas is the feedstock used to produce the grey hydrogen, converting methane to hydrogen plus carbon dioxide under high temperatures and pressures,” explained Robert Howarth, a Cornell University professor of ecology and environmental biology. “Overall, emissions of both carbon dioxide and unburned methane are 50% greater for grey hydrogen than simply burning natural gas for the same quantity of energy,” driving the carbon footprint of the process up above coal’s.
Last week, a report by UK human rights non-profit Global Witness concluded that the Shell Canada’s showcase Quest carbon capture plant in Alberta emits more CO2 than it captures.
“Grey” hydrogen currently accounts for 95% of global production, soaking up 6% of the world’s natural gas consumption along the way. Governments in Canada are casting their lot with “blue” hydrogen, at least over the short term, with Alberta publishing a largely aspirational gas and hydrogen strategy in 2020 and Ottawa on track to include a CCUS tax credit in the next federal budget.
But Morgan had a different take on the bigger picture. “While these [global] laggards continue to push CCUS approaches or complain about a ‘chicken-and-egg’ problem for hydrogen demand, the companies making the zero-regret investments in green hydrogen now will dominate the hydrogen supply for existing ammonia and oil refining sectors by 2035, with an overall demand of 73 million tons by 2050, although by then there will be scant requirement from oil,” he wrote.
