Climate policy is dominating the political and news agendas across the globe as governments enact measures to meet net-zero emission goals in Europe, the UK, China, South Korea, Japan, Canada, among others. Renewable energy is at the heart of these strategies aimed at decarbonising the economy and completing the transition to net-zero and ultimately eliminating global greenhouse gas emissions altogether.  

Widespread adoption of climate change policy has led to the acceleration of the clean energy revolution in recent years. Indeed, Ember and Agora Energiewende reported that in 2020, Europeans got more of their electricity from renewable sources than fossil fuels for the first time. Though it is evident that the renewable energy revolution has well and truly arrived, barriers to the clean energy transition and meeting climate goals remain. These issues include the ability for current grid infrastructure to cope with a significant spike in electricity demand in the near future, volatility in wind energy production, and portions of the economy whose emissions are difficult to eliminate. This is where the fuels of the future come into play.

New energy: powering the future via green hydrogen

What is green hydrogen? As we discussed last year in our blog on the different types of hydrogen, green hydrogen is produced using an electrolyser to split water into its constituent molecules of oxygen and hydrogen that is powered by renewable energy rather than fossil fuels. By contrast, blue hydrogen is produced from natural gas by using a process known as steam methane reforming alongside carbon capture and storage to make it more environmentally friendly.

Green hydrogen has the potential to provide clean power for manufacturing, transportation, and shipping – with water being the only by-product of this process. Indeed, a number of sell-side notes suggested that as blue and green hydrogen become more economical, both fuels could abate some 45 per cent of all greenhouse gas emissions and a route towards net-zero.

Another advantage of hydrogen is its versatility. For instance, it can be used in gas or liquid form, as well as being converted into electricity or being stored in existing gas pipelines to power industry as well as household appliances. Additionally, hydrogen can transport renewable energy when converted into a carrier such as ammonia, a zero-carbon fuel for shipping, for example.

Hydrogen can also be used with fuel cells to power anything that uses electricity, including electric vehicles and electronic devices. Unlike lithium-powered batteries, hydrogen fuel cells don’t require recharging and won’t run down so long as they have hydrogen fuel.

Technological challenges concerning hydrogen should, however, not be underestimated. Chief of these issues remains ensuring the safe transportation of hydrogen across long distances and international borders. A public and private sector green hydrogen strategy will be fundamental to ensuring the infrastructure is in place to facilitate hydrogen becoming a cost-effective and reliable fuel supply.

Funding the energy revolution

Further to defining the role of green hydrogen in the decarbonisation of the economy, the UK government recently published a policy paper titled ‘The Ten Point Plan for a Green Industrial Revolution’. Within this, the government set a target to work with industry to develop 5GW of low carbon hydrogen production capacity by 2030. Besides the obvious gains for green hydrogen, the government said that the industry may benefit the UK with the creation of around 8,000 jobs across our industrial heartlands and beyond.

Part of this will be supported by a range of measures, including a £240 million Net Zero Hydrogen Fund, but more investment may be needed to meet market demand. The government also intends to set out hydrogen business models and a revenue mechanism for them to bring through private sector investment this year.

2021 – the year of green hydrogen?

While much uncertainty remains around the route towards a viable future for green hydrogen (compounded by the ongoing Coronavirus pandemic), the potential growth and role of this fuel in the energy transition is without doubt. Furthermore, there are many opportunities to be had for savvy businesses operating and entering the green hydrogen market – a sector that is unlikely to slow down as governments increasingly support the sector and measures to decarbonise the economy continue apace.  

By Matthew Taylor, Associate at Tavistock