Low-carbon hydrogen could fulfill its potential to help the world reach net-zero emissions, but not without government support, the International Energy Agency (IEA) said Monday.

In its Global Hydrogen Review 2021, the world’s energy watchdog said production today is minimal, costs are not yet competitive and its use in “promising” industry and transport sectors remains limited. 

However, “there are encouraging signs that it is on the cusp of significant cost declines and widespread global growth,” the researchers said. For example, when IEA issued a special report about hydrogen in 2019, “only France, Japan and Korea had strategies” to use hydrogen.

Compare that with today. 

Seventeen governments have announced hydrogen strategies and more than 20 others have said they are working to develop strategies. In addition, numerous companies are seeking to tap into hydrogen business opportunities. 

“Pilot projects are underway to produce steel and chemicals with low-carbon hydrogen, with other industrial uses under development. The cost of fuel cells that run on hydrogen continue to fall, and sales of fuel-cell vehicles are growing,” the researchers said.

Hydrogen is seen as a key element of the energy transition because of its versatility as an emissions-free fuel at the point of combustion, and as a vessel of energy that may be converted to electricity when fed through a fuel cell.

Developments are being announced every week in North America and across the globe. The energy majors have launched projects as part of their push to net-zero carbon. In addition, many are partnering with firms to advance projects.

No More False Starts?

IEA executive director Fatih Birol unveiled the report at the Hydrogen Energy Ministerial Meeting in Japan.

“It is important to support the development of low-carbon hydrogen if governments are going to meet their climate and energy ambitions,” he said. “We have experienced false starts before with hydrogen, so we can’t take success for granted. 

“But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable and more available for use across different sectors of the economy. Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net zero emissions by 2050.”

The main obstacle to extensively using  low-carbon hydrogen is the cost of producing it, according to IEA. 

“This requires either large amounts of electricity to produce it from water, or the use of carbon capture technologies if the hydrogen is produced from fossil fuels.”

Nearly all of the hydrogen produced today is from fossil fuels without using carbon capture. That results in nearly 900 million metric tons of carbon dioxide (CO2) emissions, which is equivalent to the combined CO2 emissions of the UK and Indonesia, researchers said.

“Investments and focused policies” could close the price gap between low-carbon hydrogen and emissions-intensive hydrogen produced from fossil fuels.

“Depending on the prices of natural gas and renewable electricity, producing hydrogen from renewables can cost between two and seven times as much as producing it from natural gas without carbon capture,” the researchers said. “But with technological advances and economies of scale, the cost of making hydrogen with solar photovoltaic electricity can become competitive with hydrogen made with natural gas.”

IEA demonstrated how hydrogen could become competitive when made with natural gas in a report earlier this year.

Global capacity of electrolyzers, which produce hydrogen from water using electricity, have doubled over the last five years, with about 350 projects under development and another 40 projects in early stages, researchers said. 

If all of these projects are completed, the global hydrogen supply from electrolyzers, which creates zero emissions if the electricity used is “clean,” could reach 8 million metric tons (mmt) by 2030, according to IEA.

Today, hydrogen supply from electrolyzers is under 50,000 metric tons, well below the 80 mmt required in 2030 under the IEA’s pathway to net-zero emissions by 2050.

Countries with hydrogen strategies have committed at least $37 billion to developing and deploying hydrogen technologies, according to IEA. In addition, the private sector has committed another $300 billion. 

“But putting the hydrogen sector on a path consistent with global net zero emissions by 2050,” said researchers, “requires $1.2 trillion of investment between now and 2030.”