Two new reports came out recently published by the Energy Transitions Commission (ETC), one of them stating that green hydrogen will be well below $2 per kg by 2030. That makes it cost-competitive with grey hydrogen that has the highest demand so far compared to blue and green. The report is called Making the Hydrogen Economy Possible: Accelerating Clean Hydrogen in an Electrified Economy.
This report is part of a broader series of reports of ETC dedicated to how we can scale up clean energies until 2050 to meet net zero goals. ETC is a business think tank of a global coalition of leaders from across the energy and climate sectors.
In the latest report about scaling up green hydrogen, it is forecasted that it will play an increasing role in the decarbonization of the economy, especially in sectors where electrification is challenging.
Price Projections And Future Demand
Costs are expected to fall dramatically – $2 per kilogram in most geographies by 2030 and even $1 per kg in favorable locations like Australia. Currently, the price of green hydrogen is between $3/kg and $6.55/kg and for grey hydrogen – between $0.70 and $2.20/kg.
According to ETC, comparing green hydrogen vs blue hydrogen, by 2030 blue H2 will fall only slightly from $1.3 – 2.9/kg per kg today on the back of CCS scaling up – less than green H2. The cost of grey hydrogen is not expected to change this decade. The expected global demand for green hydrogen comes to 500-800 million tons per year by 2050 which is 15-20% of total final energy demand.
The report estimated that by 2050, 85% of clean hydrogen will be green and 15% blue. 80% of the shipping industry’s energy demand is expected to be granted to clean hydrogen. A big share of the steel industry’s final energy demand – 50% is also expected to be for clean hydrogen.
Long-distance shipping and steel production, including aviation, are just some of the industries where deep decarbonization through electrification is hard to be achieved. The study also highlights that early in 2020s development and green hydrogen production scaling up are critical to unlocking cost reduction.
Deployment within clusters, supporting green hydrogen production and end use, is pointed out as being a cost-effective solution for achieving rapid widespread utilization.
Green Hydrogen Development Costs And Policies
The cost of development of the hydrogen economy to 5 – 7 times bigger than it is today comes down to an investment of $15 trillion. $12.5 trillion of them would be needed for the higher energy requirements related to the production of green H2. $2.5 trillion would have to go for investment in electrolysers, blue hydrogen production and H2 transport and storage infrastructure.
No carbon pricing policy would be needed for green H2 to reach less than $2 by 2030 but it would definitely bring it closer to price parity with grey H2 much faster if implemented. Other policies like mandates and regulations requiring a percentage use of low-carbon energy in shipping and aviation are also suggested to accelerate deployment.
The report is establishing specific and sophisticated suggestions on ways to reduce the cost of hydrogen and scale up the clean hydrogen economy. It is one of many efforts of the climate change industry to layout and provide specific actions required in the next 30 years to curb the worst consequences of global warming.