Is green hydrogen a net zero game changer?

Imagine a future where cars don’t emit toxic fumes, but instead release only steam into the atmosphere. That may sound far-fetched, but that is exactly what harnessing hydrogen energy means. Applying this energy source across industries could prove to be a game changer in achieving net zero by 2050.

The great energy transition

In 2021 alone, global investment into the low-carbon energy transition totalled US$755 billion, an increase of more than 25% from the previous year.¹

While most of this investment was directed toward renewable energy and electrified transport, there is growing investment into green hydrogen, which may prove to be the next step in the decarbonisation journey.

The many shades of hydrogen

While we’ve all heard about hydrogen as a sustainable fuel, there are different forms of it or colours and so one can be excused for not knowing which is which. The main ones are:

• Black/brown hydrogen is produced from burning coal or lignite (aka brown coal). It is estimated that for every tonne of brown hydrogen, around 10-12 tonnes of carbon dioxide are produced. This process is the most carbon intensive.
• Grey hydrogen comprises the majority of industrial hydrogen. The production process involves combining natural gas with water vapour to create hydrogen. Large volumes of carbon dioxide are produced and released into the atmosphere, but as hydrogen replaces carbon-intensive energy alternatives, the net emissions can still be positive.
• Blue hydrogen is produced in the same way as grey hydrogen, but the emissions are captured and stored. Blue hydrogen could also play an important role in achieving net zero by 2050, particularly as governments are increasing taxes on carbon emissions or paying credits for reductions, helping to make blue hydrogen and carbon capture, utilisation and storage (CCUS) more economically-viable industries.
• Green hydrogen is produced by electrolysis, a technique which splits water molecules into hydrogen and oxygen. While electrolysis uses vast amounts of electricity, the electricity used is from renewable sources such as solar and wind, and therefore releases no emissions.

Green hydrogen only makes up a fraction of the energy mix, but it is expected to play a significant role in the future, with demand from heavy industries expected to multiply, including for rail, marine and heavy-road transportation.

Forecast global hydrogen sector demand in sustainable development scenario 2019-2070

Renewables growth vital for green hydrogen

Vital to the scaling up of green hydrogen production as its power source, renewable energy generation has dramatically accelerated, while the cost per gigawatt has continued to decline. In less than a decade, renewables have grown from supplying less than one per cent of energy in Europe to 15 per cent. As this trend continues, this will support the growth of green hydrogen production.

Unlimited investment potential spanning multiple industries

Today, more than 75 governments have announced hydrogen policies and goals compared with 2019, when only France, Japan and Korea out of the G20 nations had national strategies.²

The outlook is undeniably promising because hydrogen has the potential to transform the carbon footprint of entire energy-intensive industries, from manufacturing to transportation. As the world rushes to reach net zero emissions by 2050, green hydrogen sits at the centre of this megatrend.

In summary, we believe green hydrogen will fall in production cost and will be a net zero game changer as part of the energy matrix – including nuclear, wind, solar and long-duration energy storage (LDES).

¹ Energy Transition Investment Trends 2022, BloombergNEF.

² Global Hydrogen Review, 2021 – International Energy Agency.

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