HYDROGEN HAS TAKEN A ‘BOLD ROLE’ FOR FUTURE DEVELOPMENT

Hydrogen: The time has come for the simplest chemical substance, H2

From an Article by Ropa Mugadza, Independent Community Intelligence Service (ICIS) News

Hydrogen has recently gained traction in government strategies, business plans and the media as a potential silver bullet for reaching net zero. But in reality, hydrogen has been considered as a potential aid to mitigating climate change for over 50 years.

So, why now? What makes the attention given to hydrogen in the 2020s different from the 1970s?

Firstly, political, environmental and economic landscapes have shifted. In the 1970s, there was a lack of policy and regulation to drive the hydrogen market forward. As well as this, the technology to bring low-carbon and renewable hydrogen would have required additional investment and research. All of this meant that there was no concrete economic benefit for decarbonised energy. However, the market has moved forward. Governments have set targets, regulators are establishing conditions for market participants and businesses are under pressure from investors, consumers and stakeholders to commit to net zero emissions.

This shift can be seen across many developments that solidify the prospect of the hydrogen transition across the value chain. On July 15, the European Commission revealed funding for 41 hydrogen projects totalling €5.4 billion. The Indian government is currently holding consultations with stakeholders and is anticipated to launch a comprehensive renewable hydrogen mission that may announce purchase obligations for different industries. On the back of anticipated increased demand, the chemical company Johnson Matthey (JM) has announced a plan to build a manufacturing facility to produce hydrogen fuel cell components.

The hydrogen movement is gaining momentum on a global scale, but where is this heading?

Navigating the hydrogen transition As a means of reaching net zero by 2050, policymakers have set multiple targets for hydrogen market participants over the course of this decade.

All over the world, countries have created roadmaps and policies to ensure that steps are continuously taken towards a decarbonised society. Many countries have issued official hydrogen strategies and roadmaps in order to increase their hydrogen consumption and develop the necessary infrastructure. The targets in these strategies indicate that they are on track to increase hydrogen production capacity to 400 times that of 2020 by the end of this decade. As of the end of May 2022, the industry had announced 680 large-scale hydrogen project proposals worldwide.

Most recently, the UK government published a policy paper highlighting investment opportunity across the entire hydrogen value chain and providing information on the Net Zero Hydrogen Fund, which was established to support hydrogen deployment as well as hydrogen business models that provide revenue support to pioneer hydrogen projects.

All of this indicates that hydrogen is becoming a more appealing investment. For the first time since hydrogen was coined as the energy of the future, market participants are facing concrete implementation plans at a scale hitherto unseen.

The roadblocks to hydrogen are substantialHydrogen is rarely found on its own, it needs to be manufactured.

The production process usually requires purchasing electricity or natural gas, and the final cost of producing hydrogen can vary substantially depending on the type and environmental impact. In other words, producing hydrogen comes with a price tag.

Alongside this, although hydrogen appears to offer numerous opportunities for future investment, demand for the commodity is not set in stone. It can be used in transport, industry, power and for heating – but governments are yet to finalise the targets for using certain volumes within these different areas.

This means that market sizing is difficult for new entrants to understand.

Conclusion ~ A strong government commitment to deep decarbonisation, supported by financial investment, regulation and clear hydrogen strategies and targets, has sparked unprecedented momentum in the hydrogen industry. If the initial goals set out by policymakers and legislators are to be fulfilled, momentum must now be maintained, and a long-term regulatory framework must be established.