Editorial by Marco Alverà, Chief Executive of Snam, President of GasNaturally, and Author of “Generation H – healing the climate with hydrogen”
We are on the cusp of a hydrogen revolution. Europe can and should lead the way.
CO2 emissions continue to rise worldwide and evidence of global warming is all around us. We therefore need a new tool to meet our commitments to the Paris Agreement.
Accelerating our current “green electricity” strategy is only part of the answer, as it leaves two major challenges unresolved: how to keep the lights on when an expanded power system is reliant on intermittent, unpredictable renewables; and how to decarbonise the 50% of consumption which according to international renewable energy agency IRENA will not be electrified by 2050.
Hydrogen (H2) can help solve both these challenges and provide a definitive, affordable, and global path to solving climate change.
Using green electricity, hydrogen is produced by splitting water (H2O) with an electrolyser or natural gas (CH4) with carbon capture. It is virtually infinite, clean, easy to transport and store, and behaves like a fuel. It even offers a route to decarbonising steel – a sector that, if well-tackled, could help preserve jobs threatened by the energy transition.
Although scientists have long recognised its potential, until recently clean hydrogen was prohibitively expensive. In 2000, it cost 40 times as much to produce as oil. By 2010, this ratio had fallen to 15, and today it costs approximately twice the cost of oil. Breakeven is in sight.
So far, we have been assisted by the reduction in the cost of renewable power, but to move forward the cost of electrolysers must decline. With a still relatively small market, there is a lot of room to scale-up. The expected 7-fold reduction in electrolyser capex will bring the cost of green hydrogen to half the price of oil today.
What we need is a policy nudge to build scale. Europe should lead the way, as it has already done: despite its shortcomings, the Energiewende created significant demand for solar panels and wind turbines, driving down ultimate costs. We should learn from these successes and failures.
By creating demand, Europe can change the world, and it can do so using its existing gas network. Ongoing studies and Snam’s initial pilots in Italy suggest it is possible to blend 5%-10% of hydrogen with natural gas without having to invest in infrastructure or equipment. This would effectively decouple the development of production and consumption infrastructure.
However, this time Europe should ensure that it reaps the industrial benefits of climate leadership, rather than creating a market only for cheaper producers to undercut it. One possible way forward would be to join together to create an “Airbus of Hydrogen”, pooling skills and resources in a mega-factory large enough to push down the costs of electrolysers from the early stages. This would in turn create a market leader and make the hydrogen revolution affordable for consumers and industry worldwide.