Renewable and low-carbon hydrogen is crucial for meeting the Paris Agreement goals to decarbonise hard-to-abate sectors. To reach the targets, hydrogen would need to meet around 15 percent of world energy demand by mid-century, according to DNV.
“We forecast that global hydrogen uptake is very low and late relative to Paris Agreement requirements — reaching 0.5 percent of global final energy mix in 2030 and 5 percent in 2050, although the share of hydrogen in the energy mix of some world regions will be double these percentages,” the classification society added.
There have been many ambitious statements about the major role that hydrogen might play in the energy transition, but the amount of low-carbon and renewable hydrogen currently being produced is negligible. “That, of course, will change. But the key questions are when and by how much?,” said Remi Eriksen, group president and ceo of DNV. “We find that hydrogen is likely to satisfy just 5 percent of global energy demand by 2050 — two thirds less than it should be in a net-zero pathway. Clearly, much stronger policies are needed globally to push hydrogen to levels required to meet the Paris Agreement. Here it is instructive to look at the enabling policies in Europe where hydrogen will likely be 11 percent of the energy mix by 2050.”
Hydrogen is the most abundant element in the universe, but only available to us locked up in compounds like fossil fuels, gasses and water. It takes a great deal of energy to liberate those hydrogen molecules — either in ‘blue’ form via steam methane reforming of natural gas with CCS, or as ‘green’ hydrogen from water and renewable electricity via electrolysis.
By 2050, more than 70 percent of hydrogen will be green. Eriksen added: “Owing to the energy losses involved in making green hydrogen, renewables should ideally first be used to chase coal and, to some extent, natural gas, out of the electricity mix. In practice, there will be some overlap, because hydrogen is an important form of storage for variable renewables. But it is inescapable that wind and solar PV are prerequisites for green hydrogen; the higher our ambitions, the greater the build-out of those sources must be.”
Hydrogen and its derivatives are particularly needed in hard-to-decarbonise sectors, such a high-heat industrial processes, aviation and shipping. “Because hydrogen is crucial for decarbonisation, safety must not become its Achilles heel. DNV is leading critical work in this regard: hydrogen facilities can be engineered to be as safe or better than widely-accepted natural gas facilities. That means safety measures must be designed into hydrogen production and distribution systems, which must be properly operated and maintained throughout their life cycles,” said Eriksen.
DNV projects global spend on producing hydrogen for energy purposes from now until 2050 will be USD6.8 trillion, with an additional USD180 billion spent on hydrogen pipelines and USD530 billion on building and operating ammonia terminals.
It also expects grid-based electrolysis costs to decrease significantly towards 2050 averaging around USD1.5/kg.
The global average for blue hydrogen will fall from USD2.5 in 2030 to USD 2.2/kg in 2050. In regions like the USA with access to cheap gas, costs are already USD2/kg. Globally, green hydrogen will reach cost parity with blue within the next decade.
Green hydrogen will increasingly be the cheapest form of production in most regions. By 2050, 72 percent of hydrogen and derivatives used as energy carriers will be electricity based, and 28 percent blue hydrogen from fossil fuels with CCS, down from 34 percent in 2030.
Cost considerations will lead to more than 50 percent of hydrogen pipelines globally being repurposed from natural gas pipelines, rising to as high as 80 percent in some regions, as the cost to repurpose pipelines is expected to be just 10-35 percent of new construction costs, DNV added.
