Increase in green hydrogen production can cut cost by 80%: IRENA

By Rahul Vaimal, Associate Editor
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Increasing the production of green hydrogen, the gas produced entirely from renewable sources could help in reducing cost by 40 percent in the short-term and 80 percent long-term, as per the International Renewable Energy Agency (IRENA).

Over the years the world’s love towards sustainable energy sources has increased and climate policymakers have been encouraging countries to create green hydrogen, against the ‘grey’ or ‘blue’ hydrogen as they increasingly factor in the clean fuel as part of their energy transition.

Grey hydrogen is gas manufactured using fossil fuels like natural gas and currently accounts for nearly 95 percent of production. Blue hydrogen is also extracted from fossil fuel but through a process called methane reformation, where the carbon emissions are captured and stored.

As the world is looking for ways to cut off fossil fuel from future energy mixes, the technology that uses renewables to split water molecules through electrolysis is being increasingly favored.

“Green hydrogen is already close to being competitive today in regions where all the favorable conditions align, but these are usually far from demand centers,” the intergovernmental agency said in its report.

The report further cites a South American region, Patagonia, where wind energy could have a capacity factor of almost 50 percent, with an electricity cost of $25-30 MWh, which is enough to achieve a green hydrogen production cost of about $2.5/kg and close to the blue hydrogen cost range.

IRENA also states that green hydrogen is still 2-3 times more expensive than blue hydrogen and the cost of the former includes electricity costs, investment cost, fixed operating costs and the number of operating hours of the electrolyzer facilities.

Currently, the cost of green hydrogen is considered steep and it could fall below $2 per kilogram which is enough to make it competitive with other fuels in the coming years, according to the agency’s report.

“Green hydrogen forms a cornerstone of the shift away from fossil fuels. Its uptake will be essential for sectors like aviation, international shipping and heavy industry, where energy intensity is high and emissions are hardest to abate,” said IRENA director-general Francesco La Camera.

Several energy firms including national oil company of the UAE, ADNOC are contributing for the development of a hydrogen ecosystem as part of their long-term growth plans. The world’s largest oil exporter, Saudi Arabia, is also mapping out new strategies as it looks for newer, alternative fuels to be part of its energy mix.

Hydrogen is considered as a promising alternative for fossil fuels, especially in the transportation sector. Clean hydrogen can cut down 34 percent of greenhouse gas emissions from the hydrocarbon industry, according to BloombergNEF.

According to the American management consulting firm McKinsey’s calculations, the development of a hydrogen economy could bring $140 billion in annual revenue by 2030 and support 700,000 jobs in the US.

“Still, far steeper growth is needed in renewable power as well as green hydrogen capacity to fulfill ambitious climate goals and hold the rise in average global temperatures at 1.5°C,” IRENA said in the report.