Green or renewable hydrogen made from wind and solar power is the Holy Grail of those seeking a way to slash emissions from industrial processes. Many, sometimes reluctantly, believe blue hydrogen made from natural gas with carbon capture and storage (CCS) is essential to pave the way.

“The production of early, large-scale quantities of low-carbon hydrogen from natural gas with CCS will be essential for a decarbonised industrial sector,” said Graeme Sweeney, chairman of the Zero Emissions Platform (ZEP), the EU’s official advisor on CCS, in the European Parliament in January 2020.

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Environmentalists worry, however, that there is no guarantee blue hydrogen will give way to green hydrogen further down the line. The two have distinct value chains that involve different companies, skills and infrastructures. Green hydrogen is of interest to utilities and grid operators. Hydrogen production via electrolysers can augment the business case for renewables and help balance the grid, while blue hydrogen is a new, lower-carbon product for oil and gas companies that could be enabled by CCS retrofits to existing fossil-based hydrogen production plants.

“We do not think “blue” hydrogen is bad… [but] we think it is more of a job for the oil majors [than for utilities],” said head of RWE’s generation business Roger Miesen at a “wind meets gas” conference in Groningen, the Netherlands, in October 2019.

In a way the challenge in moving from one to another will be similar to moving from first to second-generation biofuels. The former were essentially agricultural products; the latter will be biochemical products. In practice, the two should be seen as different products and European policymakers emphasise that they should be developed concurrently, with green the main goal.

Parallel worlds

The EU is taking a global lead on a policy framework to stimulate the hydrogen economy. This is happening at a national level with strategies from Portugal, the Netherlands and Germany in the last three months and at an EU level. The European Commission (EC) published a proposal on 8 July 2020 for a first-ever European hydrogen strategy and multi-stakeholder “Clean Hydrogen Alliance” to create flagship projects.

In its strategy, the EC proposes definitions for hydrogen produced in different ways and how to incentivise each product. The document is a first attempt to accommodate different views, and legislative proposals are not expected until mid-2021.

“The carbon content of hydrogen will be the new currency,” predicts Jorgo Chatzimarkakis from Hydrogen Europe, a European trade association for the hydrogen industry. “We need a clear benchmark for clean hydrogen with quite a low grams-of-CO2-per-kilogram [threshold].”

Plenty of studies already chart the potential landscape of a new hydrogen economy. They converge on the idea that green hydrogen will finally dominate, but differ on how much and where it will be used.

This is true even for studies commissioned by the gas industry. The latest contribution, released on 30 June, is the result of a year-long effort by international energy consultancy DNV GL, on behalf of European trade association Eurogas, to plot out gas decarbonisation pathways to 2050. It ends up with only a little more green than blue hydrogen in a “gas-friendly” scenario.

Contrast this with a two-thirds majority for green hydrogen in a study earlier this year by Guidehouse (formerly Navigant) on behalf of a “Gas for Climate” consortium of European gas transmission system operators. Moreover, unlike in DNV GL’s model, biomethane rather than hydrogen would be used to heat buildings.

The reality is that both studies are far from the rhetoric of a green hydrogen economy. They foresee a substantial and long-lived role for blue hydrogen (and biomethane). The general consensus in and outside the gas industry is that green hydrogen will not be available in substantial volumes at competitive prices for at least another ten years.

The EC envisages public support for blue hydrogen production for a “transitional period”, suggesting it can help bring down industrial emissions “quickly” and build demand for clean hydrogen. The EC does not fear stranded fossil fuel assets – despite a 25-year life cycle for blue hydrogen production facilities – because it will take “some time” to build sufficiently cheap and abundant renewable power to produce green hydrogen at scale.

“There is less of a fight between green and blue [than in the past] as for a certain time they will complement each other,” says Eva Hennig, head of EU energy policy for Thuega, a network of local German utilities.

Consultants estimate that blue hydrogen could become viable at a carbon price of €50–60 a tonne. This is about double the EU carbon price today, but they calculate that a 55% emission reduction target in 2030, as envisaged by the European Green Deal, could deliver it. The EC is also ready to explore contracts for difference and quotas to kick-start the hydrogen economy.

Blue worries

Climate campaigners and policymakers are wary of blue hydrogen for several reasons, however. First, and most obviously, it depends on CCS, which is not yet a commercial reality, despite the EU having pumped billions into it over the last decade. A separate concern is that carbon capture is 60–90%, not 100%, efficient.

CCS is back on the European agenda as an essential “breakthrough technology” in the Green Deal – and therefore eligible for fresh funds – to help decarbonise energy-intensive industries. However, past experience suggests this is no guarantee it will actually materialise to “quickly” decarbonise existing hydrogen production.

A second problem is methane leakage. Methane emissions this year will cause half the global warming over the next 20 years, calculates US-based NGO the Environmental Defence Fund. The oil and gas industry is responsible for a quarter to a third of these emissions. If blue hydrogen is to be credible, methane emissions need to be dramatically reduced.

The EC is working on a cross-sectoral methane strategy for later in 2020. Agreement around a methane performance standard for Europe could have a significant impact, since the EU consumes about half of all internationally traded gas. Nevertheless, scepticism is likely to persist over a real commitment and ability to reduce methane emissions in places such as Russia, the EU’s largest gas supplier.

Methane leakage would be an even bigger problem for “turquoise” hydrogen, made from pyrolysis or the thermal cracking of methane into hydrogen and solid carbon, because it requires twice as much natural gas as the CCS route. Some in the gas industry – including Russia’s Gazprom – are looking into this, but the technology is still in its early stages.

A third problem is what to do with the blue hydrogen production infrastructure once green hydrogen takes over.

“The challenge for blue hydrogen is to show you can also do something with the plants in the future,” acknowledges Hennig.

In the long-term, some of these plants could be fed with biomethane to produce “climate positive hydrogen” or in other words, negative emissions, suggests the Guidehouse study.

This idea may run into the perennial problem of a limited supply of sustainable biomass, however. Other studies, such as one by the multi-stakeholder Energy Transitions Commission, say biomethane reforming is “unlikely to play a major role” for this reason.

A separate question is to what extent blue hydrogen will give rise to a transport infrastructure that is compatible with green hydrogen. Due to their different production methods, production will not be at the same sites. Dedicated or upgraded pipelines for one may not be ideally situated for the other.

Going green

This leads to a bigger debate over the role of hydrogen in the energy system. The gas industry’s primary argument – and the conclusion of both the DNV GL and Guidehouse studies – is that the energy transition will be cheaper with greater use of gaseous energy and hydrogen a substantial part of that.

The latest work for Eurogas estimates savings of €130bn a year, or €600 a household, from now to 2050 if gas makes up a third, rather than a fifth, of final energy demand. The savings come from foregoing extensive building retrofits and power grid expansion.

Climate campaigners – and EU policy to date – favour a more electrified system with green hydrogen playing a niche role. This is the more energy and economically efficient option for the long run, they argue. The EC was careful on 8 July to spell out that energy efficiency and electrification based on renewables remain “more important” than hydrogen.

Campaigners fear that big volumes of blue hydrogen may fuel hydrogen use in sectors that would be better off electric.

“Blue hydrogen could help speed up industrial transformation,” says Matthias Deutsch, a hydrogen expert at German think tank Agora Energiewende. “[But] the worry is that if a lot of low-carbon hydrogen becomes available, it may not be limited to the sectors that really need it.” The heating sector is the most heavily contested.

European policymakers are clear that green hydrogen is the priority, for industrial as much as climate reasons, because they see big export potential in electrolysers. The EU will issue a funding call for a 100MW electrolyer – ten times the typical size today – later this year.

They also assume blue hydrogen will ultimately be replaced by green hydrogen because of ever cheaper wind and solar power.

“That is the gamechanger,” says Ad van Wijk, professor for future energy systems at Delft University of Technology in the Netherlands. Others believe the switch will need a helping hand from policy.

The EC predicts that green hydrogen will be competitive in at least some regions by 2030. It aims to have 40GW of electrolysis capacity installed in Europe by then, in line with the first pillar of trade association Hydrogen Europe’s “2x40GW Initiative”. The industry believes it can install another 40GW in neighbouring countries by the same date.

“In the long-term, hydrogen must be green,” says Deutsch. “Blue hydrogen is not carbon-free. It cannot be the model for climate neutrality.”

Green hydrogen can, but only if the power used to make it is clean. The future of the gas industry depends on a major scale-up of renewable power.