Beyond the Hydrogen Rainbow; Let’s Talk Green Hydrogen
Solar and wind may have taken the lead roles in the drama of the energy transition over the last few decades, but there’s an understudy with significant promise waiting for its cue to take over the stage. Green hydrogen has many members in the audience anxious with anticipation because of its potential to decarbonize key sectors of the economy that existing solutions cannot due to a need for high-emission inputs besides electricity. These “hard-to-abate” sectors represent ~30% of global CO2 emissions annually, and include heavy industry sectors such as cement, steel, and plastics, and heavy-duty transport sectors such as heavy road, shipping, and aviation.
Cue: green hydrogen.
Hydrogen is actually not an energy source itself, rather an energy carrier. Essentially energy sources are used to separate hydrogen from other atoms and molecules, and the hydrogen can then be used for transport and power, heat for buildings, and feedstock for products and chemicals.
What gives hydrogen its color label — and therefore creates a rainbow of hydrogen options — is the source of its energy. Green hydrogen uses energy from renewables and, through an electrolyzer, splits water into hydrogen and oxygen. When hydrogen is created using fossil fuels, as is 95% of the hydrogen produced today, it is known as gray hydrogen. Gray hydrogen is primarily generated by separating methane (CH4) from natural gas into hydrogen, carbon monoxide, and carbon dioxide, producing 830m tons of CO2 per year along the way.
Between the two ends of the polluting spectrum sits blue hydrogen, purported to be a low carbon alternative when compared to gray hydrogen. Blue hydrogen uses natural gas or petroleum as its source but implements carbon capture and storage/sequestration to limit emissions. While theoretically environmentally-friendly, some research has found that this solution only produces 9–12% less CO2e than gray hydrogen given the additional natural gas needed to power the carbon capture, and this is assuming high capture rates and successful storage. This is an unfortunate finding given methane’s significantly more potent effects on climate (28–36x greater Global Warming Potential than CO2 on a 100-year time scale), and that green hydrogen still has a strenuous road ahead to become viable on a massive scale.
Green hydrogen will need to experience large declines in production and transportation costs in order to reach widespread adoption: prices for green range from $2.5–6/kg while gray hovers around $1–2.75/kg. The road to price parity might sound daunting, but it’s worth noting that the cost of green hydrogen already dropped by 50% from 2015–2020 and should reach parity by 2030. While 2030 is certainly too long of a timeframe to reach necessary climate targets, a number of innovative startups have risen to meet the challenge (and have raised large sums of capital) to make green hydrogen at scale a reality on a much shorter timeline. Some examples:
- H2Pro has developed an innovative way to split water into hydrogen and oxygen which eliminates the need for the most expensive part of the electrolyzer: the membrane.
- Electric Hydrogen aims to reduce costs by building dense electrolyzers to run inside gigantic and super-efficient plants that can generate as much as 100 MW of power, where conventional plants operate at about 5 MW.
- ZeroAvia seeks to decarbonize the aviation sector by replacing conventional engines with hydrogen-electric powertrains.
Green hydrogen has a key role to play in the world eliminating its emissions. We anticipate seeing a number of innovative green hydrogen companies come to market as the sector grows and look forward to taking our first hydrogen-powered flight.
Madelyn O’Farrell, Analyst, Private Investments
Green hydrogen may be coming to Texas: a partnership between Ares Management Corp, EPIC Midstream Holdings, and the Port of Corpus Chrsti Authority has just signed a Memorandum of Understanding to explore the development of a project on the Texas Gulf Coast that would produce green hydrogen and green fuels in “volumes not yet seen” in the U.S.
Airbus is testing out its first propulsion system using hydrogen on an A380. This innovative idea comes out of a collaboration with CFM, a joint venture of General Electric and Safran. Airbus will carry out ground tests this year, is targeting flight tests by the end of 2026, and plans to launch a hydrogen jet by 2035.
To learn more about green hydrogen, from innovative technologies to the opportunity for the Middle East and North Africa, check out this podcast on Audible.
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