Cost cuts for green hydrogen key to wider adoption

(Reuters) – Reducing the cost of producing clean hydrogen, through large investments and government subsidies, will be key in the wider adoption of the fuel in coming years, panelists said during the Reuters Events: Global Energy Transition conference.

So-called green hydrogen, made by using renewable energy to power electrolysers to convert water, is being backed by many governments for vehicles and energy plants but it is currently too expensive for widespread use.

Today, the price of green hydrogen is about four times that of grey hydrogen, made by extracting hydrogen from fossil fuels such as coal or natural gas while releasing carbon monoxide and carbon dioxide, said Marcelino Oreja, chief executive officer at Enagas SA (ENAG.MC).

This month the Biden administration set a goal of reducing the cost of producing clean hydrogen 80% to $1 per kilogram in a decade. read more

“We need real projects to happen to drop prices down … I think we’re going to see big projects producing big quantities of hydrogen in 2025 and beyond,” Oreja said.

Enagas, along with Spanish oil and gas company Repsol (REP.MC) are developing technology to produce renewable hydrogen using solar energy.

Results from the project are expected by 2024 or 2025 and it will be commercial after that, Oreja said.

The current industrial business for hydrogen is valued at about $200 billion and there is more than double that amount of new projects that have been announced recently, Hydrogen Council’s Executive Director Daryl Wilson said.

“We’re seeing huge momentum … the industry will more than triple in short order as the rate of new projects accelerate,” Wilson said.

Industries where electrification is not easily possible including long haul transportation – such as marine and aviation industries – are likely to be early adopters of hydrogen, panelists said.

Air Products and Chemicals Inc (APD.N) is building a $7.5 billion green hydrogen-based ammonia production facility in Saudi Arabia with partners ACWA Power (APBS.OM) from Oman and the kingdom’s megacity of the future NEOM.

Seifi Ghasemi, chairman and CEO of Air Products, said northern Saudi Arabia was perfect for the project because it has lots of sunshine during the day, wind during the night and access to ports which can ship the ammonia, for use as fuel in heavy transportation and heavy industry, to global markets.

“I know there’s a lot of projects being announced, but it takes a lot of time and effort to put all of this together,” Ghasemi said.

Hydrogen will play a pivotal role in the energy transition as it can bring together the electrical, liquids and gas systems, panelists said.

“Like the human body, where there is a deep integration of a molecular system and an electrical system … we need them working together in harmony and hydrogen gives us that opportunity,” Wilson said.

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