Hydrogen Council looks to the future

This article was originally published in Hydrogen Economist.

By Tom Young and Stuart Penson

The Hydrogen Council is a global CEO-led initiative with the goal of promoting hydrogen to enable the clean energy transition. The organisation includes 134 companies from across the globe representing the entire hydrogen value chain. Here, the council’s executive director, Daryl Wilson, talks to Hydrogen Economist about the future of the sector.

Much is spoken about the coming boom in the hydrogen industry. But there has been hype before. What makes things different this time?

Wilson: I have worked in the sector for 15 years, and I have seen all the ups and downs. But now the focus on climate change is stronger than ever, and hydrogen is an essential part of the equation in meeting net-zero objectives. Costs of renewable energy have come down, and there is confidence that the costs of hydrogen production will come down too. We have seen rapid growth over the last few years. We are now tracking more than 500 major initiatives around the world, with $160bn of industrial investment and $70bn of pledged public support. The momentum has been quite stunning over the last couple of years, and I think the latest turn of events, with Russia’s invasion of Ukraine, is only going to accelerate this.

It now looks like demand from the EU will be driving the market initially?

Wilson: In Europe, the original plan was for 5.6mn t—now it is for 20mn t. In the conversations I have been having with our members and participants, they are starting to realise it was already a chalenge to meet the original aspirations. Now the aspirations are tripling. So there is no doubt now additional capacity needs to be brought online in the supply chain. It has got to grow quickly to meet what is obviously a very large demand. And I think there is a strong sense that the shift in sentiment here is not going to change in a matter of weeks or months, regardless of the outcomes. This is going to be a permanent shift in terms of concern about energy security, decarbonising the energy sector and having much more diversity of supply.

And 10mn t of that demand will be imports. What regions do you see as likely candidates for supply?

Wilson: There is activity in the Middle East, in Australia, in Chile and all around the world. These regions have woken up to their privileged position and the opportunity that represents, and they are doing lots of work now to understand their advantages and how to realise the value of those advantages.

There is a full anticipation that this market is going to grow up and mature and be a normal market in every sense of the word, and there are some that anticipate that will happen more quickly and others expect it to take some time. With much more volume and trade on the table and more attention on renewable energy and decarbonisation, this market has to mature.

What barriers do you see to the development of a global hydrogen economy?

Wilson: First of all, let us talk about the factors that are no longer barriers. It is not about technology. It is not about funding. It is not about lack of industrial leadership. It is not about lack of public leadership. The problem now is the plain hard work of implementation. Some of these 500 projects that we are talking about, they have two-, three-, four-year implementations. It is critical that public money starts to team up with private money and we move into the procurement phase. On a multi-gigawatt hydrogen project, the procurement alone can take 9-12 months, let alone construction and operationalisation. We need now to focus on those first steps in implementation to unlock all the hard work that follows.

Can you talk about the global landscape for policy and where it needs to go to help enable this?

Wilson: There is a whole spectrum of policies around the world and a whole spectrum of degrees of implementation. Today, the strongest implementation is in China and South Korea, and the greatest sophistication of policy design is in Europe.

We have lots of evidence that contracts for difference (CfDs) and auctions are powerful tools. They were the tools that drove the competitive costs of renewable energy. Germany has a policy to put a double auction and CfD in place and I have seen many examples where that tool has activated the supply, the demand and the trade in hydrogen. So I think it is a very ingenious approach and I can see it is having an impact already: what it is doing is bringing together parties that may never have talked to each other in the past and its exposing where the cost/value/price profile will be.

What is your take on the green hydrogen versus blue hydrogen debate?

Wilson: One might imagine if you listen to the debate that blue is stalled and green is raging ahead. But the fact is that renewable hydrogen and low-carbon hydrogen are both happening all over the world already in roughly equal proportions. The economics are currently in favour of low-carbon hydrogen, but we anticipate that renewable hydrogen costs will come down and equalise somewhere between now and 2030.

The shifting geopolitical reality means that there is no value in wasting any more time on this debate: we need both these solutions urgently to mitigate climate change. We acknowledge that there are different views, but our belief is those differing views need to get worked out within the jurisdictions that are in play. In the US and Canada there is no debate about this—it is not a major issue because carbon capture and storage (CCS) is established practice. But elsewhere, where renewable energy is prevalent and there is no fossil fuel resources that are coupled with CCS, then the green hydrogen path is going to be the natural one. So I think we need to understand that where you stand on this issue depends on where you sit.

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