The world of clean hydrogen buzzing with activity

As many as 31 countries now have a hydrogen strategy, and India is one of them. Over half of these also have an electrolyser target, according to the latest update from BloombergNEF. Another 18 countries are preparing hydrogen strategies.

Green hydrogen has a critical role to play in decarbonisation and the achievement of net-zero emissions. There are four things needed to scale it up:

• Competitively priced renewable energy
• Electrolysers
• Supporting physical infrastructure
• Policy push

One of India’s advantages is cost-competitive renewable energy.

The recently passed Inflation Reduction Act in the US includes the world’s first tax credits for hydrogen. Adding in the funding to be channelled through the infrastructure law passed in late 2021, the US takes the global lead in public funding for hydrogen.

“These credits, which can provide up to $3 per kilogram of hydrogen produced, will make low-carbon hydrogen immediately competitive with its fossil counterpart in many parts of the US,” according to BNEF analyst Matthew Bravante.

In a few weeks, the US will invite bids for developers to tap into the $8 billion funding earmarked for multiple regional hydrogen hubs. The idea is to use different production routes for low-carbon hydrogen — renewable energy, fossil fuels with carbon capture and nuclear energy.

Aspirational benchmark

The tipping point for green hydrogen is seen at $1 per kilogram. That is what most countries are aspiring to.

Billionaire Mukesh Ambani, the chairman of Reliance Industries, has spoken about a $1 per kilogram target previously. Reliance is one of the largest producers of grey hydrogen globally. Earlier this week, Mr Ambani announced plans to “deliver green hydrogen at the lowest cost” and to “progressively commence transition from grey hydrogen to green hydrogen by 2025.” This will be supported by a “giga-scale electrolyser manufacturing facility.” The 20 gigawatts (Gw) of solar energy it intends to set up will partly power the green hydrogen plan.

The Adani Group announced a partnership with TotalEnergies for its green hydrogen push in June, whereby the latter would acquire 25 per cent of Adani New Industries. The company targets production of 1 million tonnes of green hydrogen per year by 2030, underpinned by around 30 Gw of new renewable power generation capacity.

ReNew Power is also getting more active in green hydrogen. It is part of a tripartite venture with Indian Oil and Larsen & Toubro, and recently announced plans to invest in Egypt.

Consumers

Interest on the buyers’ side is rising too. Amazon announced on August 25 that it agreed to buy almost 11,000 tonnes of liquid green hydrogen from Plug Power annually. The latter will use its “electrolysers, liquefaction capabilities and cryogenic tankers” to deliver hydrogen to Amazon beginning January 1, 2025. Amazon currently has hydrogen systems powering 15,000 forklifts across 70 fulfillment centres, but “is exploring and testing the use of other hydrogen applications, such as fuel-cell electric trucks and fuel-cell power generation stations providing electricity to Amazon buildings.” Walmart had signed a similar deal with Plug Power a few months ago to get up to 20 tonnes per day of carbon free hydrogen to power material-handling lift trucks in the US.

Plug Power aims to produce 70 tonnes per day of green hydrogen by the end of the year. It is on track for an output of 500 tonnes per day in North America by 2025, and 1,000 tonnes per day globally by 2028.

Demand will also come from power generators installing hydrogen-compatible gas turbines. Mitsubishi Power signed an agreement with Egypt’s Alexandria National Refining & Petrochemicals company for the “design, engineering, procurement, construction and commissioning of fuel conversion solutions for the existing 100 tonne/hour boiler, enabling it to fire up to 100 per cent hydrogen by the end of 2023.”

Canada-Germany deal

Many countries are seeking to be hubs for production, consumption and export of green hydrogen.

Canada, for instance, is “aiming to become a major producer and exporter of hydrogen as well as related clean technologies.” The country intends to start shipping green hydrogen produced by wind farms to Germany by 2025. Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz on August 23 signed a pact to create “a transatlantic supply chain for hydrogen well before 2030, with first deliveries aiming for 2025.”

Germany is “aiming to import significant amounts of renewable hydrogen to decarbonise its hard-to-abate sectors in line with its 2045 climate neutrality target.”

The colour spectrum

1. Green hydrogen:  Made via electrolysis of water using renewable energy
2. Blue hydrogen: Made via steam reforming of methane using natural gas combined with carbon capture
3. Grey hydrogen: Made via steam reforming of methane without carbon capture. It is the most commonly used method currently, and releases large volumes of carbon dioxide

Source: BloombergNEF

The writer is the New York-based Editor of Global Policy for BloombergNEF, reachable at vgombar@bloomberg.net