It goes without saying that water is a core determinant of life. Its construct? Two atoms of hydrogen and one atom of oxygen. To date, oxygen and water have dominated the headlines for their role in being vital for life, while the role of hydrogen has remained comparatively under the radar. However, almost 50 years after John Bockris coined the "hydrogen economy" concept, the energy transition and advances in technologies mean that the spotlight is ready to shine on hydrogen.
How does the rediscovery of nature's lightest element power the green transition?
A near infinite and efficient source of clean energyHydrogen is the first element on Mendeleev's Periodic Table, which is no accident. It is the lightest, simplest and the most abundant chemical element in the universe. On Earth, however, it bonds with carbon and oxygen to form hydrocarbons and water, and therefore needs to be extracted.
The fact that hydrogen is an energy carrier, not an energy source, and can be used in fuel cells to generate electricity has been known for centuries – a hydrogen-powered internal combustion engine with electric ignition was described in a French patent published in 1807 by François Isaac de Rivaz. This indeed has already been used for some time in space exploration as a lightweight method to produce vast amounts of energy. But pervasive industrial use has been plagued, to date, by issues surrounding safe transportation and storage.
Over the past 20 years however, advances in gas and hydrogen technologies have enabled the mitigation of such issues. Consequently, hydrogen, under its gas form H2, is now in use with a high degree of safety and reliability everywhere in the world, with increasingly high demand already forecast.
Furthermore, the development of renewable electric energy producing no CO2 emissions has also allowed for a production of hydrogen in usable form, from electrolysis, at a near-zero carbon emission level. Indeed, one of the major drawbacks of the use of hydrogens until recent years was linked to its production requiring a source of energy that often was not carbon neutral itself.
As a result, hydrogen use is increasingly part of the CO2-neutral energy strategies that aims to achieve the United Nations' Sustainable Development Goals (SDGs) and tackle climate change. Hydrogen will complement electricity and play a key role, especially in the cases where direct electricity consumption cannot provide suitable solutions as an alternative for hydrocarbon uses.
A carrier with good energy densityHydrogen can be stored and offers a very high energy density, allowing for efficient use as a replacement for carbon-rich sources of energy like oil and gas. After a long period where the most salient use of hydrogen as a source of energy was to propel space rockets, scientists and corporations have been able to pursue research that now enables daily use.
By virtue of its role as a medium of storage for energy, including high-grade heat – the kind of heat required in several heavy industries business models – hydrogen-based energy, according to the Hydrogen Council, will complement electricity to achieve a carbon-neutral energy transition. Hydrogen will prove an efficient alternative to carbon-based energy, in particular in the following use-cases:
- medium to long distance transportation through fuel cells;
- industrial needs for high grade heat;
- power and heat sources for buildings (piggybacking on existing natural gas installations);
- resilient buffering and storage options within the global energy system enabling large scale renewable energy integration;
- alternative zero-carbon feedstock in the industry.
In many respects, hydrogen use in these areas is now seen as essential if the world has a chance of achieving the UNSDGs. This is especially the case in areas where the use of oil or gas has been pervasive over decades and that now need to decarbonise their use. In many sectors, companies cannot afford to change and it's difficult to decommission infrastructure overnight. While significant progress has been made in the power generation and for small vehicle electric batteries, a universal effort still needs to occur, notably in areas such as heavy industries, building management and shipping.
The International Energy Agency (IEA) has launched the Tracking Clean Energy Progress Programme to examine the progress of a variety of clean energy technologies towards interim 2°C scenario 2025 targets. Thus, the IEA identifies 26 low carbon innovation areas, while highlighting that only three of them – solar PV and onshore wind, energy storage and electric vehicles (EV) – are mature, commercially competitive and on track to deliver their share of the climate objectives set out at the Paris Climate Conference.
In that context, hydrogen offers a carbon-free (leveraging renewable energies' power generation) medium to accelerate the energy transition for most of these sectors.
Hydrogen-based technologies are both safe and mature. As such, they can be used to power cars (Fuel Cell Electric Vehicles or FCEVs) over longer distances, and to power larger vehicles (like buses, ships or trains) with a better-expected efficiency than batteries (which remain more suited for short-range vehicles). FCEVs are also particularly attractive as they offer operating conditions similar to internal combustion engine vehicles, with refuelling time of ~3 minutes for a range of ~1000 km.
Similarly, the higher energy density of hydrogen enables use in heavy industries that batteries cannot provide. For example, furnaces for steel production require a high-grade energy that fossil energies today provide, but could be replaced progressively by hydrogen to reduce carbon footprint.
A strong effort is under wayNow that governments and strategists acknowledge the need for hydrogen to play a central role as a complementary energy in the global energy transition, the industry is working to streamline the access to technology and to assist in necessary steps required to scale up the enabling infrastructures.
In countries such as the UK, Japan, South Korea, China and France, governments have already made clear statements about the necessity of driving their energy policies through a combination of renewables and hydrogen to assist a swift and efficient transition across industries and across uses of hydrocarbons. These governments have understood the need to establish the infrastructures that foster the transition; as a result, initiatives are launching that aim to leverage public-private partnerships and align interests to enable their deployment.
A number of corporate sustainability leaders have already demonstrated hydrogen's sustainable strategic focus and its efforts in ESG by delivering the market standard products and solutions that fit the world of tomorrow.
Hydrogen in actionAnother great example - Air Liquide, one of the industry leaders, has launched a new initiative to support the deployment of hydrogen-powered electric vehicles and captive fleets running on hydrogen through the deployment of charging stations worldwide. In the industrial world especially, some segments like forklifts in logistics warehouses and luggage transport vehicle fleets at airports are already on the way to adopt the technology. Considering the pattern for adoption of such technologies, it is possible that the implementation for individual consumers could take time but inversely, considering the potential benefits, industrial and B2B use seem on the right adoption curve.
Not to forget Energy Observer – a recently launched hydrogen vessel, developed in collaboration with engineers from the CEA-LITEN and often referred to as « Solar Impulse of the seas » - that aims at improving the efficiency of a full production chain that relies on the coupling of different renewable energies.
The industry has estimated that to deliver on the 2030 vision for energy generation and energy use set by the governments globally and by the UN SDGs, up to $280bn of investments in hydrogen-based technologies are required. Indeed, the entire value chain needs investment, from production (up to $110bn), to logistics (up to $80bn) and decarbonisation (up to $70bn), while additional business models that will be enabled by such a scale-up could require an additional $20bn.
While these numbers are significant, in the grand scheme of global energy investment, which amounts to $1.7 trillion per year currently, such outlay appears feasible, especially with the support of governments across the board. Furthermore, these investments will drive new revenue streams, estimated at close to $140bn per year.
Nevertheless, the ability to raise capital requires the finance community to mobilise. Investment banks dedicated to support the SDGs and corporates in their sustainability journey have started to bridge the gap between projects and capital providers to ensure a sustained level of investment flow. To facilitate these investments, market participants have started various initiatives, like Hydrogen Europe, a joint undertaking between industrials, energy actors and the European Commission to finance research and the deployment of fuel cells and hydrogen technology in Europe.
BNP Paribas is committed to playing a leading role in hydrogen. It has established a dedicated H2 team to construct a strategic roadmap and better harness the Bank's business lines around common standards and objectives. This will help align the Bank's structuring and financing abilities to accelerate investment flows into the sector, thus accelerating the emergence of H2 as a clean energy vector and scaling up applications along the value chain.
These initiatives are preparing the ground to step up the energy transition, leveraging the complementary possibilities hydrogen offers, with the hope of providing standards, procedures, KPIs, etc. to drive investment and foster continuous research to improve the yields so that hydrocarbons can be phased out of the economy.
Next steps: accelerating the momentum and promoting consumer acceptanceHydrogen has already started to play a more prominent role in the energy transition. It is being used increasingly as part of the CO2-neutral energy strategies that aim to tackle climate change. Because it can be stored and converted back to power with fuel cells, today hydrogen is also seen as a medium of storage for energy. Given its ability to provide high-grade heat, hydrogen-based energy will complement electricity to achieve a carbon-neutral energy transition also acting as a buffer within the global energy system to provide resilience and efficient storage, energy source through fuel cells for medium to long distance transportation, enabling large-scale renewable energy integration etc.
The main challenge now is to accelerate the momentum and promote consumer acceptance, in particular, by developing a more favourable policy framework, by growing investments flows and by reducing the total cost of ownership.