Europe’s gas crisis could accelerate the transition to clean energy and the acceptance of green hydrogen as a viable alternative to oil and gas, according to the International Renewable Energy Agency (Irena).
“Price volatility has been a hallmark of the oil and gas system,” Francesco La Camera, Irena’s CEO, told the Financial Times. “Moving to the new energy system, where hydrogen plays a significant role, brings us less volatility.”
The development of green hydrogen, made from water and the use of renewable electricity, has become a policy priority for many countries as they prepare to reduce emissions to “net zero” by 2050.
An Irena report published on Saturday predicts that the geopolitics of oil and gas, in which producer countries have the power to influence prices, will decline as new fuels, including hydrogen, become more dominant.
It concluded that a “new cartography of energy geopolitics” and a revamped “hydrogen diplomacy” would emerge as production increased around the world.
“Hopefully, the geopolitics of energy in 2050 will be less important than it is now, because people will have less dependence on small markets that can truly impact global energy markets in an unpredictable way we have today,” said Elizabeth Press, Irena’s director of planning.
La Camera said the green hydrogen market is already growing “a little faster than we anticipated a few months ago”, pointing to recent deals in Germany, Uruguay and Brazil.
Irena estimates that hydrogen could meet 12 percent of the world’s energy needs by 2050 if global emissions are significantly reduced to limit warming to 1.5C.
But the market will develop in a “more regional than global” direction, La Camera predicted, noting that many countries will be able to produce the produced gas. As a result, profits were unlikely to reach the levels traditionally enjoyed by oil and gas producers, he added.
Major energy consumers, including the US, China, EU, Japan, India and South Korea, have already made hydrogen an important component of their energy plans.
About $ 65 billion is earmarked for hydrogen production in the next decade, with Germany, France and Japan being the largest investors.
Although the gas is difficult to transport, it can be converted into ammonia for long-distance shipping, or transported by existing natural gas pipelines. A handful of hydrogen-derived ammonia shipments were sold to Japan from Saudi Arabia and the United Arab Emirates last year.
Irena, an Abu Dhabi-based group with more than 160 member states, conducted a survey which found that Australia, Chile, Saudi Arabia, Morocco and the USA are best placed to become leading hydrogen producers, due to supportive policy and the availability of renewable energy.
Fossil fuel producers can also switch to producing hydrogen as an alternative to oil and gas. Saudi Arabia, which is trying to diversify away from its dependence on oil and gas, said this week it intends to become the world’s cheapest green hydrogen producer.
There are two main methods of hydrogen production: green hydrogen is produced using renewable electricity, and blue hydrogen is made from natural gas.
To achieve climate goals, blue hydrogen must be combined with carbon capture to limit the impact of the associated carbon dioxide and methane emissions.
The recent rise in gas prices has made the economy of green hydrogen look relatively attractive compared to blue hydrogen, which requires natural gas to produce.
The Irena report expects green hydrogen to reach price parity with blue hydrogen by 2030 in many countries, although other studies suggest closer to 2040. Currently, the cost of electrolyzers, the machines needed to produce green hydrogen, makes it expensive to manufacture.
“What’s happening right now really underscores the need for a faster transition,” Press said. It shows that we need a different energy mix that will make it safer, more secure and more diverse. ”
Colors of hydrogen rainbow
Green hydrogen Made by using clean electricity from renewable energy technology to electrolyze water (H2O), which separates the hydrogen atom in it from its molecular twin oxygen. Currently very expensive
Blue hydrogen Produced using natural gas, but with carbon emissions captured and stored, or reused. Insignificant quantities in production due to lack of capture projects
Gray hydrogen It is the most common form of hydrogen production. It comes from natural gas via steam reform, but without emissions capture
Brown hydrogen The cheapest way to make hydrogen, but also the most environmentally harmful due to the use of thermal coal in the production process
Turquoise hydrogen Use a process called methane pyrolysis to produce hydrogen and solid carbon. Not proven on scale. Concern over methane leakage