Hydrogen’s narrow pathway to positive climate impacts

A dire assessment of the state of hydrogen: unlike most other clean energy technologies, it “risks worsening climate pollution and other social outcomes if not approached with care.”

That’s according to a new report out today from Energy Innovation, which finds that the path for hydrogen to be a net positive for global climate goals is a narrow one. The policy firm analyzed 12 end-use sectors for hydrogen, and ranked them according to their ability to compete in their respective markets.

• The top line: Hydrogen’s highest-value use cases are all when it’s used as a feedstock, for example in refining, ammonia production, aviation fuel, and long-haul marine shipping. On the flip side, the lowest-value uses are for energy; power generation, vehicles, and buildings.
• The current take: Domestic hydrogen is in a bit of a sticky spot, wrote report author Dan Esposito, who leads electricity research at Energy Innovation. “The sudden injection of public funding for hydrogen has fueled hype around where it can be used, with less attention paid to where it ought to be used,” Esposito wrote. “U.S. hydrogen policy is heavily weighted toward supply-side subsidies, making hydrogen a hammer where every potential application looks like a nail.”

The worst-rated end uses according to the report are those where hydrogen seeks to replace existing energy sources, such as for commercial and residential building decarbonization, day-to-day power generation, and mobility.

At best, hydrogen has a “negligible” role to play in decarbonizing buildings, the report found, in part because existing pipelines and end-use appliances aren’t suited to handle a fuel blend containing more than 20% hydrogen. Because hydrogen carries only around a third of the energy of natural gas by volume, using today’s pipelines would result in less energy delivered over the same period of time. Replacing pipelines and appliances to prepare a building for hydrogen would be extremely costly and logistically challenging.

Then there are the potential social and climate impacts of using hydrogen, which is more flammable and leaks more readily than natural gas.

“[The climate impact of] hydrogen leakage from its use in buildings can be large enough to completely wipe out its climate benefits,” the report said.

On the mobility side, hydrogen faces similar infrastructure and efficiency problems. In both instances, better alternatives already exist, in the form of electric appliances and battery electric vehicles. Nevertheless, funding continues to flow into both end uses.

On the other end of the spectrum, hydrogen has an excellent use case in the production of chemical fertilizers like ammonia, which is already one of the main existing uses of hydrogen today. Feedstocks are generally a great use case for hydrogen, the report explained, because they generally can’t be directly electrified, and there aren’t good alternatives. 

Refining is another promising use case, as is steel production; the latter has the highest greenhouse gas abatement potential of the 12 uses ranked in the report, which describes green hydrogen as the “clearest path” for cleaning up steel at present. 

The report also included a caution against overbuilding hydrogen supply. The projected demand for high-value uses is around double the Department of Energy’s 2050 clean hydrogen production goal. That means any hydrogen flowing to low-value uses is essentially cutting into decarbonization efforts from the high-value offtakers.

At the same time, supporting industries like vehicles, power generation, buildings, and industrial process heat would require immense amounts of hydrogen — as much as four times more than that required for high-value uses, the report said. That could lead to “hysteria around the need to grow the hydrogen industry at any cost,” Esposito wrote.

Another layer of the risk of hysterical growth: the potentially massive toll on the electrical system, because of green hydrogen’s immense energy demands.

Policy recommendations

To head off the potential scenarios where hydrogen could negatively impact global climate goals, Energy Innovation’s report also outlines a series of policy recommendations targeting risk reduction and boosting offtakes from the right end users.

As for  how to encourage high-value use cases to buy more green hydrogen, the report recommends advance market commitments, contracts for difference, reverse auctions, and subsidies for hydrogen end-use equipment or utilization in promising sectors like steelmaking.

It also calls for additional research and development support for high-value hydrogen use cases that don't yet have proven technologies — such as building petrochemicals using captured carbon and hydrogen — and for industry-wide performance standards.

And when it comes to reducing the risks of using hydrogen in the lower-value use cases, the report outlines the need for rigorous health and safety standards, a high burden of proof of value for hydrogen projects, and infrastructure investments that “hedge bets” on the use cases. For example, the report said, the best first option for hydrogen fueling stations for light-duty vehicles are at multi-purpose facilities at marine ports that can also supply high-value use cases, therefore ensuring the facility’s viability if hydrogen-powered vehicles never take off.