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National strategy seen as key first step for countries keen to tap green-hydrogen potential

9th March 2021

By: Terence Creamer

Creamer Media Editor

     

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The publication of a national hydrogen strategy has been identified by the International Renewable Energy Agency (Irena) as the crucial first pillar in an evolving four-pillar policymaking toolbox for countries that are either planning to export or import green hydrogen as part of their multi-pronged decarbonisation efforts.

In fact, Irena knowledge and policy specialist Emanuele Bianco argued during a webinar on Tuesday that such a strategy was required not only to define a country’s level of ambition for green hydrogen, but also to outline the amount of support required and provide a reference on hydrogen’s development for private investment and finance.

Several countries had already published hydrogen strategies, including France, Japan, Australia, South Korea, the Netherlands, Norway, Germany, Portugal, Spain, Chile, Finland, Italy and Canada, along with the European Union, while many more, notably Morocco in North Africa, were expected to announce formal strategies soon.

Bianco noted that some of these strategies were geared toward the importation of green hydrogen to help decarbonise the hard-to-abate sectors of land and marine freight, as well as steel, cement and refining, while others were targeted at developing large-scale export capabilities.

Green hydrogen is produced using carbon-free electricity to split water, using an electrolyser, into hydrogen and oxygen.

South Africa, which does not yet have a formal strategy, is seen as a potential exporter of green-hydrogen-based products, along with countries such as Australia, Canada and Chile.

In February, Higher Education, Science and Technology Minister Blade Nzimande said South Africa had a comparative advantage when it came to the production of renewable hydrogen and a unique competitive advantage in the production of green powerfuels. This latter advantage arose from the country’s 50 years of experience in the commercial production of synthetic fuels using the Fischer-Tropsch process, as well as its good shipping access to rapidly growing markets for such green powerfuels in Asia and Europe.

He also acknowledged the lack of an overarching hydrogen strategy as a threat to South Africa realising the benefits of the global shift to green hydrogen, but said he was determined to ensure that the right environment, the policy space and the policy levers were put in place to drive the “hydrogen economy in South Africa, with maximum international cooperation”.

Besides the crafting of a national strategy the other three policy measures highlighted by Irena included:

setting policy priorities so that the currently limited volume of green hydrogen could be deployed in applications that provide the highest value;

the creation of guarantees of origin, or labelling, so as to reflect carbon emissions over the whole lifecycle of hydrogen and level the playing field between green hydrogen and grey or blue hydrogen, which have the same molecular structure, but which are produced using fossil fuels; and

creating the governance systems and enabling policies to facilitate an integration of green hydrogen into the broader energy system.

Bianco recommended that potential exporting countries prioritise the upscaling of production so as to help reduce costs and to prove that mega-scale production, using electrolysers, was indeed possible.

The cost of green hydrogen, relative to grey (methane- or coal-derived hydrogen) and blue (methane- or coal-derived hydrogen, with carbon capture), remained the main barrier to deployment.

Currently about 120-million tonnes of hydrogen are produced yearly, with 95% of that produced using gas or coal.

However, green hydrogen was expected to become more competitive as a result of the fall in renewable electricity costs and as more large-scale electrolysers were built and the value-adding and logistics infrastructure was developed.

Irena calculates that green hydrogen could start becoming competitive with blue hydrogen by 2030 in countries with renewable electricity prices of $30/MWh and assuming a rapid scale-up of electrolyser capacity.

Assuming high capacity factors, such plants could produce at a cost of between $1/kg and $2/kg.

There was also a need to rapidly expand demand, which Bianco believed could be facilitated initially through the progressive displacement of grey or blue hydrogen in existing processes, such as in the manufacture of ammonia or methanol, ahead of greenfield projects that would be based on green hydrogen.

He stressed, however, that hydrogen should be perceived as a part of a broader technology portfolio so that its deployment did not displace more efficient solutions and so that it could complement other clean solution in the energy transition, including technologies such as battery energy storage and heat pumps.

In addition, he urged policymakers to adopt an economy-wide perspective in an effort to spread the benefits of green hydrogen beyond the energy transition and into the closely associated areas of industry, trade and finance.

Edited by Creamer Media Reporter

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