The world is facing a critical challenge to reduce greenhouse gas emissions and curb climate change. One of the most promising solutions is green hydrogen, produced through renewable resources such as solar and wind. However, the economics of green hydrogen have been a major obstacle to its adoption, primarily due to the varying costs and availability of renewable energy sources.
Recently, two articles shed light on the current and future state of the green hydrogen market. The first article, published by Recharge News, reports that the elevated natural-gas prices across the world have made green hydrogen cost-competitive with grey hydrogen. This shift in pricing means that green hydrogen is now the only way to expect hydrogen to return to a cost of $1.50 per kilogram by 2030. The article identifies potential cost reductions due to falling renewable energy production costs, economies of scale, and technological advances.
The second article, published by PwC, analyses the global demand and cost trajectory of green hydrogen. The report identifies potential demand growth, cost trajectories per country, and the most promising export and import markets. The findings suggest that the most attractive production markets for green hydrogen are those with abundant, low-cost renewable resources. Regions like the Middle East, Africa, Russia, the US, and Australia have the potential to produce green hydrogen for €3 to €5/kg today. In Europe, production costs vary from €3 to €8/kg, depending on access to low-cost renewable energy plants.
Despite the initial costs, green hydrogen is a better long-term solution to decarbonize economies than grey hydrogen, which is produced from natural gas. Grey hydrogen is inexpensive without a price on carbon emissions, but it is not environmentally sustainable. The cost of production for green hydrogen is expected to decrease over time due to continuously falling renewable energy production costs, economies of scale, and technological advances.
The Recharge News article also highlights the potential disruption that green hydrogen could have on battery technologies or “sustainable fuels” and those pushing blue hydrogen solutions using carbon capture. However, green hydrogen is becoming increasingly essential in reducing carbon emissions and meeting global climate targets.
In conclusion, the future of green hydrogen looks promising as renewable energy costs continue to decline, and economies of scale and technological advances make green hydrogen more cost-competitive. While there are still challenges to overcome, such as building the necessary infrastructure for large-scale hydrogen use, it is important to recognize the potential of green hydrogen in meeting the world’s future energy demands and achieving a carbon-neutral future.