Leading energy companies have signed up to the UN Green Hydrogen Catapult, an initiative to drive the growth of the green hydrogen sector 50-fold within 6 years. ACWA Power, CWP Renewables, Envision, Iberdrola, Ørsted, Snam and Yara make up the seven-company-strong consortium that will see the cost of hydrogen come down to $2/kg by 2026, approximately half its current price.
The world urgently needs to massively ramp up deployment of breakthrough solutions like green hydrogenNigel Topping, COP26 High Level Champion for Climate Action
The initiative is linked to the United Nations Framework Convention on Climate Change’s Race to Zero campaign. This initiative will be key in transforming the world’s most carbon intensive industries, including power generation, chemicals, steelmaking and shipping. A January 2020 report from industry group the Hydrogen Council suggested this price could be a tipping point for green hydrogen and derivatives such as ammonia to become the energy source of choice across multiple sectors.
Green Hydrogen key to meeting Paris Agreement goals
Green hydrogen is produced by using renewable energy (wind and solar) to power electrolysis that splits water into its constituent parts. It is widely regarded as the leading contender to decarbonize emissions-intensive heavy industry and transport sectors.
The coalition partners believe that affordable access to green hydrogen will facilitate the decarbonisation efforts of many countries party to the Paris Agreement and help fast track the reduction of emissions to pre industrial levels.
“Having led the race to deliver photovoltaic energy at well-below US$2 cents per kilowatt-hour, in certain geographies, we believe the collective ingenuity and entrepreneurship of the private sector can deliver green hydrogen at less than US$2 per kilogram within four years,” says Paddy Padmanathan, CEO of ACWA Power.
Collaborating to accelerate the pace of development
To accelerate the pace of development of the necessary technology, the founding partners of the initiative thought it would be essential to collaborate. This will speed up component manufacturing and construction, help market development and increase flow of investment. The initative will require investment of roughly US$110 billion and deliver more than 120,000 jobs, thus in parallel facilitating recovery from COVID-19.
A Wood Mackenzie report forecasts that green hydrogen production costs are set to fall by up to 64% by 2040. Lower renewable electricity pricing and increased electrolyzer utilization rates, increasing natural gas prices could drive up the price of hydrogen from steam methane reforming, currently the cheapest production option.
“Green hydrogen production costs will equal fossil fuel-based hydrogen by 2040. In some countries, such as Germany, that arrives by 2030. Given the scale up we’ve seen so far, the 2020s is likely to be the decade of hydrogen. Rising fossil fuel prices will boost green competitiveness, further strengthening the case for this technology in the coming years,” said Ben Gallagher, Wood Mackenzie