Hydrogen energy investment skyrockets, industry poised to power the future

• Author:
• Author name

  Quantumrun Foresight
• February 10, 2022

Insight summary

As investments surge in hydrogen production, many nations are crafting strategies to unlock the potential of this plentiful, light element in reducing carbon emissions and battling climate change. Green hydrogen, produced through renewable-energy-powered electrolysis of water, stands out as a truly clean energy source, despite the high current costs of electrolyzers. The rise of hydrogen energy could bring about diverse impacts, from more eco-friendly public transport and reduced carbon footprints for businesses to shifts in global energy politics and the emergence of new, hydrogen-related industries and job opportunities.

Green hydrogen context

The sheer scale of private and public investment in hydrogen production signals the coming of age for the most abundant chemical in the universe and the lightest element on the periodic table. Many countries, including the US, Japan, China, Australia, and others, have outlined national hydrogen strategies to seize the inherent potential of green hydrogen to meet global decarbonization goals and mitigate climate change. Hydrogen provides a carbon-free base for synthetic fuels to power manufacturing and transportation, making it a suitable alternative to fossil fuels as an energy source. The spectrum of grey, blue and green hydrogen is defined by its production method and indicates its efficacy in carbon neutrality. 

Blue and grey hydrogen are produced using fossil fuels. In the production of blue hydrogen, the offset carbon is captured and stored. Green hydrogen, however, is a truly clean source of energy when produced through the electrolysis of water (splitting the hydrogen and oxygen molecules) using electricity generated by wind or solar. The current cost of electrolyzers is prohibitive and negatively impacts the production cost of green hydrogen.

However, cost-effective production is on the horizon with the development of next-generation electrolyzers and a drastic decrease in the installation cost of wind turbines and other renewable energy sources. Analysts predict a USD $10 trillion green hydrogen market by 2050 and indicate that production will already be cheaper than blue hydrogen production by 2030. The benefit of green hydrogen as a renewable source of clean energy is potentially game-changing for the planet.

Disruptive impact

Hydrogen-fueled cell vehicles (HFCVs) may become a more common sight on our roads. Unlike conventional vehicles, HFCVs emit only water vapor, drastically cutting carbon emissions. Moreover, the rise of hydrogen could see homes and buildings powered by hydrogen fuel cells, reducing reliance on grid electricity and providing a cleaner, more efficient energy source.

Additionally, hydrogen's role as a versatile energy carrier promises to change how businesses operate. Companies could use hydrogen as a power source for their machinery, vehicle fleet, or even their entire premises, resulting in considerable reductions in operating costs and carbon footprints. The increased use of hydrogen in steelmaking also holds promise for an eco-friendlier industrial process, reducing the industry's carbon emissions.

Increasing investments in hydrogen could enable more eco-friendly urban planning and public transportation. Hydrogen-powered buses, trams, or trains could become prevalent, offering a cleaner alternative to traditional public transport. Additionally, governments might also consider policies promoting the development of hydrogen-based infrastructure, such as refueling stations for HFCVs, which could stimulate economic growth while also supporting the shift toward cleaner energy sources. This transition would also require education and training programs to equip the workforce with skills relevant to the hydrogen economy.

Implications of green hydrogen

Wider implications of green hydrogen may include:

• Green ammonia (made from green hydrogen) as a possible replacement for fossil fuels in agricultural fertilizers and thermal power generation.
• The improvement of hydrogen fuel cell technology which will complement the growth of hydrogen vehicle options.
• The viability of heating homes with hydrogen—a solution being explored in the UK, where nearly a third of the UK’s greenhouse gas emissions can be attributed to natural gas central heating systems.
• The emergence of new industries, fostering economic diversification and resilience against market shocks, similar to how the digital economy transformed societal structures.
• A shift in global energy politics, reducing the influence of traditional oil-producing nations and increasing the importance of hydrogen production capabilities.
• A new era of energy-efficient devices and machines, altering the way we live and work much like the spread of smartphones did.
• The need for skills related to hydrogen production, storage, and application, creating a workforce revolution akin to the emergence of the tech industry.

Questions to consider

• Hydrogen has been hailed as the fuel of the future for decades but has only started to emerge as a potential panacea to address the global challenge of climate change. Do you think that all variables are in place to unlock the potential of hydrogen as a clean, sustainable source of energy?
• Do you think the significant investments made in hydrogen production will yield positive returns in the medium-to-long term?