The declining cost of making hydrogen from renewable sources could pave the way for cutting emissions in some of the most fossil fuel-dependent sectors of the economy.
This is according to a Bloomberg New Energy Finance (BNEF) report that projects global greenhouse emission could be cut by 34% by 2050, if a switch is made to ‘clean’ hydrogen.
Kobad Bhavnagri, Head of Industrial Decarbonisation for BNEF, said: “Hydrogen has potential to become the fuel that powers a clean economy. In the years ahead, it will be possible to produce it at low cost using wind and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills.”
The study suggests that renewable hydrogen could be produced at $0.8 (£0.65) to $1.6$ (£1.3) in most of the world by 2050, at par with natural gas prices in Brazil, China, India, Scandinavia and Germany.
While clean hydrogen could be the way to go, storage and transportation would require a costly investment of $637 billion (£520bn) by 2050 to provide the fuel with the same ubiquity as natural gas.
Bhavnagri said: “The clean hydrogen industry is currently tiny and costs are high. There is big potential for costs to fall, but the use of hydrogen needs to be scaled up and a network of supply infrastructure created.
“This needs policy coordination across government, frameworks for private investment and the roll-out of around $150 billion (£122bn) of subsidies over the next decade. That may sound daunting but it is not, in fact, such a huge task – governments around the world currently spend more than twice that every year on fossil fuel consumption subsidies.”
The research reiterated that hydrogen is likely to be a more expensive form of energy despite potential cost reductions and called for emission policies and an industrial commitment to net-zero emissions.