Mind the Gap: Turning Challenges of Hydrogen Production into Opportunities for a Sustainable Tomorrow
Mind the Gap is a new content series from Infrastructure Asia that explores the opportunities and risks involved in Asia’s infrastructure development. Through insightful discussions with leading industry players, the series deep dives into innovative solutions and explores how we can bridge the gap to achieve a greener future for the region.
The path to achieving net zero emissions by 2050 may not necessitate novel technological breakthroughs or the discovery of new energy sources. Instead, innovation and fresh perspectives to existing solutions could play a crucial role. In fact, the International Energy Agency estimates that 35% of the necessary emissions cuts by 2050 can be achieved with existing technologies already in development.
One such innovation is the development of hydrogen for decarbonisation efforts. This versatile element holds promise for particularly challenging sectors to decarbonise, such as steel production, chemicals, fertilisers, shipping, and aviation. Hydrogen's momentum has been building in recent years, with the COP28 Declaration of Intent on hydrogen certification schemes signed by over 30 countries in December 2023 being a landmark achievement. The declaration signified a new step towards unlocking the socio-economic benefits of international trade in renewable and low-carbon hydrogen and its derivatives.
However, despite its potential, the nascent hydrogen industry faces significant challenges. From high initial costs to storage and transportation complexities, scaling production to meet the demands of a transitioning energy landscape all require a measured and collaborative approach across the entire value chain. Strong partnerships between governments, industry players, investors, and the scientific community will be critical to overcome the obstacles.
In this article co-authored with GHD, a leading global engineering, environmental, and advisory services firm, we unpack the exciting opportunities and critical challenges surrounding hydrogen's role in Asia's sustainable infrastructure development.
Understanding hydrogen’s diverse applications
While we anticipate renewable energy to dominate the future energy mix, some sectors (e.g., iron and steel production) are difficult, if not impossible, to electrify entirely. This is where hydrogen can plug the gap.
As a versatile energy carrier with diverse applications, hydrogen offers the unique ability to produce, store, transport, and utilise energy in diverse ways. It can be used in fuel cells for generating electricity with high efficiency for powering buildings, electric vehicles, and more. Additionally, it functions as a reliable energy storage solution, mitigating inconsistencies between supply and demand on the grid. But beyond its ability to act as an energy carrier, hydrogen’s rich potential also lies in its ability as an enabler to add value to existing commodities across various sectors.
Clean hydrogen, if harnessed effectively, can potentially abate up to seven gigatons of carbon emissions annually by 2050, which is equal to approximately 20% of human-driven emissions based on the current global-warming trajectory. To achieve this, identifying the best applications for hydrogen in the short, medium, and long term is essential. For instance, Singapore's National Hydrogen Strategy outlines how the nation intends to ease different industries, such as aviation, into scaling hydrogen adoption strategically. This includes using hydrogen for sustainable aviation fuel (SAF) production in the short term, transitioning to hydrogen fuel cell for airside ground vehicles and propulsion systems in the medium term, and ultimately, achieving hydrogen-powered aircrafts in the long run.
Conducive policies and government commitment are key complements to such national hydrogen strategies. They help to incentivise organisations and investors to overcome current challenges in producing low-cost hydrogen at scale. India's National Green Hydrogen Mission aims to shift the nation away from fossil fuels by encouraging investment in low-cost green hydrogen production. Through close collaboration between its public and private sectors to create a domestic supply chain, India is targeting an ambitious electrolyser capacity of 25 GW by 2030, capable of producing five million tonnes of green hydrogen. On the other hand, cross-border collaborations, such as the Japanese-Australian Hydrogen Energy Supply Chain (HESC) project, enable countries to leverage shared expertise and resources to accelerate hydrogen adoption.
Nevertheless, mass-market adoption of hydrogen will depend on the availability of low-cost, clean hydrogen supplies. This requires a multi-pronged approach: scaling up electrolysis capacity, expanding renewable energy infrastructure to power it, and developing robust storage solutions. Timely investments in these areas are crucial to accelerate cost competitiveness for green hydrogen production. This, in turn, will unlock hydrogen's full potential as a breakthrough for the green energy transition.
Maximising hydrogen’s potential
Large-scale investment across technology, manufacturing, infrastructure, and supply chains is crucial to scale hydrogen adoption, yet its potential for clean energy should not be overlooked. Fortunately, as the hydrogen landscape continues to rapidly evolve, more major players from energy, industry, and finance are stepping forward to spearhead innovative projects propelled by the momentum towards net zero ambitions.
Here is a closer look at some key opportunities that make hydrogen crucial for sustainable development:
- Accelerating decarbonisation beyond geographical constraints
For countries with limited access to existing renewable resources like solar, wind or hydropower due to geographical limitations, hydrogen offers an alternative solution. For example, Singapore can explore blending hydrogen with natural gas operations through equipment such as Utility-scale Combined Cycle Gas Turbines (CCGTs) to generate electricity. With further technological advancements, Singapore has postulated hydrogen could meet up to 50% of its projected electricity demand by 2050.
Additionally, standardised methodologies for calculating greenhouse gas emissions associated with hydrogen production, like those by the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), help to promote transparency and accelerate market development. This, in turn, attracts investment, reduces financing costs, and leads to economies of scale.
- Bolstering renewable energy storage capabilities and grid stability
Clean hydrogen presents an opportunity for greater grid stability by acting as a storage medium for excess renewable energy. During peak wind or solar production, hydrogen can be generated from electrolysis using renewable electricity and stored for use in peak demand and seasonal energy balancing.
Once produced, hydrogen can be used in stationary fuel cells for power generation or stored as a compressed gas, cryogenic liquid or a wide variety of loosely bonded hydride compounds for longer-term use. This ensures a smoother and more consistent energy supply for areas which depend on more volatile renewable energy sources.
- Catalysing industrial innovation and job creation
As of 2023, over 1,000 large-scale hydrogen projects have been announced globally, bringing in approximately USD 320 billion in direct investments. Over time, these investments will translate into substantial job creation opportunities across the entire sector’s value chain, from the development of new fuel cell, electrolysers, and storage technologies.
- Maximising the use of existing energy, commodity infrastructure and technology
Another key advantage of clean hydrogen is its ability to seamlessly integrate with existing infrastructure to accelerate the net zero transition. This can be achieved by producing synthetic methane using hydrogen, allowing for direct injection into existing natural gas liquefaction (LNG) transport and usage infrastructure.
Additionally, hydrogen can add value to existing resources by converting low-value commodities (e.g., municipal waste) into higher value energy sources (e.g., aviation fuel) that can be readily integrated into current systems. This "drop-in" capability positions hydrogen as a powerful enabler for decarbonisation across various key industries, while fostering a circular and sustainable economic model.
Barriers to scaling hydrogen adoption
While hydrogen holds immense promise for achieving net zero emissions, significant hurdles still impede its widespread adoption. Estimates suggest clean hydrogen production needs to grow more than sixfold to meet the demands of a transitioning energy landscape. To unlock its full potential, we require a multipronged approach to address these challenges and foster an economically viable market for clean hydrogen. These challenges include:
- High upfront costs: Large-scale production and infrastructure development require substantial initial investments. Green hydrogen production through electrolysis, liquefaction, and regasification faces limitations in cost, energy efficiency, and scalability. Currently, green hydrogen is two to three times more expensive to produce than fossil fuels, and constructing hydrogen pipelines can be considerably more expensive than traditional options.
- Inconsistent terminology: The lack of consistent definitions for low-emission hydrogen creates confusion and hinders adoption. Different stakeholders and countries use varied terminology, impacting trade and investment. This ambiguity creates uncertainty for investors and consumers, making it difficult to verify if production methods comply with emission requirements across regions. Establishing uniform standards for measuring the carbon intensity per unit of hydrogen produced is crucial to overcome this barrier.
- Storage and transportation constraints: Hydrogen's low volumetric energy density presents a significant storage challenge. Compared to fuels like natural gas, hydrogen requires larger storage volumes, posing difficulties for onboard vehicle storage and bulk storage for industrial applications. Additionally, hydrogen can embrittle certain materials, leading to storage tank degradation and safety concerns. Safely storing and transporting hydrogen necessitates developing high-pressure containers and adapting existing pipelines to be hydrogen-compatible.
- Infrastructure compatibility: As an addition to the abovementioned challenge, integrating hydrogen into existing infrastructure presents further hurdles. Existing infrastructure may not be readily compatible with hydrogen, requiring repurposing end-use infrastructure (e.g., tanks and pipelines) or even replacements in some cases.
Despite these challenges, the potential benefits of hydrogen holds strong promise for global decarbonisation. Every challenge presents an opportunity for innovation. Strategic frameworks with a focus on economic benefits are essential to encourage greater global market demand for hydrogen.
To help navigate the intricacies of establishing a successful hydrogen economy, Infrastructure Asia together with our partners can bridge the necessary expertise and knowledge gaps and strengthen capabilities in project development, financing, and implementation. A successful transition to a green and competitive energy future will require even more collaboration across sectors and strong public-private partnerships (PPPs) to ensure the efficient implementation of affordable hydrogen solutions.
Achieving a successful hydrogen economy requires a balanced approach. While ambition is crucial, a phased investment strategy is prudent. This means prioritising the development of hydrogen infrastructure alongside consistent investment in storage and distribution technologies.
Lastly, it is important to remember that clean hydrogen's potential goes beyond power generation. It also acts as a catalyst for broader decarbonisation efforts. This includes enabling the conversion of commodities and the production of low-carbon chemicals and energy products.
Ultimately, integrating hydrogen as a complementary element within a comprehensive energy strategy, alongside other renewable sources, is critical for achieving a sustainable future.
