IEA recommends countries to work together on hydrogen

The IEA’s new Breakthrough Agenda Report contains four key priority areas for hydrogen and projects annual value chain investment could top as much as $130bn through to 2030.

Demand creation, standards and certification, research and innovation and financial and technical assistance are the ‘big four’ that stand out in the report as immediate priorities for strengthening international collaboration.

The importance of countries working in unison is that it can support faster growth in demand for low-carbon and renewable hydrogen by exchanging policy best practice; aggregating demand to accelerate cost reduction; and creating level playing fields in competitive sectors.

The UK is proceeding with a contractual producer-focused hydrogen business model which also encourages end-user uptake; Germany is considering (carbon) contracts for difference to promote hydrogen use in industry; Portugal and India are testing auctions for hydrogen supply; and the United States is considering a production tax credit to reduce the cost of low-carbon hydrogen production.

In addition, coordinating efforts to promote low-carbon and renewable hydrogen demand can be beneficial for infrastructure development. Pipelines, facilities at ports and trading routes all benefit from economies of scale.

Many international initiatives are working on demand creation in ways that support both the sharing of lessons learned related to policy implementation, and the reduction of costs through increased market size.

International collaboration on hydrogen standards has so far largely focused on safety and operational protocols in traditional hydrogen-using sectors such as refining and chemicals, but the wider range of hydrogen uses in the low-carbon economy now requires a new and broader set of standards to be agreed.

Robust and globally harmonised standards relating to emissions, safety, and operations are essential for hydrogen’s potential in the low-carbon economy to be fully realised, the report adds, particularly relating to shipping, road transport and steel production.

It recommends governments and companies agree a comprehensive portfolio of international standards and associated certification schemes for renewable and low-carbon hydrogen, addressing emissions accounting, safety, and operational issues, including leakage.

In its third recommendation, the IEA states governments and the private sector should agree on minimum reporting principles to guide a deeper and more rapid sharing of knowledge these demonstrators, including a commitment to share the lessons learned from all publicly funded demonstration projects. Doing so will help overcome technology availability barriers and accelerate the pace of deployment in multiple regions in parallel.

Donor countries and multilateral development banks should make increased levels of concessional finance available for well targeted, catalytic uses that can mobilise large-scale private investment in renewable and low-carbon hydrogen production, distribution and end use projects in developing countries.

This will provide much-needed support for the first wave of low- carbon and renewable hydrogen projects, ensuring that a wider set of countries can deploy the technologies required.

The environmental transition will be challenging. Hydrogen production currently is almost entirely derived from fossil fuels, emitting around 900 Mt of carbon dioxide in 2020, equating to approximately 3% of global energy-related CO2 emissions (IEA, 2021).

Existing hydrogen use must be decarbonised by the uptake of rapidly increasing shares of both low-carbon and renewable hydrogen. The latter has the largest cost premium compared to today’s unabated fossil hydrogen production and has the greatest potential for cost reduction in this decade.

If ambitious action to scale-up renewable hydrogen production is taken, costs could fall by 40-55% by 2030, driven by a reduction in the cost of electricity and in the steep capital costs of electrolysers, the report states.

China accounts for nearly 30% of global demand, followed by the United States and India. These three countries combined use nearly half of the hydrogen produced.

Tags: Carbon, Germany, Hydrogen, IEA, UK