The Green Hydrogen Catapult aims for $2/kg H2 and needs $110 billion, if you’ve any to spare

December 9, 2020 |

From Europe comes news that major hydrogen project developers including ACWA Power, CWP Renewables, Envision, Iberdrola, Ørsted, Snam, and Yara have joined hands to scale-up green hydrogen production 50-fold in 6 years in a bid to slash the production cost to below $2 per kilo. This report from the Hydrogen Council has focused on $2 per kilo as a pricing tipping point where green hydrogen and its derivatives will become economically competitive. 

The partners have dubbed their initiative the Green Hydrogen Catapult.

Now, the incredible price tag, wait for it

The partners have targeted the deployment of 25 gigawatts through 2026 of renewables-based hydrogen production. The Catapult target will require investment of roughly $110 billion and deliver more than 120,000 jobs.

What the partners bring — and you’re invited

The partners said “Committed businesses with aligned vision and gigawatt-scale projects under development, as well as mission-aligned investors, customers, and city and regional governments are invited to participate as the initiative takes shape and builds global momentum in advance of the next UN Climate Summit, scheduled to be held in Glasgow in November 2021.”

Companies in this initiative will work toward the target by developing project capacity, supporting the design of specific tools to solve early market challenges, and sponsoring targeted collaboration. Rocky Mountain Institute, a global non-profit think-and-do-tank, will facilitate the initiative alongside partners.

The green hydrogen backstory

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.

Multiple sectors—including steel and fertilizer production, power generation, and long-range shipping—have signaled interest, near-term demand exists in Europe and elsewhere. Green ammonia, a derivative of green hydrogen, is also being tested to displace fossil fuels in thermal power generation, greatly decreasing the emissions intensity of existing energy infrastructure.

The addressable market and why people think it’s so big

It is now estimated that green hydrogen could supply up to 25% of the world’s energy needs by 2050 and become a US$10 trillion addressable market by 2050. These projections are underpinned by the recent emergence of strong hydrogen-focused national hydrogen strategies including in Australia, Chile, Germany, the EU, Japan, New Zealand, Portugal, Spain and South Korea.

Reaction from the stakeholders

“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. “From an industry perspective, we see no technical barriers to achieving this, so it’s time to get on with the virtuous cycle of cost reduction through scale up.” 

“The world urgently needs to massively ramp up deployment of breakthrough solutions like green hydrogen,” says Nigel Topping, COP26 High Level Champion for Climate Action. “The bold vision and leadership of businesses can propel green hydrogen along an exponential growth trajectory to support economic recovery and deep decarbonization sooner than anticipated.”

“Scaling up green hydrogen using existing infrastructure will be crucial to reaching climate goals,” says Marco Alverà, CEO of Snam. “We believe that this new ‘coalition of the willing’ composed of leading companies in the private sector, with expertise, commitment and confidence in hydrogen’s potential, will play an important role in fostering cooperation and help to deliver the projects necessary to bring green hydrogen costs to the $2/kg tipping point even sooner than expected.”

The Bottom Line

$110 billion is like asking for a moonshot, except that it’s more expensive than a moonshot. Consequently, the partners are sort-of announcing their goals, and really announcing to EU governments that they are about to make a gigantic ask for policy and financial support. “We see no technical barriers” is one way of saying that substantial barriers exist in policy and finance.

Why believe? Absolutely, the world needs hydrogen and needs green everything, so affordable green hydrogen will have many champions and customers. And, the world could use a competitor to EV platforms, unless the story of petroleum has left you entirely comfortable with the unintended consequences of energy monopolies. 

Why be skeptical? Our impression is that Europe has the highest “confident renewables consortia” to “actual scaled production any time soon” ratio of any continent. And, the jury is still out on “how soon, how much” there will be a transition to green hydrogen in transport. Competing ideas include a much faster, bigger ramp up in electrics for heavy transport, and a slower exit from blends of liquid fossils and liquid biofuels.

More on the story.

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