In 1980 Harvard Business School professor, Michael E. Porter published his Five Forces model that identifies and analyses the competitive forces that shape every industry and helps determine an industry’s weaknesses and strengths.
Hydrogen Ireland has taken this approach and examined how six Factors are combining in unison and contributing to create the perfect environment for a Green Hydrogen market.
Globally we are witnessing the emergence of an increasingly dynamic low-carbon hydrogen market which has seen a deluge of public funding support, corporate commitments, project research, private investments, and significant consumer interest over the past 18 months. It is the belief of Hydrogen Ireland that this activity amounts to a paradigm shift in our energy markets, supplies, supply, and value chains which will see green hydrogen emerge as the key element in our transition to a sustainable economy.
The Six Green H2 factors of influence are.
Versatility
Global Targets
EU Strategies
Global Energy Policies
Investments
Scale
1. Versatility
2. Global Targets
3. EU Strategies
Green H2
Opportunity
Factors
4. Global Energy Policies
5. Investments
6. Scale
1. Versatility
Green Hydrogen is a versatile, storable energy source. The key advantage of green hydrogen is that it acts as a flexible form of storable energy and is applicable in many situations P2X ‘power-to-X’ – turning electricity into green hydrogen – is crucial to maximising the efficiency of renewable energy sources like wind and solar, which cannot be easily dialled up and down as required.
P2X includes
- • Power to Industry (P2I),
- • Power to Mobility (P2M),
- • Power 2 Heat (P2H)
- • Power to ? (P2?)
The International Energy Authority (IEA) roadmap to net zero states that reaching net zero by 2050 will require further rapid deployment of available technologies as well as the widespread use of technologies that are not on the market yet. Major innovation efforts must occur over this decade in order to bring these new technologies to market in time. Most of the global reductions in CO2 emissions will be achieved from technologies readily available today. But in 2050, almost half the reductions will come from technologies that are currently at the demonstration or prototype phase. In heavy industry and long-distance transport, the share of emissions reductions from technologies that are still under development today is even higher.
Hydrogen is easily stored and transported unlike electricity storage. Hydrogen is also extremely versatile, making it possible not only to decarbonise areas like transport and heating where renewable energy has potential, but also to decarbonise industrial processes which cannot be converted to electricity.
2. Global Targets
Green H2 delivers on the 2050 net zero C02 targets.
The global drive for decarbonisation is growing at pace, driving zero carbon technologies. In the Climate Summit in May 2021 President Biden announced the United States will target reducing emissions by 50-52 percent by 2030 compared to 2005 levels. He underscored America’s commitment to leading a clean energy revolution and creating good-paying, union jobs – noting that the countries that take decisive action now will reap the economic benefits of the future.
In May 2021 the International Energy Authority published its Net Zero by 2050 , a roadmap for the global energy sector. This is the world’s first comprehensive energy roadmap detailing government actions to rapidly boost clean energy and reduce fossil fuel use and as a result can create millions of jobs, lift economic growth and keep net zero in reach.
The key beneficiary in this global drive is Green H2, this drive to net zero has pivoted commercial opportunity promoting green hydrogen production as a key solution in meeting the 2050 climate targets.
3. EU Strategies
Hydrogen is now a fundamental pillar of the energy policy of the EU. It is a key component of the EU Strategy for Energy System Integration and has been included in the TEN-E framework. To unlock hydrogen’s benefits the EU hydrogen strategy targets 6 GW of electrolyser by 2024 and 40 GW by 2040, with heavy-duty transport identified as a key sector.
The EU energy integration strategy recognises the hierarchy of energy efficiency, electrification and then the use of green hydrogen. Member states are recognising this and providing support programmes for hydrogen and hydrogen mobility.
4. Global energy policies
Green H2 is central to Global energy policies. As European economies emerge from the coronavirus crisis, the next challenge is building climate resilience throughout the continent. The European Union is mapping a greener European future supported by the EU’s Green Recovery Package announced last year. This deal has earmarked 150 billion euros specifically for green hydrogen.
This European green drive is being reflected globally with 17 countries including Japan, South Korea and Canada announcing hydrogen strategies, supporting the global drive to net zero.
5. Investment
The flow of Investment into Green H2 projects is increasing. Significant investment globally is being made in Green Hydrogen projects. Investment in low-carbon hydrogen has witnessed
55 projects being announced totalling US$4.5 billion in the first quarter of 2021. This money flow clearly indicates that the financial markets understand and believe in green hydrogen and the potential financial and environmental returns.
- • France has announced €7 bn of funding for hydrogen (with 27% for earmarked for transport) and targets 100 refuelling stations by 2023.
- • Portugal has announced €7-9 bn of investment in hydrogen technologies to 2030.
- • The UK is providing a subsidy per kilogram sold through the RTFO7, which provides an incentive by awarding double the RTFCs per kg H2 supplied alongside capital support schemes.
The PM of Australia, Scott Morrison announced at the climate conference in May 2021 “We are investing around $20 billion to achieve ambitious goals that will bring the cost of clean hydrogen, green steel, energy storage and carbon capture to commercial parity. We expect this to leverage more than $80 billion in investment in the decade ahead. In Australia our ambition is to produce the cheapest clean hydrogen in the world, at $2 per kilogram Australian.
6. Scale
Scaling up Green H2 production. The surge in Green Hydrogen projects has also witnessed a surge in electrolyser production and capacity. In 2019 global estimated electrolyser manufacturing capacity was a 200 MW, within 2 years this has increased significantly to 6.3 GW of current announced electrolyser capacity and with new technologies coming online this is set increase dramatically in the coming years.
It is predicted that by 2050 1,000 GW of electrolyser capacity will be required and this represents a significant challenge for the industry. However, the exponential rate of growth in manufacturing capacity is predicted to continue.
Conclusion
We are entering a new energy phase globally where business as usual is no longer a viable option, we must increase our pace towards a net-zero future. Climate change presents a fundamental challenge to society. It is a shared challenge, and all must play their role.
This challenge also presents opportunity, it is not an ‘if’ Hydrogen but a ‘when.’ In Hydrogen Ireland we are working internationally to upscale green hydrogen production, storage, transport and use- delivering SMART H2 where we escalate the value of Green H2 in every step of the value chain
As discussed one of the strengths of hydrogen is its versatility both in terms of production across technologies and use by industry and individual, and also its potential as a storage and back up medium at a time when intermittent renewables is increasingly dominating the electricity system. It is this versatility and adaptability that has shifted the energy equation in favour of green hydrogen and why governments, industry and investors alike see such potential for economic, social, commercial and environmental returns.
Hydrogen has the versatility and capacity to fill the gaps where electricity cannot easily or economically replace fossil fuels and where limited sustainable bioenergy supplies cannot cope with demand. This includes using hydrogen-based fuels for ships and planes, as well as hydrogen in heavy industries like steel and chemicals.
The six key factors detailed in this article are the perfect energy recipe for a Green Hydrogen energy solution 2021+.
Paul McCormack, Hydrogen Ireland Director
