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Key takings from "The dawn of green hydrogen" - a report by Strategy& a part of PwC

Key takings from "The dawn of green hydrogen" - a report by Strategy& a part of PwC

In the ever-evolving landscape of global energy, a new contender has emerged with the potential to revolutionize our energy systems: green hydrogen. As the world grapples with the pressing need for decarbonization, green hydrogen offers a promising solution, both economically and environmentally.

1. The Global Energy Paradigm Shift

The global energy system is on the cusp of a transformative era. This transformation is driven by the rapid decline in renewable energy costs and significant technological advancements. Traditional energy sources, primarily fossil fuels, are being challenged by cleaner and more sustainable alternatives. Among these, green hydrogen stands out, not just as an energy source, but as a potential medium for transporting clean energy across the globe.

2. Hydrogen: The Versatile Element

Hydrogen, the most abundant element in the universe, has long been recognized for its potential in various industrial applications, from refining and petrochemicals to steel manufacturing. Its high energy efficiency makes it a compelling choice. However, the traditional methods of hydrogen production have been less than environmentally friendly, producing significant CO2 emissions. This is where the distinction between the different "colors" of hydrogen becomes crucial.

3. The Spectrum of Hydrogen Production

Hydrogen production can be categorized into three primary types based on their environmental impact:

  • Gray Hydrogen: Produced using natural gas or coal, this method results in high CO2 emissions, making it the least environmentally friendly.
  • Blue Hydrogen: This method is similar to gray hydrogen production but incorporates carbon capture technologies to trap up to 90% of the greenhouse gas emissions. While better than gray hydrogen, it still has an environmental footprint.
  • Green Hydrogen: The most environmentally sustainable method, green hydrogen production uses renewable energy sources to power the electrolysis of water, splitting it into hydrogen and oxygen. This method produces no direct CO2 emissions.

4. The Economic Viability of Green Hydrogen

While green hydrogen's environmental benefits are clear, its economic viability has been a topic of discussion. Currently, producing green hydrogen is more expensive than traditional methods. However, with the continuous advancement in electrolysis technology, the decreasing costs of renewable energy, and the benefits of economies of scale, green hydrogen is projected to become cost-competitive by 2030. By 2050, it might even cost less than half of gray hydrogen.

5. Green Hydrogen in Industry and Transport

Green hydrogen's potential extends beyond being just an energy source. It can play a pivotal role in various industries:

  • Chemicals: Hydrogen is a critical feedstock for ammonia and methanol production. As green hydrogen becomes more affordable, it's expected to be the primary choice for new production facilities.
  • Steel: With environmental policies pushing for cleaner production methods, hydrogen can be used in the direct reduced iron method, offering a more sustainable approach to steel production.
  • Heat and Power Generation: Green hydrogen can be used for commercial and residential heating, and in power plants to generate electricity, especially in countries reliant on expensive imported fuels.
  • Transport: The automotive industry is undergoing a significant shift towards electric vehicles (EVs). Among EVs, fuel-cell vehicles powered by hydrogen offer a more sustainable and, in some cases, more cost-effective alternative to battery-powered EVs.

In conclusion, green hydrogen represents a beacon of hope in the quest for a decarbonized world. With its myriad applications and the potential to reshape industries, it's not just a fleeting trend but a cornerstone for a sustainable future. As the Gulf Cooperation Council (GCC) countries and others worldwide recognize its potential, investments and research in this domain are bound to increase, solidifying green hydrogen's position in the global energy landscape.

Read Full Report : https://www.strategyand.pwc.com/m1/en/reports/2020/the-dawn-of-green-hydrogen/the-dawn-of-green-hydrogen.pdf