The European gas crisis could accelerate the transition to clean energy and the adoption of green hydrogen as sustainable alternatives to oil and gas, according to the International Renewable Energy Agency (Irena).
“Price volatility has been a feature of the oil and gas system,” Francesco La Camera, Irene’s CEO, told the Financial Times. “The transition to a new energy system, where hydrogen plays a significant role, brings us less volatility.”
The development of green hydrogen, produced from water and using renewable electricity, has become a policy priority for many countries as they prepare to reduce emissions to “net zero” by 2050.
An Irena report released on Saturday predicts that oil and gas geopolitics, in which producer countries have the power to influence prices, will disappear as new fuels, including hydrogen, become more dominant.
It was concluded that a “new cartography of energy geopolitics” and a redesigned “hydrogen diplomacy” would emerge as production strengthened around the world.
“Let’s hope 2050’s energy geopolitics is less important than it is now, because people will have less dependence on small markets that can really impact global energy markets in the unpredictable way we have today,” said Elizabeth Press, Irena’s director of planning.
La Camera said the green hydrogen market is already growing “a little faster than we predicted a few months ago”, pointing to recent deals in Germany, Uruguay and Brazil.
Irena estimates that hydrogen could provide 12 percent of the world’s energy needs by 2050 if global emissions are significantly reduced to limit warming to 1.5C.
But the market will develop in a “more regional than global” direction, La Camera predicted, noting that many countries will be able to produce the gas produced. As a result, they are unlikely to get to reach levels traditionally enjoyed by oil and gas producers, he added.
Large energy consumers, including the United States, China, the EU, Japan, India and South Korea, have already set hydrogen as a major component of their energy plans.
About $ 65 billion is earmarked for hydrogen production in the next decade, and Germany, France and Japan will be the biggest investors.
Although the gas is difficult to transport, it can be converted to ammonia for long-distance transport or transported through existing pipelines. A handful of shipments of hydrogen-derived ammonia were sold to Japan last year from Saudi Arabia and the United Arab Emirates.
Irena, an Abu Dhabi-based group with more than 160 member states, conducted a study that found that Australia, Chile, Saudi Arabia, Morocco and the United States are in the best position to become leading hydrogen producers, due to support policies and renewable energy availability.
Fossil fuel producers could also switch to hydrogen production as an alternative to oil and gas. Saudi Arabia, which is seeking to diversify by relying on oil and gas, said this week it wants to become the world’s cheapest producer of green hydrogen.
There are two main methods of hydrogen production: green hydrogen is produced using renewable electricity, and blue hydrogen is produced from natural gas.
In order to achieve climate goals, blue hydrogen must be combined with carbon capture to limit the impact of associated carbon dioxide and methane emissions.
The recent jump in gas prices has made the green hydrogen economy look relatively attractive compared to blue hydrogen, which requires natural gas to produce.
Irene’s report expects green hydrogen to reach blue hydrogen price parity by 2030 in many countries, although other studies suggest closer to 2040. Currently, the price of electrolyzers, machines needed to produce green hydrogen, makes its production expensive.
“What is happening right now really underscores the need for a faster transition,” the Press said. This shows that we need a different energy mix that will make it safer, more secure and more diverse. ”
Hydrogen rainbow colors
Green hydrogen Made using clean electricity from renewable energy technologies for the electrolysis of water (H2O), separating the hydrogen atom in it from its molecular oxygen twin. Currently very expensive
Blue hydrogen Produced using natural gas, but with carbon emissions collected and stored or reused. Negligible quantities in production due to lack of capture projects
Gray hydrogen This is the most common form of hydrogen production. It comes from natural gas by steam reforming methane, but without capturing emissions
Brown hydrogen The cheapest way to produce hydrogen, but also the most environmentally harmful due to the use of thermal coal in the production process
Turquoise hydrogen It uses a process called methane pyrolysis to produce hydrogen and solid carbon. Not proven to scale. Concerns about methane leaks