Guest post: Can ‘green hydrogen’ grow fast enough for 1.5C?

Hydrogen is expected to become one of the building blocks for reaching global climate goals, but current production is almost entirely from carbon sources.

In a recent study, we looked at how quickly the world would need to scale up “green” hydrogen – made by splitting water with low-carbon electricity – to help limit warming to 1.5C. (For more on the different ways to make hydrogen, see Carbon Brief’s in-depth Q&A.) Electrolyzer capacity must grow 6,000-fold by 2050 in a 1.5C trajectory from today’s levels of 600 megawatts (MW).

This article includes updated analysis using the latest version of the International Energy Agency’s (IEA) hydrogen project database, published in October 2022, which tracks more than 1,300 electrolysis projects globally.

Our results suggest that even if electrolysis capacity is growing as fast as wind and solar, it is still likely to fall short of this trajectory. It will provide less than 1% of final energy up to 2030 in the EU and 2035 globally – well below the requirements of 1.5C scenarios.

Emergency-like growth rates, similar to those achieved by the US for military equipment in World War II, would enable green hydrogen to achieve ambitious goals for its expansion.

Still, this pace of adoption would entail demanding and rapid political interventions. Accelerated deployment of alternatives to hydrogen, such as electric cars, electric trucks and heat pumps, is a hedge against the risk that hydrogen deployment will not live up to such high expectations.

Project pipeline

Current hydrogen electrolyser capacity stood at around 600 MW globally in 2021. In the IEA’s 1.5C compliant Net-Zero Emissions in 2050 scenario (NZE), this capacity reaches 3,670 gigawatts (GW) in 2050 – a staggering 6,000-fold increase. This enormous scale-up challenge overshadows even the simultaneously required 10-fold increase in renewable energy capacity.

Nevertheless, it may be possible to achieve an ambitious path for electrolyser installation. The capacity of announced projects shows exponential growth in the EU and globally. If all these projects are built, the global total will reach 300 GW in 2030, half of which is in the EU.

The chart below shows the amount of electrolyser capacity planned by year for the proposed deployment in the EU (left panels) and globally (right panels). Planned capacity is broken down by country or region (top panels) and by project status (bottom panels).

Electrolysis projects including historical data and future project announcements in the EU and globally.
Electrolysis projects including historical data and future project announcements in the EU and globally. Source: Adapted from Odenweller et al. (2022).

Current electrolysis capacity is comparable to solar cell (PV) capacity in 2000. Global PV capacity then reached 300 GW in 2017. What took 17 years for solar might only take half as long for green hydrogen if all project announcements become reality.

Fixed investment commitments for electrolysers, however, are lagging behind. More than 80% of the announced capacity to come online in 2024 is not yet supported by a final investment decision.

It is therefore very uncertain how many announced projects will be realized and whether electrolysis capacity can be expanded quickly enough to meet hydrogen demand in the medium and long term.

The EU’s hydrogen target

The EU illustrates the short-term challenges of scaling up green hydrogen. In response to the global energy crisis, the EU has stepped up its efforts to speed up the energy transition.

The recent REPowerEU package sets a target of producing 10 million tonnes (Mt) of green hydrogen by 2030, as well as importing an additional 10 million Producing each 10Mt of hydrogen would require about 100 gigawatts (GW) of electrolysis capacity. Can this level be reached?

The pipeline of announced projects is shown again in the figure below, broken down by country (left) and by status (center). Most of these projects have had a feasibility study completed or are planning to do so (light blue bars) but have not yet progressed beyond this stage.

If 30% of these “feasibility study” projects are built by 2024, as planned, installed capacity would still need to double every year after that to reach the 2030 target (below right).

Electrolysis project announcements in the EU until 2024 and required growth to reach the REPowerEU target in 2030.
Electrolysis project announcements in the EU until 2024 and required growth to reach the REPowerEU target in 2030. Source: PIK analysis.

Growth rates of 100% – required to double capacity each year – are unprecedented for energy technologies and far exceed those historically observed for solar and wind.

Growth like wind and sun

In our Nature Energy article, we expand on this idea and ask again, “What if electrolysis grows as fast as wind and solar have?”

Methodologically, we extend the outlook to 2050 and account for uncertainties in key parameters using a probabilistic approach. We simulate thousands of possible expansion paths and aggregate them into what we call the “green hydrogen feasibility space”.

This is illustrated in the figure below for the EU (left panels) and globally (right). The electrolyser capacity targets are shown with open circles, including requirements to comply with the IEA’s NZE by 2050 and thus limit warming to 1.5 C (dashed line). The top panels show the period to 2050 and the bottom panels zoom in to 2030.

Examples of simulated paths for installed capacity are shown with the gray lines, with the probability of achieving these outcomes shown in shades of red. The central pathway from our simulations is shown with the dark red line.

Probabilistic feasibility space for scaling up electrolysers in the EU and globally. Source: Adapted from Odenweller et al. (2022).

Our results suggest that green hydrogen is likely to be scarce in the near term, assuming it grows as fast as wind and solar have in the past. Hydrogen has the potential to become more abundant in the long term, but our results show that this is uncertain.

Short-term scarcity means that – again below growth rates seen for wind and solar – electrolysis capacity is likely to remain small relative to government targets over the next few decades. This is despite initial exponential growth in our simulations.

In this case, green hydrogen is likely to provide less than 1% of final energy up to 2030 in the EU and 2035 globally, well below the requirements of 1.5C scenarios.

Our simulations indicate that a “breakthrough” to high electrolysis capacity is likely in the coming decades. Specifically, we find a shift in the distribution of more likely outcomes for installed capacity—shown by darker shades of red in the figure above—from lower to higher capacities.

However, the timing and magnitude of this shift is highly uncertain. For the EU, our simulations see a “breakthrough” on average around 2038 – and globally around 2045. This may sound surprising given the recent hydrogen hype.

But experience from previous energy technologies – explored in our simulations – shows that it usually takes a long time before high growth rates translate into large installed capacity.

Nut-like growth

In our research paper, we also looked at what would happen if green hydrogen expands faster than the world’s fastest-growing energy technologies, such as wind and solar. We asked, “What if electrolysis grows as fast as some of the fastest growing technologies in history?”

We included a wide portfolio of technologies, from US military equipment in World War II to the high-speed rail network in China or highly modular technologies such as smartphones and internet servers.

Our analysis shows that post-emergency-like growth would enable green hydrogen to overcome short-term scarcity and would bring the REPowerEU target within reach.

In the long run, such rapid growth rates will also close the gap between possible green hydrogen supply and potential demand. However, it remains uncertain whether such emergency-like growth can be achieved.

Political consequences

In a final step, we asked what would have to happen for green hydrogen to reach such unconventionally high growth rates. We found that key conditions include special coordination, dedication, regulation and funding.

For example, governments would need to urgently secure business cases for investing in green hydrogen. This can be through public financial support or through regulation, such as green hydrogen quotas.

In addition, the simultaneous scaling up of supply, demand and infrastructure for the production and use of hydrogen will require significant coordination.

Recently, the world’s two largest economies have been pushing new hydrogen policies such as the EU’s “Important Projects of Common European Interest” (IPCEI) and the EU’s “Hydrogen Bank” as well as the US Inflation Reduction Act.

These initiatives aim to break the vicious cycle of uncertain supply, insufficient demand and incomplete infrastructure. It remains to be seen whether these policies will be enough.

“Blue” hydrogen – that is, hydrogen produced from gas with carbon capture and storage – could be available earlier than green hydrogen, since steam reforming of gas is well established.

Blue hydrogen could therefore at least play a bridging role, enabling an early build-up of hydrogen infrastructure and end-uses of hydrogen.

However, there are unresolved concerns about life-cycle emissions and threats of new fossil lock-ins. Furthermore, sharp increases in gas prices in the EU have complicated the competitiveness of blue hydrogen.

Until the fog around availability and cost clears, policymakers should be aware that there remains a risk of overestimating hydrogen’s potential.

There will always be potential to expand the use of hydrogen if supply exceeds expectations.

Conversely, if hydrogen is dependent on decarbonizing sectors and supply does not meet expectations, it may simply be too late to switch to alternatives in time for climate targets.

This suggests that the expansion of already available and more efficient alternatives, such as direct electrification using heat pumps, electric cars and electric trucks, offers a way to hedge against the risk of hydrogen not delivering.

Odenweller, A., Ueckerdt, F., Nemet, GF, Jensterle, M., Luderer, G. 2022. Probabilistic feasibility space of scaling up green hydrogen supply. Nature Energy, doi:10.1038/s41560-022-01097-44.

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