At the atomic level, hydrogen is a deceptively simple molecule: just two protons sharing two electrons. When it comes to using that molecule as a low-carbon energy solution, things get a whole lot more complicated.
Hydrogen has been a big topic lately in the world of climate action. That’s particularly true of green hydrogen, which is produced with renewable energy. On Earth Day, green hydrogen got a shout-out in the White House announcement of ambitious new climate targets. Plus, investors such as Breakthrough Energy Ventures and Generate Capital have been all over hydrogen innovation and deployment.
Why all the hype? Green hydrogen offers the tantalizing trifecta of being clean, flexible and abundant. Hydrogen molecules produced with renewable electricity can be used for a wide array of applications, including in sectors such as heavy-duty trucking and steel manufacturing, where climate-friendly options are scarce.
"Green hydrogen has been called the ‘Swiss Army Knife of decarbonization’ because it can help with some of the trickiest sectors to decarbonize," said Alicia Seiger, a lecturer at Stanford Law School, who moderated a recent Yale-Stanford panel on the subject.
The versatility of green hydrogen was also a hot topic of conversation at GreenBiz Group’s VERGE Electrify event last month. Much of the discussion occurred during a breakout session called "How Does Green Hydrogen Fit into Electrifying Everything?"
"There’s not a single hard-to-abate sector where you can’t say, ‘What about hydrogen?’" said Thomas Koch Blank, senior principal at RMI and a panelist in the VERGE Electrify session.
Green hydrogen has been called the 'Swiss Army Knife of decarbonization' because it can help with some of the trickiest sectors to decarbonize.
The big challenge is moving from theoretical possibility to practical reality, when little progress has been made to date.
"It’s easy to picture a promised land in 30 years where we use a ton of hydrogen in a ton of sectors, but getting from here to there, to me, is extremely complex," said Shayle Kann, partner at Energy Impact Partners, in an "Ask an Expert" session during VERGE Electrify.
A key ingredient for realizing the potential of green hydrogen is collaboration. Building up a new value chain from scratch requires very deliberate coordination amongst policymakers, entrepreneurs, corporate partners and investors — a prime example of the village that’s necessary to nurture a breakthrough to wide-scale deployment.
Low-cost renewables have led to a tipping point
One driving force behind the rise of green hydrogen has been the plummeting cost of renewable energy, a critical input in the production process.
Today, the large majority of hydrogen in the U.S. (around 95 percent) is produced from steam methane reformation, powered by fossil fuels, mainly natural gas. This is known as grey hydrogen. If the emissions happen to be captured and stored (uncommon at present), that’s considered blue hydrogen.
Green hydrogen, on the other hand, is produced by splitting water molecules via electrolysis. This process requires a large amount of electricity but can be accomplished entirely with renewables. When green energy is cheaper, so is green hydrogen.
"That is a must," said Taylor Huff, founder and chief executive officer of electrolyzer startup Origen Hydrogen. "You need low-cost renewables, whether it’s via a [power purchase agreement] … or as the infrastructure does develop, being able to site the electrolyzers at wind and solar farms."
The current output of green hydrogen is small, but it has massive growth potential. A report from the consulting firm Strategy& estimates that green hydrogen could replace up to 37 percent of oil production (at pre-pandemic levels) by 2050, a $300 billion market.
Huff understands the necessity to shift from fossil fuels to green molecules better than most, as he spent the first 10 years of his career in the oil and gas industry.
"Those experiences led me to see that now is the time for green hydrogen, and action is really happening," he said. "This is truly taking off."
Green hydrogen is two or three times more expensive than fossil-based hydrogen, but costs are dropping fast, and proponents are optimistic about reaching cost parity within this decade.
"We know we can produce it at scale, for a much, much lower cost," said Janice Lin, founder and president of advocacy group Green Hydrogen Coalition and a panelist at VERGE Electrify. "We’ve seen this happen with wind and solar and batteries and many, many other industrial commodities."
Governments are accelerating ambition
Another key driver for green hydrogen has been government action, and within the U.S., California has long been a leader on this front. As far back as 1999, the state convened the California Fuel Cell Partnership, which brings together automakers, oil majors and other stakeholders to expand the market for hydrogen-powered vehicles.
In 2007, the state took things a step further by issuing a stringent low-carbon fuel standard that incentivized cleaner options such as hydrogen.
Then the state really threw down the gauntlet in 2020, when Gov. Gavin Newsom issued an executive order banning the sale of new gas-powered cars by 2035.
One of the main agencies overseeing this bold and rapid transition is the California Air Resources Board (CARB), which has a broad remit to protect air quality across the state.
"We're agnostic about the technology and the fuel as much as we can be," said Analisa Bevan, zero-emission infrastructure specialist at CARB, during the Yale-Stanford panel. "So we're trying to promote both battery-electric and hydrogen fuel cell electric vehicles to see that transition to 100 percent zero-emission vehicles in California."
Investors appreciate long-term standards and mandates, such as those set by California regulators, because they create a market signal that low-carbon hydrogen and other options will have the chance to gain a foothold.
"It's not so much the magnitude of some of these incentives; it's the fact that you know they're going to be around," said Joshua Posamentier, managing partner at sustainability-focused investing firm Congruent Ventures, during the Yale-Stanford panel.
While ambitious state policy is good, comprehensive federal policy would be even better. This would help to give a fair shot to new technologies as compared to deeply entrenched (and heavily subsidized) incumbent technologies such as fossil fuels.
"Green hydrogen companies aren't asking for a handout. We just want it to be a level playing field," said Sanjay Shrestha, chief technology officer of PlugPower, a hydrogen fuel cell manufacturer, during the Yale-Stanford panel.
The rest of the United States has yet to catch up with California in terms of ambition, but the rest of the world Is charging ahead. Over the past year, a slew of countries have released their plans for green hydrogen production, likely aiming to attract the latest investment and innovation. Among international actors, the European Union stands out with its goal to build 40 gigawatts of green hydrogen capacity within member countries and another 40 GW in Ukraine and North Africa.
"I think we can learn from our friends abroad," said Huff of Origen Hydrogen.
It all comes down to infrastructure
Policy is useful because it lays a foundation for innovation, sometimes literally. Physical infrastructure is essential for new technologies to move down the cost curve, but it can be prohibitively expensive for any single actor to build this infrastructure alone. Governments can get the ball rolling by investing in this infrastructure themselves or catalyzing public-private partnerships.
"National, regional, state and provincial leadership is critical because when you have a resource as flexible — both in terms of how it’s made and how it’s used — as hydrogen, there’s this opportunity for shared infrastructure," said Lin of the Green Hydrogen Coalition. "Having coordinated leadership top-down is really important."
Working together to build infrastructure early can help with a quintessential problem faced by climate technologies. Customers and investors are each hesitant to buy into a new system, but someone needs to make the first move.
"There's a little bit of a chicken and the egg with hydrogen," said Posamentier of Congruent Ventures. "Getting down the cost curve will generate bigger markets, but we're not going to invest in those technologies until there's an obvious and clear market."
In the case of road transportation, both individual drivers and fleet managers need to be confident that next-generation vehicles will reliably meet their needs. To ease their concerns, California is already building its zero-emission vehicles strategy around a firm backbone of infrastructure development.
"It is pretty fundamental that the fueling stations have to come first, because nobody in their right mind would buy a vehicle if they didn't know where to fuel it — that applies for battery electric and for hydrogen," said Bevan (of CARB). "We've really come around to understanding that we have to go out big and broad with a hydrogen fueling network in order to catalyze the sale of the vehicles that will use that fuel."
Rather than preserving the status quo, some of the current leaders in fueling infrastructure are keen to stay ahead of the game. For instance, Pilot Company is exploring how to incorporate next-generation fuel types into its network of travel centers across North America. Dan Kim, Pilot’s senior director of business development, paraphrased hockey legend Wayne Gretzky when describing his company’s approach, as part of the recent Yale-Stanford panel.
"Infrastructure players like us, we need to not just be aware … where the puck is, but where the puck is going to," he said.
It is pretty fundamental that the fueling stations have to come first, because nobody in their right mind would buy a vehicle if they didn't know where to fuel it — that applies for battery electric and for hydrogen.
Some green hydrogen can be used on-site, but much will need to be moved to be used somewhere else, whether it’s for vehicle fuel, manufacturing or any other application. Hydrogen is notoriously hard to transport because it’s flammable and takes up a lot of space, unless it’s highly pressurized.
Several potential options exist for getting green hydrogen from Point A to Point B, such as sending it through dedicated pipelines, liquefying it and moving it by rail, or temporarily converting it to a carrier like ammonia, which is easier to transport. Advocates for green hydrogen are pushing for all of the above.
"We have to think about all the solutions," Lin said. "It’s not an either/or. We need all of it, and we need to go as fast as possible."
This challenge of transporting green hydrogen for a wide array of uses will require building new infrastructure as well as repurposing existing infrastructure, such as natural gas pipelines.
"It’s not a secret that the hardest things to build in the U.S. are pipelines and overhead power lines," said Holt Bradshaw, principal consultant in the energy advisory group of multinational conglomerate Siemens, during the VERGE Electrify breakout. "To the degree we can use existing infrastructure creatively, it’s gonna help speed this up."
When it comes to moving around large quantities of one of the world’s most explosive substances, a common and critical concern is safety. Past mishaps are still top of mind, even if they happened multiple generations ago.
"I get the question all the time: ‘Well, what about the Hindenburg?’" said Neva Espinoza, a vice president at the energy think tank Electric Power Research Institute, who moderated the hydrogen breakout session at VERGE Electrify. "That question comes to me at least once a week."
Seiger, who moderated the Yale-Stanford panel, had a more modern reference in mind, jokingly making a comparison to the memorable gas station explosion from the movie Zoolander.
Whatever calamity one might envision, it’s clear that there are important risks to consider when expanding hydrogen infrastructure. The bright side is that strategies are already in place to deal with these risks, because millions of tons of grey hydrogen are already transported safely and securely every year. Companies looking to handle green hydrogen are prepared to take proper precautions.
"All fuels and energy carry some inherent risks," Kim said. "I think it's important not to dismiss them, or to say ‘it’s safe’ or ‘it's dangerous.’ I think it's important to clearly articulate in a transparent manner what the risks and safety considerations are."
In some sense, the fact that so many companies are seriously considering the details of green hydrogen infrastructure is evidence in itself that the technology is within the realm of possibility. As a sustainability analyst, Koch Blank (of RMI) has noticed a sea change in the conversation around not just green hydrogen but also a wider set of formerly far-fetched solutions for deep decarbonization.
"The actual opportunity for some sectors of our economy to achieve a decarbonized business has gone from impossible to ‘We can do it,’ and that’s a pretty significant shift," he said.