The comprehensive need for sustainable innovations proliferates through the growing concerns in decarbonisation efforts. The global energy system faces the mandatory need to mould into a low-carbon model, to mitigate climate change. Hydrogen, being the most profuse element and a source of clean fuel, has the potential to transform sustainability efforts to new heights. Given that the production methods of hydrogen are altered, the source of energy can be transformed to steer a clearer path to an equitable future by the substantial reduction in carbon emissions.
Hydrogen is an energy carrier and source of storage, hence it holds the capacity to partake in industrial processes and the supply of fuel. It has a wide range of production methods, however, only 4% is generated through the sustainable method of electrolysis, while the remaining 96% is generated from fossil fuels. To attain hydrogens' role as a low-carbon energy source, its generation methods must be changed (through renewable electrolysis), or adapted (through carbon capture/storage)1.
Low-carbon hydrogen energy has faced an exponential growth in demand, with over 1000 advancing hydrogen processes being underway. Compared to the $2bn worth of investments in 2020, by-out barons and Venture Capitalists have poured around $8bn into hydrogen ventures in 2021. The rapid growth has caught the interest of public markets. Thyssenkrupp Nuceras's plan to go public and its expectation to list in an initial public offering worth nearly $3bn demonstrates the growing public interest in the hydrogen sector2. By 2030, the projects are expected to have $320bn worth of prospering investments.
However, though hydrogen is a well-acknowledged energy carrier, its definitive application has been stunted by certain barriers to entry, including but not limited to (i) costs, (ii) infrastructure availability, and (iii) coordination with stakeholders. The hydrogen sector is facing a growing fear of a bubble– similar to what occurred in the 2000s, initially derived from frenetic activity. The accusation is rooted in the index of current hydrogen firms being listed as underperforming relative to America’s S&P 500 blue-chip benchmark, alongside the industry's price volatility. Oliver Mussad, CEO of Atome, worries that people interested in hydrogen sectors have been sold “hopium” due to alarmingly growing frenetic activity3.
However, rather than placing the responsibility of a potential future bubble on frantic activity, it should be steered towards the need for even larger investments. The International Energy Agency forecasts that an additional $380bn, on top of the announced $320bn, must be invested by the end of the decade, to achieve the 2050 goal of net-zero carbon emissions5. Proper decarbonisation requires prodigious investments in proper facilities with strong infrastructures, while coordination challenges with stakeholders, and an increase in public awareness must be successfully operationalised to obtain expected results4.
Hydrogen as a low-carbon energy source has a promising future, however, it comes down to the risk investors are willing to take. The hydrogen sector is meandering through a
slow and unclear path, and many expectations must be held up for the sector to live up to its potential.
Helmi Heinonen
Sources cited:
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