January 22, 2021

The Future of Hydrogen

The government of Japan under its presidency of the G20, requested the International Energy Agency (IEA) to prepare a report on how hydrogen could fulfill its longstanding potential as a clean energy solution.

The report found that clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly. It concluded that now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used.

Hydrogen offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help improve air quality and strengthen energy security.

The International Energy Agency (IEA)’s 7 key recommendations to scale up hydrogen.

  • Establish a role for hydrogen in long-term energy strategies. National, regional and city governments can guide future expectations. Companies should also have clear long-term goals. Key sectors include refining, chemicals, iron and steel, freight and long-distance transport, buildings, and power generation and storage.
  • Stimulate commercial demand for clean hydrogen. Clean hydrogen technogies are available but costs remain challenging. Policies that create sustainable markets for clean hydrogen, especially to reduce emissions from fossil fuel-based hydrogen, are needed to underpin investments by suppliers, distributors and users. By scaling up supply chains, these investments can drive cost reductions, whether from low-carbon electricity or fossil fuels with carbon capture, utilisation and storage.
  • Address investment risks of first-movers. New applications for hydrogen, as well as clean hydrogen supply and infrastructure projects, stand at the riskiest point of the deployment curve. Targeted and time-limited loans, guarantees and other tools can help the private sector to invest, learn and share risks and rewards.
  • Support R&D to bring down costs. Alongside cost reductions from economies of scale, R&D is crucial to lower costs and improve performance, including for fuel cells, hydrogen-based fuels and electrolysers (the technology that produces hydrogen from water). Government actions, including use of public funds, are critical in setting the research agenda, taking risks and attracting private capital for innovation.
  • Eliminate unnecessary regulatory barriers and harmonise standards. Project developers face hurdles where regulations and permit requirements are unclear, unfit for new purposes, or inconsistent across sectors and countries. Sharing knowledge and harmonising standards is key, including for equipment, safety and certifying emissions from different sources. Hydrogen’s complex supply chains mean governments, companies, communities and civil society need to consult regularly.
  • Engage internationally and track progress. Enhanced international co-operation is needed across the board but especially on standards, sharing of good practices and cross- border infrastructure. Hydrogen production and use need to be monitored and reported on a regular basis to keep track of progress towards long-term goals.
  • Focus on four key opportunities to further increase momentum over the next decade. By building on current policies, infrastructure and skills, these mutually supportive opportunities can help to scale up infrastructure development, enhance investor confidence and lower costs:
    • Make the most of existing industrial ports to turn them into hubs for lower-cost, lower-carbon hydrogen. Use existing gas infrastructure to spur new clean hydrogen supplies.
    • Support transport fleets, freight and corridors to make fuel-cell vehicles more competitive.
    • Establish the first shipping routes to kick-start the international hydrogen trade.
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