Green hydrogen – hype or hope?
In the short term, green hydrogen may not be the cure-all for the energy crisis, Eric Heymann says, but in the long term it will be indispensable in the fight against climate change.
Green hydrogen – hype or hope? Explained in 99 seconds
Eric Heymann is Senior Economist for sectors, technology and resources at Deutsche Bank Research. Who better to talk to about green hydrogen? He considers it a multi-talent that can, in the long term, help us solve the energy crisis and fight the effects of climate change.
Eric, what is green hydrogen and what can it be used for?
Green hydrogen is produced using renewable energies. It is a climate-friendly form of energy, and its uses are manifold. For example, it can replace fossil fuels in the building industry or in the transport sector. In the steel industry, for instance, green hydrogen is a carbon-free alternative to coal to power furnaces. If green hydrogen can be produced locally, it eliminates the need to transport it long distances and keeps costs down. In the medium to long term, green hydrogen will play an important role as a sustainable, reliable and hopefully cheap energy supply and also help combat climate change.
Green hydrogen is hydrogen produced using renewable energies.
You mentioned the transport sector. Could green hydrogen be a game changer there?
We have to distinguish between types of transport. At the moment, most passenger vehicle companies are focusing on battery-powered cars rather than on hydrogen fuel cells as battery technology is cheaper and already fairly well established. Here, electrification is simple. In other areas, though, where electrification is more difficult, hydrogen – and specifically green hydrogen – will player a larger role: in shipping, haulage and aviation, for example. At the end of the day, it will depend on how much the alternatives cost and how difficult the new technology is to implement.
What other obstacles do you see?
The two main obstacles to large-scale green hydrogen uptake are infrastructure investments and costs. Massive investments are needed in infrastructure: we will need electrolysers, pipelines and also additional renewable energy installations in order to have enough green energy to produce green hydrogen. Still being scarce, green hydrogen is expensive and the costs associated with using it – conversion, cooling, transport – are currently high.
Will green hydrogen solve the energy crisis?
Many observers see green hydrogen as a cure-all for the energy crisis. There is no one solution; it will be a mix. One thing is clear: with the global population growing by 80 million each year, the world’s energy demand is rising. In the short term, there simply isn’t enough green hydrogen available to meet this demand in Germany or worldwide.
So what’s the solution?
It’s clear that Germany will have to import large amounts of green hydrogen – usually in gas form. A country as densely populated as Germany just doesn’t have the space to install the number of wind or solar farms to produce the necessary excess in green energy. Another option is to import ammonia (NH4), which can be used to produce hydrogen and is, in fact, easier and therefore less costly to transport. In Germany, the first green ammonia import terminal at the port of Hamburg is being built for ammonia from Saudi Arabia.
Many observers see green hydrogen as a cure-all for the energy crisis.
Is this the chance for the Middle East and Africa to play a major role in the global green energy economy of the future?
With solar power and wind energy in abundant supply, Saudi Arabia is one of a number of countries in the Middle East and Africa that is particularly well suited to producing large amounts of green hydrogen at low cost. South America and Australia also have excellent conditions. The European Union is partnering with a number of these countries and investing in the green hydrogen infrastructure of the future.
Will the EU still get a look in when it comes to investment spending?
At the moment, it seems that large parts of private investments might flow to the United States. With the Inflation Reduction Act, the US is arguably taking more of a pragmatic approach and paying a fixed sum for every kilo of hydrogen produced either by renewables or by nuclear power. The game is far from over, though, and the European Union will also attract investment spending in green hydrogen. With competition for the hydrogen market now intensifying, strong policy support and financial incentives will be key to bringing more green hydrogen to the market.
In a nutshell?
There is simply not enough green hydrogen available for it to make a short-term breakthrough; in the medium to long term, though, and with increased investment spending and subsidies, green hydrogen will play an important role as a sustainable, reliable and hopefully cheap energy supply and will help combat climate change.
About Eric Heymann
Eric Heymann is a Senior Economist for Deutsche Bank Research, responsible for energy issues and climate policy, the automotive industry, the transport and traffic sector and industrial cross-cutting issues. Eric studied economics at Justus Liebig University in Giessen. He has been working for Deutsche Bank Research since 1998.
… is an English editor in Deutsche Bank’s Newsroom in Frankfurt. Troubled about what the future might hold if the economy doesn’t start seriously pursuing net-zero goals very soon, she is interested in exploring new technologies and their potential for creating a world worth living in.
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