Clean hydrogen has risen to prominence as a pivotal element in decarbonizing sectors traditionally seen as challenging to reform, such as heavy industry and transport.
This surge in interest is not unfounded, as clean hydrogen, holds the potential to significantly reduce greenhouse gas emissions in areas where other renewable energies may falter.
Clean hydrogen production is categorized mainly into two types: “blue” and “green.” Blue hydrogen is produced from fossil fuels, with the carbon emissions captured and stored to mitigate environmental impact.
Green hydrogen, on the other hand, is obtained through the electrolysis of water using renewable energy sources or biomass, presenting an even more sustainable option.
Conventional hydrogen production, reliant on fossil fuels without carbon management, is gradually becoming less favored due to its environmental footprint.
The shift towards a hydrogen-based economy is expected to reshape the energy geopolitics, offering emerging markets and developing countries (EMDCs) a unique position as both key consumers and exporters.
Recognizing this potential, governments worldwide are developing strategies to harness clean hydrogen, with policy alignment being crucial to attract private investment and reduce risks associated with this nascent industry.
However, the path to widespread clean hydrogen adoption is fraught with challenges, particularly regarding costs.
The Energy Sector Management Assistance Program (ESMAP) has highlighted that beyond technology expenses, financing costs play a significant role in the overall affordability of clean hydrogen projects.
Identifying and mitigating project risks are vital steps towards making clean hydrogen a financially viable option. For clean hydrogen to significantly contribute to global climate targets, production must scale up dramatically from current levels, with a notable increase required by 2030.
Investment is a critical factor in this expansion, especially for EMDCs, where the potential for clean hydrogen production is significant. Projections suggest that attracting up to $100 billion annually by 2030 is achievable with the right strategies and financing frameworks in place.
The future of clean hydrogen in transforming the global energy landscape is bright, particularly for emerging markets. However, addressing cost disparities, securing adequate financing, and mitigating project risks remain critical hurdles.