How Hydrogen Empowers The Energy Transition

How Hydrogen Empowers The Energy Transition

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Description: Paris, December 12, 2015: 195 countries sign a legally binding agreement to keep global warming well below 2°C – an ambitious goal that will require the economies around the globe to decarbonize large parts of the world’s energy system. This energy transition faces challenges. Significant amounts of renewable energy must be installed and integrated while securing the supply and resilience of the system is demanding.

Energy end-use sectors, such as transport, must be decarbonized at scale.

 
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Contents:
How hydrogen empowers
the energy transition

Hydrogen Council January 2017

How hydrogen empowers
the energy transition

Preface – How hydrogen empowers
the energy transition
Paris, December 12, 2015: 195 countries sign a legally binding agreement to keep global warming well
below 2°C – an ambitious goal that will require the economies around the globe to decarbonize large
parts of the world’s energy system. This energy transition faces challenges. Significant amounts of
renewable energy must be installed and integrated, while securing the supply and resilience of the system
is demanding. Energy end-use sectors, such as transport, must be decarbonized at scale.
In this context, we are convinced that the unique contribution that hydrogen solutions offer needs to be
strongly reaffirmed now. Hydrogen and fuel cell technologies have significant potential to enable this
transition to a clean, low-carbon energy system. Completing this transition will result in greatly reduced
greenhouse gas emissions and improved air quality.
We formed the Hydrogen Council to both underpin and leverage the enabling role of hydrogen. This
partnership of 13 players from various industry and energy sectors with global reach is committed to
providing guidance to accelerate and expand the deployment of hydrogen and fuel cell solutions around
the world.
Hydrogen is a versatile, clean, and safe energy carrier that can be used as fuel for power or in industry
as feedstock. It can be produced from (renewable) electricity and from carbon-abated fossil fuels. It
produces zero emissions at point of use. It can be stored and transported at high energy density in liquid
or gaseous form. It can be combusted or used in fuel cells to generate heat and electricity.
In this paper we explore the role of hydrogen in the energy transition, including its potential, recent
achievements, and challenges to its deployment. We also offer recommendations to ensure that
the proper conditions are developed to accelerate the deployment of hydrogen technologies, with
the support of policymakers, the private sector, and society.
We, the members of the Hydrogen Council, believe in the potential of hydrogen in making the energy
transition happen. In order to unleash this potential, we ask policy makers for their support to overcome
existing barriers. Hydrogen technology rollout requires large-scale efforts and Council members are
willing to further increase their investments. To do so, we see a stable, long-term regulatory framework,
dedicated coordination and incentive policies, and initiatives to set and harmonize industry standards
as essential preconditions on a political level.
We invite governments and key society stakeholders to also acknowledge the contribution of hydrogen
to the energy transition and to work with us to create an effective implementation plan – so that the
compelling benefits of hydrogen deployment can be reaped.

Chapter 1

The energy transition – a necessity
and a global challenge
The need for an energy transition is widely understood and shared; however, the implications and
challenges that must be resolved call for a concerted effort. Hydrogen has the potential to be a powerful
enabler of this transition, as it offers a clean, sustainable, and flexible option for overcoming multiple
obstacles that stand in the way of a resilient and low-carbon economy.
The world needs a cleaner, more sustainable energy system
Unless the energy system changes in almost every respect, from power generation to end-uses across
sectors, the global climate will be affected in the coming 50 to 100 years. The greenhouse gases emitted
in a business-as-usual scenario would lead to an increase of the average global temperature of about 4°C.
This, in turn, would raise sea levels, shift climate zones, and make extreme weather and droughts more
frequent, as well as causing other changes, all impacting biological, social, and economic systems.
The concept of mitigating climate change by transitioning to an energy system with less greenhouse gas
emissions, much reduced particulate emissions, and more sustainable, even circular, consumption and
production, enjoys broad global support. The international community has embraced the idea in multiple
international agreements, including the Sustainability Development Goals (SDGs), Habitat III, and COP21
in Paris. With COP21, 195 countries adopted the first universal, legally binding global climate deal. It aims
to keep “the increase in the global average temperature to well below 2°C above pre-industrial levels and
to pursue efforts to limit warming to 1.5°C”.
These goals are ambitious, and current efforts are not enough. The country plans laid out in COP21 to
reduce CO2 emissions (the INDCs) are insufficient. They will increase the average global temperature well
above the 2°C mark by 2100.1 Limiting global warming to 2°C will allow a cumulated emission of energyrelated carbon emissions of approximately 900 Gt of CO2 by 2100. At current annual energy-related CO2
emissions of 34 Gt, that ceiling will be reached before 2050. At the same time, the world is facing a need
of near-term goals for reducing air pollution, since only 1% of the global population lives in areas with
emissions deemed healthy by the World Health Organization.
The need for action is pressing. To achieve the ambitions of COP21, Habitat III, and SDGs across all
sectors, the world needs to embark on one of the most profound transformations in its history: a transition
of energy supply and consumption from a system fueled primarily by non-renewable, carbon-based
energy sources to one fueled by clean, low-carbon energy sources.
Efforts to decarbonize the energy system need to pull on four main levers: improving energy efficiency,
developing renewable energy sources, switching to low/zero carbon energy carriers, and implementing
carbon capture and storage (CCS) as well as utilization (CCU).
This will radically change energy supply and demand. Today, fossil fuels account for 82% of primary
energy consumption; renewable energy sources contribute only 14%, and nuclear sources 4%.
Towards 2050, growth in population and GDP will increase energy demand by 16%, despite projected
energy efficiency achievements. By 2050, renewables are expected to increase their share of the energy
mix by 3 to 5 times the current amount. At the same time, fossil fuels continue to make up a large share
(partially using carbon capture and storage to offset or prevent emissions). New energy carriers will
be needed to transfer the growing share of decarbonized primary energy towards the energy demand

1

IEA analysis found that implementation of the INDCs is consistent with a global temperature rise of 2.7°C by 2100
and 3°C thereafter.

How hydrogen empowers the energy transition

1

side, while maintaining the quality of energy services provided to end uses (residential, industries,
and transport). Two energy carriers promise to have the greatest possible impact when it comes to
decarbonizing and implementing changes at scale: electricity and hydrogen.
The energy transition needs to overcome five major challenges
Transitioning towards a low-carbon economy will need nothing less than a paradigm shift
(see Appendix I), requiring large scale investments. The challenges ahead come from five areas –
and hydrogen has a role to play in successfully overcoming all of them (Figure 1).
Figure 1:

Hydrogen as a zero-emission energy carrier needed to overcome the challenges around
the energy transition
Energy carriers
Electricity

Sources of energy

Backbone of energy system

Hydrogen

Today
Future

End uses

H2
4.

H2
1. Increasing renewables

2. Infrastructure needs

share leading to
imbalances of power
supply & demand

to go through a major
transformation

H2
3. Global buffering capacity

based on mostly fossil sources

Source: Hydrogen Council

1.

H2

H2

H2
CCS
H2 +
CCU

Some energy
uses are hard to
electrify via the grid
or with batteries:
▪ Long-range
transport
▪ Energy-intensive
industry
▪ Part of residential
heating

5.
Carbon needs
to be reused to
decarbonize
feedstock

Using more variable renewable energy in the power sector will unbalance supply and demand.
Generating electricity from intermittent renewable energy sources and increasing electricity demand will
strain the power system to its limits. Grid capacity, intermittency, as well as application of low-carbon
seasonal (weeks to months) storage and back-up generation capacity will be challenges to address.
Hydrogen helps optimize the power system for renewables, facilitating further increases in renewable
shares. Electrolysis produces hydrogen by using (excess) power supply and enables to valorize it either
in other sectors (transport, industry, residential heat) or to store it for future re-use . Hydrogen has the
potential to improve economic efficiency of renewable investments, enhance security of power supply
and serve as a carbon-free seasonal storage, supplying energy when renewable energy production is low
and energy demand is high, e.g., in European winter.

2.

2

To ensure security of supply, global and local energy infrastructure will require major
transformation. Today, about 30% of the global primary energy supply is traded across borders,
encompassing a mix of energy carriers (oil, gas, coal and electricity). The need for energy trading will
persist, since the potential of renewable energy production varies heavily across the world’s regions –
How hydrogen empowers the energy transition

compounded by limited “storability” of electricity as such. A functioning cross-border energy infrastructure
will be essential for ensuring a secured energy supply. Changes will also occur at the level of regions or
cities within a country: a new mix of centralized and decentralized energy supply will emerge, amplifying
the need for adjusted energy infrastructure.
Hydrogen can provide a cost-effective, clean energy infrastructure, contributing to supply security both
at local and country levels. Shipped, piped, or trucked, hydrogen is a means to (re)distributing energy
effectively among cities and regions.

3.

Buffering of the energy system through fossil fuels will no longer be sufficient to ensure smooth
functioning of the system. The buffer capacity ensures the smooth functioning of the energy system
by maintaining a reserve of approximately 15% of the world’s total annual energy demand. This buffer
absorbs supply chain shocks, provides strategic reserves at country level, and anticipates supply and
demand imbalances. Today, fossil energy carriers provide most of the storage capacity. As electrification
increases, those reserves will no longer be adequate to ensure a stable energy supply for all end-users.
Due to its storability and flexibility in terms of transport, hydrogen is a viable – and clean – future option for
mastering the buffer challenge.

4.

Some energy end uses are hard to electrify via the grid or with batteries, especially in transport
but also in other sectors. In many sectors, direct electrification is and will remain technologically
challenging or uneconomical even at very high CO2 prices. This applies, e.g., to heavy-duty transport,
non-electrified trains, overseas transport, and aviation, but also to some energy-intensive industries. In
other sectors, such as light-duty vehicles, direct electrification, although technologically possible, does
not always meet performance requirements in range and charging convenience.
In many, if not all of these sectors, where technological and/or economic obstacles prevent direct
electrification, hydrogen offers a viable solution.

5.

Renewable energy sources cannot replace all fossil feedstocks in the (petro-)chemicals industry.
Fossil fuels used for the production of, e.g., plastics will cause (carbon) emissions at the end of their life cycle
when burned in incinerators. These delayed emissions need to be decarbonized too. Combining hydrogen
with captured carbon creates hydrocarbons that can complement oil and natural gas as chemical feedstock.
Thus, hydrogen may also help to put carbon capture and utilization into practice and to decarbonize other
carbon-intense sectors like the cement industry.
Taken together, the unique properties of hydrogen make it a promising solution to overcome the challenges
facing the energy system. Hydrogen can be produced without any carbon footprint if renewable electricity
is used for electrolysis, if bio-methane is used in steam methane reforming (SMR) or if SMR is equipped
with CCS/CCU. The properties of hydrogen enable it to generate power and/or heat (through fuel cells,
combined heat/power units (CHPs), burners, or modified gas turbines). Its chemical properties also allow
for its use as feedstock in chemical processes, including production of ammonia and methanol. Hydrogen
combustion does not emit SOx or other particulates, and only limited NOx. In fuel cells, e.g., for vehicles,
hydrogen usage does not cause any emissions and makes less noise than conventional engines. Stored in
tanks, hydrogen is lighter and contains more energy than a battery of similar size, offering clear benefits for
energy storage and distribution. (For more information on hydrogen, see Appendix II – Hydrogen essentials.)

How hydrogen empowers the energy transition

3

Chapter 2

The role of hydrogen in the
energy transition
Hydrogen’s unique properties make it a powerful enabler for the energy transition, with benefits
for both the energy system and end-use applications (Figure 2).
Figure 2:

Hydrogen has seven roles in decarbonizing major sectors of the economy
Energy carrier
Hydrogen

Sources of energy

Backbone of energy system

End uses

4. Decarbonize
transport

5. Decarbonize industry
energy use

1. Enable large-scale,

efficient renewable
energy integration

2. Distribute energy across
sectors and regions

6. Serve as feedstock

using captured carbon

7. Help decarbonize
Source: Hydrogen Council

1.

3. Act as a buffer to

building heating

increase system resilience

Enable large-scale, efficient renewable energy integration
In the power sector, the timing of variable electricity supply and demand is not well matched (neither
over the day nor between seasons). Integration of an increasing share of intermittent sources up to
targeted levels (above 40% of the electricity mix) will enhance the need for operational flexibility. Increased
electrification and limited storability of electricity will require adequate storage solutions. Various
options exist to resolve the various issues, such as grid infrastructure upgrades or technologies for
short- or longer-term balancing of supply and demand, e.g., flexible back-up generation, demand-side
management, or energy storage technologies .
Hydrogen offers valuable advantages in this context, as it avoids CO2 and particles emission, can be
deployed at large scale, and can be made available everywhere. There are two ways in which hydrogen
improves the efficiency and flexibility of the energy system (Figure 3):
i. Electrolysis can convert excess electricity into hydrogen during times of oversupply. The produced
hydrogen can then be used to provide back-up power during power deficits or can be used in
other sectors such as transport, industry or residential. It thus valorizes excess electricity.
The potential of valorization of otherwise curtailed renewable energy is considerable. For instance,
in Germany alone, in a scenario with 90% renewables, curtailment of more than 170 TWh/year is
projected for 2050, equivalent to about half the energy needed to fuel the German passenger car fleet
with hydrogen. This would create an opportunity for around 60 GW of electrolysis capacity to operate
economically (depending on improvements in grid interconnectivity).
How hydrogen empowers the energy transition

5

Figure 3:

Excess power can be used to produce hydrogen for seasonal energy storage
Simulation for Germany 2050, in GW
RES production

Load demand

Curtailed periods of oversupply
200

Periods of deficits

H2
150

100

50

0

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Load demand in winter is higher while RES production is lower
Source: EC 2050 scenario, McKinsey analysis

Hydrogen offers a centralized or decentralized source of primary or backup power. Like gas, power
from hydrogen (or one of its compounds) is switched on and off quickly. Thus, hydrogen helps deal
with sudden drops in renewable energy supply, e.g., during adverse weather events). In addition,
electrolysers may provide ancillary services to the grid, such as frequency regulation.
Hydrogen can also be used in specific fuel cell CHPs in industry and buildings, linking heat and power
generation. This enhances the efficiency of generated electricity and heat for these sectors and
improves flexibility of the energy system as a whole. Its potential is discussed in the following sections.
ii. Hydrogen can serve as long-term carbon-free seasonal storage medium.
Hydrogen represents the optimal overall solution for long-term, carbon-free seasonal storage. While
batteries, super-capacitors, and compressed air can also support balancing, they lack either the power
capacity or the storage timespan needed to address seasonal imbalances (Figure 4). Pumped hydro
offers an alternative to hydrogen for large-scale, long-term energy storage; it currently accounts for
more than 95% of global power storage (162 GW worldwide). However, its remaining untapped potential
is subject to local geographic conditions and limited to about 1% of annual global energy demand
(0.3 EJ). This is not enough to handle seasonal demand differences. For instance in Germany energy
demand is about 30% higher in winter than in summer, while renewable generation is typically 50%
lower in winter than in summer (Figure 3).
At this point in time, hydrogen remains a novel way to store energy, but more and more large, hydrogenbased storage demonstration projects are being planned, announced, or launched around the world –
e.g., in Denmark, Canada, Japan, and the Asia-Pacific region. In addition, underground storage of large
volumes of hydrogen is a well-established industry practice and does not present a major technological
barrier. With an increasing share of renewable energy sources, the deployment of hydrogen as a longterm storage solution is expected to accelerate. As that happens, the cost of hydrogen storage is
6

How hydrogen empowers the energy transition

Figure 4:

Hydrogen is most promising for long-term carbon-free seasonal storage
Technology overview of carbon-free energy storage technologies

Capacity
10 GW
1 GW

Pumped Hydro Storage

100 MW

Compressed air

Geographical
capacity constraints

Hydrogen storage1

100 kW

Battery

1 MW

Fly-wheel

10 MW

10 kW
1 kW

Super
capacitor

Minute Hour

Day

Week

1 IEA data updated due to recent developments in building numerous 1MW hydrogen storage tanks

Season
Discharge duration

Source: IEA Energy Technology Roadmap Hydrogen and Fuel Cells, JRC Scientific and Policy Report 2013

projected to decrease to €140/MWh (power to power) in 2030 for hydrogen stored in salt caverns. This
is even less than the projected cost for pumped hydro storage (about €400/ MWh in 2030). In Germany
the constrained potential for storage in caverns is about 37 billion cubic meters. This would be sufficient
to store 110 TWhth hydrogen, covering the projected full seasonal storage need.
All in all, hydrogen permits to integrate more economically large amounts of intermittent energy sources
in the system and provides the much needed flexibility to maintain the resilience of the system.

2. Distribute energy across sectors and regions
The power system will require distribution of renewable energy for several reasons. Some countries,
such as Japan, are not well positioned to generate energy with wind or solar power alone. Other countries
may need time to raise the necessary investments. In some cases, importing renewable energy might
be more economical, e.g., bringing low-cost solar energy from sun-belt countries to less sunny regions.
As hydrogen and its compounds have a high energy density and are easily transported, they will help to
(re)distribute energy effectively and flexibly.
While transporting electricity over long distances can cause energy losses, pipeline transportation of
hydrogen reaches almost 100% efficiency. This benefit makes hydrogen an economically attractive
option when transporting renewable energy at scale and over large distances, e.g., from areas with a high
potential for renewable power generation, such as the Middle East, to areas with high energy demand like
Europe.2 Import of hydrogen might serve as a long-term strategy, aimed at handling the ramp-up period
for renewables or ensuring adequate energy supply during the winter, when renewable energy sources
produce less electricity.
Japan is planning to launch the first technical demonstration of a liquefied hydrogen carrier ship to enter
2

Assuming double production costs for solar and wind electricity in the Netherlands compared with solar in the sun-belt
regions, 2 ct/kWh electrolysis cost without electricity and 2.5 ct/kWh for the liquefaction and transport of hydrogen

How hydrogen empowers the energy transition

7

international trade in 2020. Today, hydrogen pipelines and gaseous or liquefied tube trailers are the most
common modes of transport. As the flow of hydrogen increases, the costs for liquefaction and transport
are expected to drop by 30 to 40% in the next 15 years. Use of existing gas grids to transport hydrogen
has been tested but not applied at large scale. Leeds is the first city that has proposed to convert its gas
grid into a hydrogen grid by 2026.

3.

Act as a buffer to increase system resilience
Hydrogen can help align global energy storage with changing energy demand. Its high energy density,
long storage capacity, and variable uses make hydrogen well suited to serve as an energy buffer and
strategic reserve.
Today, the energy system has backup capacity of about 90 EJ (24% of final annual energy consumption),
held almost exclusively by fossil energy carriers. The council sees no indication that the amount of
buffering need could decrease significantly in the future.
But, as consumers and the power sector switch to alternative energy carriers, the use of fossil fuels
as backup might shrink, since this buffer serves only applications that consume fossil fuels. The most
efficient buffer would mix energy carriers that reflect (or could transform into) end-use applications. This
mix would include fossil fuels, biofuels/biomass/synthetic fuels, and hydrogen.

4.

Decarbonize transport
Fuel cell electric vehicles (FCEVs) have an important role to play in decarbonizing transport. Today oil
dominates the fuel mix that meets the world’s transport needs. Gasoline and diesel account for 96% of
total fuel consumption and 21% of global carbon emissions (Figure 5).
Efficient hybrid vehicles like hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs)
are already reducing vehicle emissions. However, fully decarbonizing transport will require deployment

Figure 5:

FCEVs will play an essential role in decarbonizing transport
Projected economic attractiveness

Weight
Tons

Bubble size representing the relative annual
energy consumption of this vehicle type in 2013

10,000+

BEV
FCEV
Bio- and (H2-based)
synthetic fuels

1,000
1

100

10

Light commercial vehicles

1

Small cars/urban mobility2

1

0.1
10

Medium to large cars²,
fleets and taxis

100

1,000+
Average mileage per day/trip
Km

1 Battery-hydrogen hybrid to ensure sufficient power
2 Split in A- and B-segment LDVs (small cars) and C+-segment LDVs (medium to large cars) based on a 30% market share of A/B-segment cars and a 50% less energy demand
Source: Toyota, Hyundai, Daimler

8

How hydrogen empowers the energy transition

of zero-emission vehicles like hydrogen-powered FCEVs and battery electric vehicles (BEVs), or hybrid
combinations thereof. Advances in technology and new trends in mobility (e.g., connected cars,
autonomous driving technology, and shared mobility) will influence relative levels of deployment and the
transition speed. Both electric vehicle types make use of similar and complementary technologies and are
specifically suited to serve different segments and customers. Besides lowering CO2 emissions, both also
support local air quality improvements and noise reductions.
FCEVs offer several significant benefits. Firstly, they can drive long distances without needing to refuel
(already more than 500 km), a feature highly valued by consumers. Secondly, they refuel quickly (3 to 5
minutes), similar to current gasoline/diesel cars, which adds to consumer convenience. Thirdly, thanks
to a much higher energy density of the hydrogen storage system (compared to batteries), the sensitivity
of the FCEV powertrain cost and weight to the amount of energy stored (kWh) is low. This increases its
attractiveness and likelihood of adoption of vehicles that require significant energy storage (e.g., heavy
load capacity and/or long range/heavy use). Lastly, FCEV infrastructure can build on existing gasoline
distribution and retail infrastructure, creating cost advantages and preserving local jobs and capital assets.
FCEVs will emerge in all segments. Considering the above indicated benefits, they will be especially
important in decarbonizing passenger cars (e.g., medium to large cars, fleets, and taxis), heavy-duty
transportation, buses, and nonelectrified trains. Application of synthetic fuels made out of hydrogen to
shipping and aviation is also being explored (Figure 6).
For passenger cars, total cost of ownership (TCO) for FCEVs is currently higher than for internal
combustion engine (ICE) vehicles, while travel cost (hydrogen price per kilometer traveled) is already
similar to the cost of HEVs in Japan. When FCEVs reach at-scale commercialization, we are confident
that cost parity (from a TCO perspective) can be reached by 2025 for medium to large passenger cars.
Figure 6:

Leading Western and Asian countries plan to roll out a significant hydrogen infrastructure
over the coming decade. Number of hydrogen refueling stations (HRS)1
Significant HRS network development

US

Europe

Minor HRS network development2

Asia

Up to 2,0003
8303
6003

60

130

2016

2020

520

340

100
2025

2016

103
2020

2025

2016

2020

2025

1 Publicly available HRS from countries with a significant HRS network development
2 Countries or states with no major HRS outlook as of today
3 Depending on the number of FCEVs on the road
Source: H2 Mobility, US DOE, Hydrogen Europe, Air Liquide

How hydrogen empowers the energy transition

9

Selected car fleets and buses will reach cost parity even sooner, as their infrastructure rollout tends
to be simpler and thus cheaper.
Major automotive players are pursuing a dual solution for zero-emission products. Three leading
manufacturers already offer commercially available FCEVs, while many others have announced the
intention to launch their own FCEVs soon. FCEVs are starting to become commercially available, with
more than a thousand vehicles already on the road in Japan and the US, and a few hundred in Europe.
Several OEMs have FCEV production lines that can produce thousands of FCEVs a year. By the early
2020s, a significant ramp-up is expected and OEMs will have the capacity to produce tens of thousands
of commercially available passenger FCEVs a year. This is in line with several countries’ ambitious FCEV
deployment targets. China, for example, has set the goal of having 50,000 FCEVs on the road by 2025
and 1 million by 2030. Japan plans to deploy 200,000 FCEVs by 2025 and 0.8 million by 2030.
FCEVs start to penetrate mass and goods transport. While the current market share of FCEV buses is still
small (~ 500 on roads around the world), recent investments show increasing momentum to shift mass
transit to FCEV solutions. For example, Lianyungang Haitong Public Transport (China) plans for 1,500
FCEV buses, Europe has announced to deploy in total 600 to 1,000 FCEV buses by 2020 and South
Korea plans to replace 27,000 CNG buses with FCEVs by 2030. The development of commercial heavyduty vehicles is currently targeted by several OEMs. Germany announced recently that its first hydrogen
trains will start running in 2017. FCEV trains are already cost competitive with diesel trains (from a TCO
perspective).
Leading Western and Asian countries are planning to roll out significant hydrogen infrastructure over
the coming decade. In Europe the number of stations is expected to double biannually, with up to 400
stations in Germany alone by 2023, and California has set the goal of having 100 stations by 2020.
Japan already has more than 80 stations operating, and South Korea and China are planning to setup
a hydrogen network, together aiming for 830 stations by 2025. The total targeted number of more than
3,000 stations in 2025 will be sufficient to provide hydrogen for about 2 million FCEVs. After this initial
development phase, refueling infrastructure will be self-sustained.

5.

Decarbonize industry energy use
Today, natural gas, coal, and oil provide energy for industrial processes and thus generate about 20%
of global emissions. Industry needs to improve energy efficiency (including waste heat recovery), thus
reducing the need for energy. Steam electrolysis technologies can help valorize waste heat into hydrogen.
Industry also needs to decarbonize the sources of process heat, for both low- and high-grade heat.
Industry has many options for decarbonizing low-grade heat. While heat pumps and electric resistance
heating offer advantages in certain geographic locations, hydrogen is clearly advantageous when it is
available as a by-product of the chemical industry or when a specific industry needs an uninterruptable
power supply (as provided by a fuel cell), along with heat. As hydrogen can be combusted in hydrogen
burners or be used in fuel cells, it offers a zero-emission alternative for heating.
High-grade heat - above 400°C - is harder to decarbonize. Hydrogen burners can complement electric
heating to generate high-grade heat, depending on local conditions: some regions might favor industrial
use of hydrogen technologies instead of electricity, given the constraints they have in the design of their
energy system.

10

How hydrogen empowers the energy transition

Today, industry uses hydrogen in low-grade heat applications, such as process heating and drying. In the
future, industry might also use a mix of hydrogen burners and fuel cells to meet their low- and high-grade
heat needs. Fuel cells have a higher efficiency than burners and simultaneously provide heat and power,
but their deployment still requires significant investment. Burners, on their side, require only adjustments
of existing equipment.

6. Serve as feedstock using captured carbon
Hydrogen-based chemistry could serve as a carbon sink and complement or decarbonize parts of
the petrochemical value chain. Today, crude oil (derivatives) are used as feedstock in the production of
industrial chemicals, fuels, plastics, and pharmaceutical goods. Almost all of these products contain both
carbon and hydrogen. If the application of carbon capture and utilization (CCU) technology takes off (as
part of a circular economy or an alternative to carbon storage), the technology will need (green) hydrogen
to convert the captured carbon into usable chemicals like methanol, methane, formic acid, or urea. This
use of hydrogen would make CCU a viable alternative for other hard-to-decarbonize sectors like cement
and steel production, and would contribute to the decarbonization of part of the petrochemical value
chain.
The use of hydrogen and captured carbon to produce chemical feedstocks is in the research and
development phase, with initial pilot projects being launched. Iceland has an operational geothermal
plant that uses geothermal CO2 and generated electricity to produce hydrogen and then methanol.
This methanol production is stated to be cost-competitive with an electricity price of EUR 30/MWh; other
local conditions might produce different results. Sweden has planned a similar project that will use carbon
captured from iron ore processing. Germany is combining carbon from steel production emissions with
hydrogen from excess electricity to produce chemicals. The project is still in the concept phase and is
expected to reach scale in 15 years.

7. Help decarbonize building heating
Heating and warm water supply account for about 80% of residential energy consumption. About 50 EJ of
energy is used for residential heating, responsible for 12% of global emissions. Hydrogen will be part of a
portfolio of solutions for decarbonizing building heating. Local conditions will dictate the choice of options.
Building heating can use hydrogen as a fuel or leverage hydrogen technologies, or ideally a combination of both:
hydrogen technologies such as fuel cell micro CHPs serve as energy converters. They offer high efficiency for
heat and power generation (> 90%). Hydrogen itself can serve as a fuel (either pure or blended with gas, partially
decarbonizing the gas grid). For houses connected to a natural gas grid, switching to hydrogen-combustionbased heating offers an opportunity to keep using the existing gas grid. With relatively small adjustments and
investments, the grid can safely transport a mixture of hydrogen and natural gas. Full decarbonization requires a
total switch to hydrogen, as contemplated by UK gas grid operators in Leeds.
On a global scale, about 190,000 buildings are already heated with hydrogen-based fuel cell micro CHPs.
Most micro-CHPs (> 95%) are located in Japan, where about half run on methane combined with a reformer
to produce hydrogen. The project has shown the ability of micro CHPs to meet heating requirements and
supplement the electricity balance. By 2030, some 5.3 million Japanese households will use micro CHPs.
Economies of scale have already cut prices more than 50%, from 2.4 USD/W installed in 2009 to 1 USD/W
installed in 2014.

How hydrogen empowers the energy transition

11

Chapter 3

Existing barriers and enablers
to fully unlock the potential
of hydrogen
The long-term benefits of hydrogen are compelling, and it provides a promising pathway for the energy
transition, with a clear acceleration over the past 3 years, coming from commercialization of products in
all sectors. Continuous improvements in cost and performance of hydrogen related technologies are
being made along the entire value chain (Figure 7).
Figure 7:

Continuous improvements are being made along the entire value chain
Selected examples of hydrogen technologies
2010

1,400k

301

190k

8

6-7

4-6

263

No. of public HRS

Zero-carbon production
(electrolysis example)

Fuel Cells

10

990

50% in ammonia/fertilizer production, with the rest in refining of
(bio)fuels, methanol production, and processing). The use of hydrogen as an energy carrier is beginning
to accelerate; in recent years, fuel cell sales have increased more than 30% a year, reaching 60,000 units
last year, with over 300 MW of capacity. Costs of fuel cells fell almost 50% during the last 10 years and are
projected to drop drastically, with the transition to mass production over the next 10 to 15 years.
Hydrogen can be used safely. Over the past decades hydrogen has been widely used in industry
ensuring safe production, storage, transport and utilization. Hydrogen is flammable fuel, and has
similar flammable properties as gasoline and natural gas. Hence, similar to other flammable fuels,
hydrogen can be used safely when simple guidelines are observed and the consumer has knowledge of its
characteristics.

How hydrogen empowers the energy transition

17

List of abbreviations

BEV

Battery electric vehicle

CCS

Carbon capture and storage

CCU

Carbon capture and utilization

CHP

Combined heat/power units

CNG

Compressed natural gas

COP21

Conference of the Parties in Paris in December 2015

FCEV

Fuel cell electric vehicle

GDP

Gross domestic product

HEV

Hybrid electric vehicle

ICE

Internal combustion engine

INDC

Intended Nationally Determined Contributions

OEM

Original equipment manufacturer

PHEV

Plug-in hybrid electric vehicle

R&D
R, D & D

Research and development
Research, development and deployment

ROC
SDG

Sustainability Developent Goals

SMR

Steam methane reforming

TCO

18

Renewable Obligation Certificate

Total cost of ownership

List of sources

D

Department of Energy, US: Global energy storage database, 2016
Department of Energy and Climate Change, UK: The Future of Heating: A strategic
framework for low carbon heat in the UK, 2012

E

E4Tech: Fuel Cell Industry Review, 2016
E4Tech: Hydrogen and Fuel Cells: Opportunities for Growth, 2016
Element Energy: Strategies for joint procurement of fuel cell buses, 2016
Enerdata: Global Energy Statistical Yearbook, 2016
Energy Information Administration: Monthly Energy Review, November 2016
Energy Technologies Institute: Hydrogen The role of hydrogen storage in a clean
responsive power system, 2015
The European Wind Energy Association: Wind Energy Scenarios, 2015

F

Fuel Cells and Hydrogen Joint Undertaking: Commercialisation of energy storage
in Europe, 2015

G

Greenpeace: PowE[R] 2030, 2014

H

Hydrogen Science and Engineering: Materials, Processes, Systems and Technology
Volume 2, D. Stolten and B. Emonts, 2016

I

International Energy Agency: Energy technology perspectives, 2016
International Energy Agency: World energy outlook, 2016
International Energy Agency: Technology Roadmap Hydrogen and Fuel Cells, 2015
International Gas Union: World LNG Report, 2016
International Renewable Energy Agency: The Power to Change: solar and wind cost
reduction potential to 2025, 2016

J

Joint Research Centre: Scientific and policy report, 2013

M

McKinsey & Company: A portfolio of power-trains for Europe: a fact-based analysis, 2012

N

The National Hydrogen Association: Hydrogen safety, 2016

P

Praxair: Advanced Hydrogen Liquefaction Process, 2011

S

SBC Energy Institute: Hydrogen based energy conversion, 2014

U

Umwelt Bundesamt: Energy target 2050: 100% renewable electricity supply, 2010
US Department of Energy: Fuel Cell Technologies Market Report, 2015

W

The World Bank: Annual report, 2014
World Health Organization: World Health Statistics, 2014

How hydrogen empowers the energy transition

19

Contact and
Acknowledgements

Contact
Hydrogen Council
secretariat@hydrogencouncil.com
www.hydrogencouncil.com

Acknowledgements
This vision document has been authored by the 13 member companies of
the Hydrogen Council: Air Liquide S.A., Alstom, Anglo American plc,
BMW Group, Daimler AG, Engie S.A., Honda Motor Co. Ltd,
Hyundai Motor Company, Kawasaki Heavy Industries Ltd.,
Royal Dutch Shell, The Linde Group, Total S.A., Toyota Motor Corporation
The authors would like to thank McKinsey & Company for providing research
for this report.
The Hydrogen Council is supported by Hydrogen Europe.

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