A new report is raising questions about the future cost of hydrogen, suggesting that renewable versions of the fuel will “undercut” other low-carbon types in the next decade.
Published yesterday by BloombergNEF, the analysis found that “green” or renewable hydrogen, made with solar or wind power, will become cheaper than “blue” hydrogen — produced from natural gas and outfitted with carbon capture — by 2030 in all of the 28 countries studied, including the United States. Several fossil fuel companies and oil majors are backing subsidies for blue hydrogen.
Both renewable and “blue” hydrogen remain little more than a concept at this point. About 95% of the United States’ hydrogen is “gray,” or natural gas-derived, and has no capture system for the CO2 emissions that result.
Most analyses show that blue hydrogen would be several times cheaper to produce, at present, than renewable hydrogen, but BNEF’s analysis predicts that situation will make a dramatic shift over the next decade. By 2050, the firm’s analysts wrote, renewable hydrogen will be even cheaper than the “gray” kind, plunging as low as 67 cents per kilogram in the U.S., compared to $1.19/kg for gray hydrogen.
“Companies currently banking on producing hydrogen from fossil fuels with CCS will have at most ten years before they feel the pinch,” said Martin Tengler, lead hydrogen analyst at BNEF, in comments included in the analysis’s release. “Eventually those assets will be undercut, like what is happening with coal in the power sector today.”
A key price threshold for renewable hydrogen to become widely adopted, in the minds of industry and energy researchers, is $2 per kilogram. That’s the target point for Energy Department hydrogen researchers and industry coalitions like the Green Hydrogen Catapult. By 2030, renewable hydrogen’s cost in the U.S. will range from $1.21 to $1.93 per kilogram, depending on what kind of electrolyzer is used to split hydrogen from water, wrote Meredith Annex, head of heat decarbonization research at BNEF, in an email to E&E News.