Russia sanctions and gas price crisis reveal danger of investing in “blue” hydrogen

Hydrogen is expected to be a key instrument in meeting European objectives of climate-neutrality by 2050, since it does not emit carbon dioxide (CO2) when burnt and can be produced from renewable electricity and water (known as green or renewable hydrogen). 

Following the European Green Deal announcements in December 2019, the EU announced its hydrogen strategy in 2021, targeting 40 gigawatts (GW) of electrolysers and 10 million tonnes (mt) of domestic renewable hydrogen production by 2030. 

In response to the Russian invasion of Ukraine, REPowerEU announced in March 2022 plans to further replace demand for Russian gas with an additional 15mt of renewable hydrogen (10mt imports and 5mt additional domestic production). Notably, hydrogen produced by other means is not considered part of the solution.

Meanwhile the UK’s British Energy Security Strategy, published in April 2022, describes hydrogen as a “low carbon super fuel of the future” and aims to produce as much as 10GW of low carbon hydrogen by 2030, with at least half produced from water electrolysis (using renewable or nuclear electricity) and the rest produced from natural gas with emissions reduced by carbon capture and storage (blue hydrogen).

Gas-derived blue hydrogen has long been proposed by the oil and gas industry as an energy carrier that can help reduce global warming, although this has been contested by climate and energy experts: 

• The International Council on Clean Transportation recommended that policymakers should not support fossil-based hydrogen in climate and gas policies, saying that only hydrogen produced from renewable electricity or forest residue biomass can have low greenhouse gas (GHG) emissions after accounting for uncertainties in parameters, especially methane leakage and carbon capture rates. 
• Cornell and Stanford University researchers concluded that blue hydrogen may harm the climate more than directly burning gas or even coal for heat, due to methane emissions from its supply chain and uncertainty over the performance of carbon capture and storage (CCS) technology.
• A recent analysis by IEEFA in the U.S. has highlighted how large commercial CCS projects have not achieved the industry target rate over time, despite years of investment and projects.

More broadly speaking, other studies have been published questioning the Global Warming Potential (GWP) of hydrogen. A recent study released by the UK government’s own Department of Business, Energy and Industrial Strategy (BEIS) found that hydrogen is twice as powerful a greenhouse gas as previously thought. Global warming potential (GWP) is a measure used to compare the warming effect of different gases with that of CO2. By definition CO2 has a GWP of 1. BEIS estimated that hydrogen has a GWP of six to 16 over a 100-year time horizon, and 20 to 44 over a 20-year horizon. This compares with a GWP of 84 to 87 for methane, the main component of natural gas. But hydrogen is the lightest element and leaks more easily than methane, so any future hydrogen systems will need to have strong leakage protection and monitoring to be considered climate neutral.