Price beats climate. Hydrogen produced from fossil fuels still enjoys a distinct price advantage over green hydrogen. At costs between €1-2/kg, the greenhouse gas intensive energy carrier significantly undercuts the cost of €3-8/kg that is seen with environmentally friendly green hydrogen. But despite the enormous cost difference, green hydrogen is on a triumphant march forward. While more than 90% of the hydrogen used worldwide is still produced using climate-damaging natural gas, recent studies by PWC and Bloomberg NEF show that green hydrogen can be produced at cost parity by 2030. This is thanks to falling costs in renewable energy production, more cost-effective electrolysis technologies and rising natural gas prices.
So it’s clear that green hydrogen is becoming more competitive and at the same time, is expected to work wonders in industrial processes that are difficult or impossible to electrify – which it can. But it can only work its magic if the production of hydrogen is also climate-neutral, and that finish line is still a long way off. It should be known though, that the “green” designation of this promising energy carrier may not always be deserved, and there is little consistency with regards to how this is regulated. It should be clear that in order to produce 100% green hydrogen, 100% green electricity is needed for electrolysis.
How green is green hydrogen?
The most important factor in assessing the climate impact of hydrogen production and utilisation is the energy sources used. But in reality, it is extremely difficult to accurately track just how green hydrogen actually is. Since electrolysers that formally draw green power from the grid also draw substantial amounts of grey power, “green” hydrogen is often just “greened” hydrogen. Hydrogen is only 100% green if the electrolyser obtains the electricity directly from renewable energy plants. The still high share of fossil electricity in the electricity mix of many European countries thus presents itself as a barrier to the production of true green hydrogen.
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