Hydrogen generated from renewable sources could slash global greenhouse gas emissions from fossil fuels and industry by a third, research from BloombergNEF (BNEF) has suggested.
The company's Hydrogen Economy Outlook also suggests renewable hydrogen can be produced at $0.8 (£0.6) to $1.6 per kg, making it competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia.
BNEF said that falling costs offer a “promising route“ to cutting emissions in some of the world's most fossil fuel-dependent sectors by up to 34%, but only if policies are put in place to scale-up the technology.
Kobad Bhavnagri, head of industrial decarbonisation at BNEF, said: “Hydrogen has potential to become the fuel that powers a clean economy.
“In the years ahead, it will be possible to produce it at low cost using wind and solar power, to store it underground for months, and then to pipe it on-demand to power everything from ships to steel mills.“
Hydrogen is a clean-burning molecule that can be used as a substitute for coal, oil and gas in a large variety of applications, but for its use to have net environmental benefits, it must be produced from clean sources.
Renewable hydrogen can be made by splitting water into hydrogen and oxygen, using electricity generated by cheap wind or solar power, and BNEF said that the cost has fallen by 40% in the last five years.
However, for hydrogen to become as ubiquitous as natural gas today, the company said that three to four times more storage infrastructure would need to be built at a cost of $637bn by 2050.
“The clean hydrogen industry is currently tiny and costs are high. There is big potential for costs to fall, but the use of hydrogen needs to be scaled up, and a network of supply infrastructure created,“ Bhavnagri continued.
“This needs policy coordination across government, frameworks for private investment, and the roll-out of around $150bn of subsidies over the next decade.
“That may sound daunting but it is not, in fact, such a huge task – governments around the world currently spend more than twice that every year on fossil fuel consumption subsidies.“
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