Hydrogen is an energy carrier that can displace fossil fuel usage across numerous industries. It emits zero-carbon emissions when burned, although it's production can be carbon-emitting depending on how it's produced. Hydrogen can play a particularly critical role in decarbonising heavy industry which contributes around 30 per cent of total greenhouse gases. This is because heavy industries typically use fossil fuels within their production processes and can be challenging to decarbonise1. Displacing their fossil fuel usage with low-carbon emitting hydrogen can reduce emissions by up to 34 per cent, according to Bloomberg New Energy Finance2.
The IEA estimates that hydrogen could make up nearly 20 per cent of final energy demand in a low-carbon economy, up from around 5 per cent today3. This would mean an ~11x increase in hydrogen production from ~70 Mt/annum today to around 800 Mt/annum by 2050. Moreover, new hydrogen supply would need to be mostly low or zero-carbon (e.g. ‘blue' or ‘green').
The ETC estimates that building a low-carbon hydrogen economy will require investment of around USD$130 billion per annum across production, transport and storage infrastructure4. Cost reductions and greater hydrogen supply will be necessary to support demand adoption across a range of industrial sectors.
This paper by HSBC Centre of Sustainable Finance showcases the role of hydrogen in decarbonising hard-to-abate sectors and application opportunities. It also highlights mechanisms, like industrial clusters, to accelerate the build-up of a hydrogen economy. This report aims to address the following questions:
- How significant is the role of low-carbon hydrogen in decarbonising hard-to-abate sectors?
- What are the most impactful near-term opportunities for low-carbon hydrogen?
- What are mechanisms that can help overcome the barriers for wider scale adoption of low-carbon hydrogen in heavy industry?
1 International Energy Association (2019)
3 International Energy Association (2019)
4 Energy Transitions Commission (2020): Making Missions Possible – Delivering a net-zero economy