H2Tech - Q1 2021 - 13

REGIONAL REPORT: EUROPE

The price of decarbonization. In line

with its net-zero carbon goal, the EU plans
to prioritize green H2 production, mainly
from wind and solar energy. Over the
short-term and medium-term, however,
blue H2 will be needed to rapidly reduce
emissions from existing gray H2c production and support the parallel and future
development of green H2 production.
Feeling blue? The success of blue
H2 use will be largely dictated by prices
for both carbon capture and natural gas.
At present, the cost of producing blue
H2 increases in parallel with increasing
rates of CO2 capture (FIG. 1); however,
as infrastructure expands and the cost of
CO2-capture equipment decreases, blue
H2 production costs are anticipated to fall
over the next decade. A transition from
steam methane reforming (SMR) to autothermal reforming (ATR), which combines process and combustion emissions,
could push the cost of blue H2 production
to $1.25/kg (€1.05/kg) of H2 by 2030.
At present, carbon capture and storage
typically adds $50/t (€42/t) of CO2 captured to the cost of producing blue H2 , or
$0.25/kg (€0.21/kg) of H2 to the cost of
gray H2. If less concentrated CO2 is captured from exhaust gases, this adds $0.40/
kg (€0.33/kg) of H2 to the cost of blue
H2 , with an emissions abatement cost of
more than $100/t (€83/t) of CO2.2 Additionally, natural gas prices are forecast
to increase, which could drive up costs
for blue H2 production by nearly 60% by
2040, according to Wood Mackenzie.3
Seeing green. Conversely, Wood
Mackenzie predicts that green H2 production costs could fall by as much as
64% by 2040 with greater utilization
and reduced renewable power prices, at
which time the cost of green H2 will equal
the cost of fossil-based H2.3 In some European countries with numerous green
H2 projects, such as Germany, green H2
costs will be at or near parity with fossil
H2 costs closer to 2030.
Costs for electrolyzers for green H2
production are expected to decrease by
50% between 2020 and 2030 with improved economies of scale, after already

7
6
5
$/kg of H2, 2019

producing, using, storing and
transporting green molecules
* A significant scale-up in
renewable power capacities
* Necessary, further reductions
in H2 production costs.

4
3
2
1
0
SMR,
no CCUS

SMR,
53% CCUS

SMR,
Electrolysis Electrolysis
89% CCUS via solar
via wind
2020

ATR,
Electrolysis
≥ 90% CCUS via renewable
energy
2030

Electrolysis
via renewable
energy
2050

FIG. 1. Present and projected costs for different types of H2 production, 2020-2050.
Note: Gray H2 and blue H2 assume a natural gas price of $3.50/MMBtu.2

decreasing by 60% between 2010 and
2020. By 2050, electrolyzer costs may
decline by as much as 90% from presentday price levels. This anticipated cost decrease and manufacturing scale-up will
allow green H2 in areas where renewable
power is inexpensive to compete with
fossil-based H2 by the start of the next
decade. It will also aid the EU's effort to
install 40 GW of electrolyzer capacity to
produce up to 10 metric MMt of renewable H2 in the EU by 2030.1
Between 2030 and 2050, renewable
H2 technologies should reach maturity
and be deployed at large scale in the EU
to reach all difficult-to-decarbonize sectors. In this period, renewable electricity
production must be massively increased,
since nearly 25% of renewable electricity could be dedicated for renewable H2
production by 2050.

sions in cold climates. A demonstration
project in Fife, Scotland will heat 300
homes from late 2022-March 2027 with
100% green H2 from a purpose-built H2
system. Offshore wind energy will be
used to power the electrolyzer to produce the H2 for the H100 Fife project.
Other pilot projects are ongoing to analyze the potential to replace natural gas
boilers with H2 boilers.
The creation of new end-use markets
is key to scaling up the production of H2.
A primary market is industrial applications. In industry, one of the most immediate applications for low-carbon H2 is to
reduce and replace the use of emissionsintensive gray H2 in refineries. Although
most project announcements within
the last couple of years have focused on
green H2 substitution, some blue H2 initiatives are seen in Europe.

Expansion of H2 markets in Europe.
As H2 infrastructure and production
expands, H2 will find application in a
number of new areas. It can be used to
decarbonize steelmaking and mining
operations, as well as for fuel in truck,
rail, marine and other transportation
modes. Green H2 can be stored as backup power for renewables-based energy
grids, providing flexibility and reliability of supply.
Furthermore, with some retooling of
infrastructure, H2 also can be used in residential and commercial heating, which
accounts for a large amount of CO2 emis-

Blue H2: A bridge to green. The
EU's Hydrogen Strategy estimates
that carbon prices would need to be
€55/metric t-€90/metric t of CO2 to
make blue H2 competitive with gray H2
today. However, the strategy also notes,
" ...the further retrofitting of existing fossil-based hydrogen production with carbon capture should continue to reduce
greenhouse gas and other air pollutant
emissions in view of the increased 2030
climate ambition. " 1
In light of this provision, some European countries have taken steps to incorporate fossil-based and blue H2 into their
H2Tech | Q1 2021 13

H2Tech - Q1 2021

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