The war in Ukraine has spurred investment in green hydrogen production as blue and grey alternatives see overhead costs soar, a Carbon Tracker report finds.
- Investors are turning to green hydrogen after the price of oil and gas spiked following the war in Ukraine, according to Carbon Tracker.
- Governments have been focusing on domestic production of energy following volatility in oil and gas markets.
- Green hydrogen is forecast to grow by three times its 2022 levels.
With Russia’s invasion of Ukraine driving up the price of oil and gas, investors are turning to green hydrogen production as the cost of fossil fuel-powered production has grown by more than 70% on international markets.
This comes as Scotland’s energy secretary, Michael Matheson, says hydrogen energy might the “greatest industrial opportunity since oil and gas” for the country.
As a result of higher gas-feed prices, £89 billion of ‘dirty’ hydrogen assets may become stranded by 2030, the report found.
According to the IEA, green hydrogen is forecast to grow by three times its 2022 levels.
The report finds that within a few months, 25 countries, mostly drawn from the Global North, have committed £64.9 billion of public and private funds to producing green hydrogen.
However, the report shows that the UK’s announced green hydrogen target by 2030 is 5% of energy consumption and by 2050 it is set to drop to 4%.
Author of the “Clean Hydrogen’s Place in the Energy Transition” report, Kofi Mbuk, told Energy Voice why the UK seems to be lagging behind when it comes to green hydrogen: “Its hydrogen plan was always more geared more towards blue as opposed to green but now, come the war, prices have skyrocketed and now the costs of running blue hydrogen assets have jumped 50 plus per cent in the UK alone.
“Blue hydrogen assets are no longer financially feasible, you are going to supply a lot of gas disruption and obviously these assets are at a heavy risk of actually getting stranded before the end of this decade.
“The UK should have had a stronger commitment policy to green hydrogen, this is a narrative that Carbon Tracker has been hammering on. The UK needs to renew its commitment to green hydrogen.”
Green hydrogen production still has drawbacks, for example, production requires massive quantities of freshwater.
The report found that to meet the IEA’s growth projection targets by 2050, the total volume of freshwater needed will surpass a quarter of the world’s current freshwater consumption with countries in the Middle East and North Africa region most vulnerable.
Mr Mbuk’s report estimates that building out a green hydrogen economy will also require £2.67 trillion of investment by 2050 under Net-Zero targets.
This investment would be used in building critical assets like import/export facilities, transportation (tankers), storage, pipelines and desalination plants.
Carbon Tracker is a think tank that aims to reduce carbon emissions and assist in reaching net zero targets.
The organisation produces research which it says delivers insight into tackling the “universal problem” of climate change.