Blue hydrogen should be used as a stepping stone to green in the US, according to a report on hydrogen’s future prospects from independent research firm Rhodium Group.

The focus of the Biden administration so far has been on green hydrogen, with the ‘hydrogen shot’ initiative aiming to reduce costs to $1/kg. But the technology will be hard to scale quickly and blue hydrogen could be used to build demand, according to the report, entitled ‘Clean Hydrogen, A Versatile Tool for Decarbonization’.

“A hybrid approach to energy policy is necessary to reach climate targets—the US needs both rapid deployment of mature, clean technologies and continued innovation in new technologies,” it says.

If clean hydrogen is to fulfil its three main roles in a decarbonised US energy system—as energy storage, as a feedstock and as a fuel—then it is vital that it scale up quickly. Current deployment levels for green hydrogen are too low a starting point, according to the report.

“A hybrid approach to energy policy is necessary to reach climate targets,” Rhodium

Scaling challenges for green hydrogen are largely to do with the necessary rate of renewables deployment, according to Bloomberg New Energy Finance founder Michael Liebreich in a recent blog post.

“Wind and solar today meet around 13pc of global power demand. All of it would need to be diverted to making hydrogen just to meet current demand for grey hydrogen,” he writes, noting that blue hydrogen is a necessary stepping stone rather than an end goal.

Rhodium says that in the early stages each unit of green hydrogen production will be small and not price competitive with grey hydrogen for some time—meaning another low-carbon form of the fuel will be required. Rhodium puts the cost of blue hydrogen at $1.50-2.15/kg, while green hydrogen currently costs $4.10-6.90/kg.

The key advantage of blue hydrogen is the only moderate increase in costs from the widely used grey form of the fuel at $1-1.50/kg.

“We emphasize [steam methane reformation] retrofits and electrolysis as clean hydrogen options because they are receiving the most attention in the US context,” says the report.

Rhodium says 50,000 jobs could be created by converting existing grey hydrogen production in the US to blue. 

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Author: Gregor Macdonald