The Brussels-based and CEO-led Hydrogen Council has quickly become a key player promoting clean hydrogen as a means to achieve rapid decarbonisation of the global economy.

To learn more about the Hydrogen Council and its recent activities, Hydrogen Economist interviewed Daryl Wilson—appointed the organisation’s first executive director in October 2020—shortly after his return from the Cop26 climate conference in Glasgow.

Wilson has more than 35 years of industry experience, including 14 years as CEO of Canadian technology company Hydrogenics. The firm has since been acquired by US multinational Cummins—with France’s Air Liquide continuing to hold a minority stake.

Could you describe the work of the Hydrogen Council?

Wilson: The Hydrogen Council was founded in 2017 by 13 CEOs to help promote the use of clean hydrogen to support efforts to decarbonise the global energy mix. Hydrogen has been produced as an industrial feedstock in large quantities for significant markets including ammonia and fertiliser production, as well as desulphurisation of gasoline and diesel fuel. The goal of the Council has been to encourage a shift from grey to clean hydrogen production and to expand markets for hydrogen by promoting its use as an energy carrier. 

To achieve this two-pronged goal, the Hydrogen Council convenes events and publishes studies, including two released at the start of Cop26 in Glasgow—Hydrogen for Net Zero, looking at production, costs and markets; and Policy Toolbox for Low Carbon and Renewable Hydrogen. As of now, the Council has 130 CEO members.

Where can big gains be made to bring down the cost of clean hydrogen production?

Wilson: It is similar to wind and solar in the past—as the scale and number of projects increase, clean hydrogen projects will increasingly benefit from economies of scale. You will see that across the supply chain, with greater competition to provide parts and services to producers. You will also see it with the scaling up of facilities producing clean hydrogen. At present, clean hydrogen is being produced in small facilities and often with relatively low utilisation rates. This will change as demand rapidly ramps up in coming decades.

22pc – Proportion of final energy demand that could be met with hydrogen in 2050

The Council anticipates that clean hydrogen could account for 22pc of global final energy demand in 2050, representing 660mn t/yr based on our recent net-zero study. That compares to 90mn t/yr of mainly grey hydrogen production in 2020. As an energy carrier, we see it gaining significant market share in a number of new industries, such as steelmaking and cement, as a source of heat for buildings and industry, as well as use in transportation and power generation.

What timescale do you see for these big gains?

Wilson: At present, the cost to produce grey hydrogen tends to be about $1/kg compared with $1.50-2.00/kg for low-carbon hydrogen and $4.50-5.0/kg for renewable hydrogen, suggesting a significant green premium, especially for the latter. But we foresee the cost of renewable hydrogen dropping rapidly through 2030, with its cost coming to match that of low-carbon hydrogen sometime in the 2025-30 period. Carbon pricing and decarbonisation policies will play a role in making clean hydrogen cost competitive with grey.

On that note, could you lay out your ideal policy environment for the development of both low-carbon and renewable hydrogen?

Wilson: That was the focus of our recent policy toolbox study. Unlocking the full potential of clean hydrogen investment will require a strong and comprehensive policy roadmap, and the needed policies will shift over time with the three major market phases: market creation, market growth and market maturity.

There are six pillars of efficient policy design for low-carbon and renewable hydrogen. The pillars are leveraging local strengths, while benefiting from cross-border cooperation; reducing policy risks and market uncertainty through legislation; provision of hydrogen-specific market support across the supply chain; robust regional carbon pricing mechanisms; harmonised standards and certification systems to enable cross-border trade; and the inclusion of societal value and values in the design of all policies.

Which regions currently have the best policy regimes?

Wilson: In Europe, the UK and EU have been the leaders, with France and Germany each committing to roughly $10bn in funding to rapidly develop clean hydrogen markets in their countries. In Asia, China, Japan and South Korea are leading the pack. Australia, with its vast renewable energy resources, is leading policy on the production front.

You recently returned from Cop26 in Glasgow. How favourable do you see the result for the development of a global hydrogen economy and why?

Wilson: In some ways, the result of the conference was highly favourable. As of now, hydrogen is widely understood as a source of energy and greatly appreciated for its potential contribution to the decarbonisation of the global economy. At the same time, there were many hydrogen-related announcements and commitments at the conference.

On the other hand, we have a long way to go in terms of implementation and action across the hydrogen value chain to achieve the levels needed to help put us on a pathway to achieve net zero by 2050. For example, in our net-zero study, we identified a $540bn investment gap through 2030 compared with $160bn in announced direct investments to date. In terms of the hydrogen value chain, there is a $210bn upstream shortfall, a $170bn gap for transmission and distribution and a $160 bn shortfall for end-use applications.

This is a serious issue because it takes a lot of time and many steps to move from an announced project to an operating facility, wherever it may be on the hydrogen supply chain.

How important is the role of 'clusters' or 'valleys' for the development of the hydrogen economy?

Wilson: They are very important because they will allow for relatively rapid growth in clean hydrogen consumption in a given region, which in turn allows for economies of scale and substantially lower costs on the supply side. It should be noted that the Clean Energy Ministerial global forums are doing some excellent work helping to advance hydrogen clusters on a global basis, while the IEA is advancing an initiative for ports, with over 400 port authorities around the world already on board.

What are your views on low-carbon hydrogen as a stepping stone to renewable hydrogen?

Wilson: I do not view low-carbon hydrogen as a stepping stone to renewable hydrogen. Rather, they are two important standalone pathways for achieving rapid decarbonisation. Low-carbon hydrogen allows us to achieve greater decarbonisation quicker and at a lower cost, since it will take time to bring down the cost of renewable hydrogen. Of course, this is assuming low-carbon hydrogen projects are done right, with significant reductions in lifecycle emissions, especially methane emissions.

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Author: Vincent Lauerman