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Is Hydrogen the Clean Energy of the Future?


Hydrogen is a clean alternative to fossil fuels because it emits no greenhouse gases or pollutants. However, producing hydrogen on a large scale and implementing it in various sectors is a long and challenging task. Scroll down to learn about the hydrogen energy market, its varied applications, and future projections.

Table of Contents
The global hydrogen generation market
The uses of hydrogen
The future of hydrogen

The global hydrogen generation market

The global hydrogen generation market is expected to grow at a CAGR of 10.5% to USD 263.5 billion by 2027. The increasing demand for hydrogen for fuel cells in electric vehicles and rockets in the aerospace industry is propelling the market forward.

Furthermore, economic policies in which countries pledge to achieve global decarbonization by 2050 have boosted the market growth. In 2020, the European Union established a unique hydrogen policy that supports green hydrogen production initiatives.

The Asia Pacific is estimated to be the largest market for hydrogen generation in 2022, with China accounting for the largest share. Siemens Energy (Germany), ENGIE (France), and Linde plc (Ireland) are the major global players in this space. 

This article covers everything investors should know about hydrogen as an energy source, its applications, and its future.

What is hydrogen?

Hydrogen is a naturally occurring gas and one of the most abundant chemical elements, accounting for 75% of the universe’s mass. It is a more environmentally-friendly alternative to methane. Water, animals, plants, and humans all contain hydrogen atoms. While it is found in nearly all living things, hydrogen as a gas is very scarce.

Hydrogen can be produced from different resources, including nuclear energy, biogas, natural gas, and renewable energy like solar and wind. But the biggest challenge is harnessing hydrogen as a gas on a large scale to fuel businesses. 

Why is hydrogen considered essential for the future?

For many years, natural gas was used to fuel heat and electricity in homes and businesses. In the US, 47% of houses depend on natural gas and 36% on electricity, while 85% of households in the UK rely on gas. 

Methane is the primary constituent of natural gas derived from oil and gas fields. Industries have continued to use natural gas because it is readily available, cost-effective, and a cleaner alternative to coal, the dirtiest fossil fuel many countries have historically relied on for heating and generating electricity. 

When natural gas is burned, it produces valuable energy; however, it emits carbon dioxide into the atmosphere, contributing to climate change. In contrast, hydrogen only emits water vapor as a byproduct.

How is green hydrogen different from gray and blue hydrogen?

Blue hydrogen is produced using non-renewable resources through two different methods. The most common method is steam methane reformation, which produces bulk hydrogen and accounts for most global production. A reformer is used in this method to react steam at high temperatures and pressures with methane and a nickel catalyst.

The second method is auto-thermal reforming, in which oxygen, carbon dioxide, or steam react with methane to produce hydrogen. The disadvantage of these two methods is that they have carbon as a byproduct, necessitating carbon capture and storage to trap and store this carbon.

Alternatively, green hydrogen can also be produced by using electricity to power an electrolyzer, which separates hydrogen from water molecules. This results in pure hydrogen and does not release any byproducts. An added benefit of using electricity is that it allows to divert excess electricity to electrolysis, so it is used to produce hydrogen gas that can be stored for future energy requirements.

Lastly, gray hydrogen is produced from fossil fuels, is relatively cheap, and is commonly used to make fertilizers. Unfortunately, for every 1 kg of gray hydrogen produced, 10kg of carbon dioxide is released into the atmosphere. As a result, it is regarded as the least renewable form of hydrogen.

The uses of hydrogen

Hydrogen has a variety of applications and is used in different industrial processes. In the United States, nearly all the hydrogen is used for refining petroleum, processing foods, producing fertilizer, and treating metals. The petroleum refineries in the country use hydrogen to reduce the sulfur content of fuels. 

Used for outer space exploration

The National Aeronautics and Space Administration (NASA) has been using hydrogen as a rocket fuel since the 1950s. NASA was the first to power spacecraft electrical systems with hydrogen fuel cells.

Hydrogen fuel cells generate electricity

By combining oxygen and hydrogen atoms, hydrogen fuel cells generate electricity. Like a battery, hydrogen reacts with oxygen in an electrochemical cell to generate electricity. There are various types of fuel cells available for different applications. 

Small fuel cells can power mobile phones and computers. In contrast, large fuel cells can power electric grids, provide emergency power in buildings, and supply electricity in areas that are not connected to power grids.

As of 2021, there were approximately 166 operating fuel cell electric power generators at 113 outlets in the United States, with a total capacity of roughly 260 megawatts (MW). With around 16 MW of generation capacity, the Bridgeport (Connecticut) Fuel Cell is the largest single fuel cell generating facility.

The next largest facility, the Red Lion Energy Center in Delaware, has an electricity generation capacity of 6 MW. Almost all these operating fuel cells use pipeline natural gas as a hydrogen source, while others use landfill gas and biogas.

Used in power plants

There is a growing interest in using hydrogen in power plants in the United States. Several power plants have announced their desire to operate on a natural gas-hydrogen fuel mixture in combustion gas turbines. For example, the 485 MW Long Ridge Energy Generation facility in Ohio, which has a gas-fire combustion turbine that runs on a 95% natural gas/5% hydrogen fuel blend, plans to use 100% green hydrogen produced using renewable resources.

Another example is the Intermountain Power Agency plant in Utah, which plans to convert an existing coal-fired power facility to a combined gas-fired facility that will initially use up to 30% hydrogen and eventually use 100% green hydrogen.

Hydrogen filling station next to solar panels and wind turbines

Used in vehicles

Under the Energy Policy Act of 1992, hydrogen is considered an alternative to vehicle fuel. There is a growing interest in hydrogen because it can power fuel cells in zero-emission vehicles, has the potential for high efficiency, and boasts promising potential for domestic production.

A fuel cell can be 2 to 3 times more effective than internal combustion engines powered by fossil fuels. Hydrogen can also be used to fuel internal combustion engines, but it releases nitrogen oxide. 

Hydrogen-fueled vehicles are fewer today because fuel cells are expensive, and there is a limited number of hydrogen fueling stations. There are about 48 hydrogen stations available in the United States, and almost all are in California. 

Countries transitioning to a green hydrogen economy

Australia: Despite having a negligible presence in green hydrogen markets, Australia has collaborated with various organizations to develop solar and wind projects that promote renewable hydrogen production.

Canada: Canada has a thriving hydrogen and fuel-cell segment thanks to joint partnerships and investments from the private and public sectors. Global players in this segment, such as Ballard Power Systems and Hydrogenics, are also based in Canada.

China: Hydrogen vehicles are tax-exempt in this country, and hydrogen is viewed as a potential means of decarbonizing transportation. Further, Wuhan is regarded as a hydrogen city as it plans to open up at least 100 fueling stations for fuel-cell vehicles by 2025. 

Japan: Japan is the world leader in the manufacture of hydrogen fuel cells thanks to the automobile manufacturers Toyota and Honda. The nation is also eager to switch from liquified natural gas to green hydrogen.

The future of hydrogen

Hydrogen demand

In the short term, hydrogen will be used in sectors with societal pressure to decarbonize. Consumer goods companies in the EU are increasingly interested in renewable energy sources.

Hydrogen is expected to decarbonize industrial feedstock and electricity generation in the near future. In the long run, the production of ammonia and synthetic hydrocarbon fuels derived from hydrogen will allow for the decarbonization of the most difficult-to-abate sectors, such as aviation.

Hydrogen supply

The use of hydrogen will only become more common if the cost of green hydrogen falls significantly. Blue hydrogen will most likely be used to meet demand if the prices are high in the short term.

Hydrogen distribution

An efficient distribution system will be in place to supply hydrogen, including a well-connected pipeline and ships and trucks. Because a dedicated hydrogen network will not be as widely distributed as the current natural gas network, hydrogen distribution via trucks will be necessary. Imports via pipelines and ships will be critical in meeting domestic demand.

Given the high transport costs, local hydrogen produced from low-cost renewable electricity will remain competitive against imported hydrogen. As the demand for hydrogen grows, centralized production via a pipeline structure to large-scale storage will become more appealing.

Policy perspective

Europe will most likely drive the hydrogen industry, opening up new opportunities in other regions, such as producing electrolyzers and fuel cells in Asia and exporting renewable resources from the Middle East and North America.

The cost of electrolyzers and fuel cells must be reduced for a short-term hydrogen supply. However, hydrogen will always be more expensive than fossil fuels, necessitating policy incentives to be competitive.

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