Hydrogen will account for just 20% of carbon abatement in heavy industry by 2050: BloombergNEF
H2 will play “crucial” role in decarbonising industry, but too late to prevent catastrophic global warming on its own, analysts say
Hydrogen: hype, hope and the hard truths around its role in the energy transition
This puts it behind the use of carbon capture and storage (CCS), which BNEF predicts will be deployed earlier and therefore have more impact, accounting for 29% of carbon reductions by mid-century.
Hydrogen technology pathways, along with direct electrification, have the “best chance” of competing with existing technology on cost, the report’s authors believe, but note that they will only become widely available by 2035.
“A clean fuel will be chosen based on local supply chains and cost, and hydrogen used where it is needed for its chemical properties, in steel and petrochemicals,” a BNEF blog summarising the report said.
The steel industry is looking at using hydrogen in iron-making (a key stage in steel production), using it in place of fossil fuels to chemically alter iron ore in a relatively new technology known as direct-reduced iron (DRI).
Hydrogen has also been touted as a source of high temperature heat for steelmaking, but many analysts believe that electrification using an electric arc furnace (EAF) would be cheaper and more efficient.
BNEF also touts the use in industry of bioenergy (which will account for 10% of carbon abatement by 2050) and recycling (29%), noting that these pathways are available today which will maximise their impact.
“Hydrogen arrives later but ultimately plays a crucial role in steel and petrochemicals as both a feedstock and a source of heat,” BNEF said.
However, the forecast only sees a small amount of fuel switching and hydrogen use in the steel industry in the 2040s. “far too late to prevent catastrophic global warming” on its own.
Crucially, BNEF warn that no clean technology will be able to compete with existing pathways on economics alone, and will need strong financial support from governments.
“Projects today are being driven by consumer demand and generous subsidies, such as the Inflation Reduction Act [IRA] in the US,” it explained.
Noting that most new industrial assets will be built in the developing world, the report’s authors called for all new plants to be built with decarbonisation in mind — or risk “billions of dollars” of stranded assets by 2060.
“To avoid stranded assets, it is crucial that all new industrial capacity is built clean, today,” said Julia Attwood, head of sustainable materials at BNEF and lead author of the report. “Low-carbon technologies can increase costs in the near-term, but locking a new industrial plant that would run for 50 to 100 years into coal, gas or oil will eventually lead to high carbon payments and uneconomic production.”
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