Low-carbon hydrogen — mainly green, but also blue — will play a “critical role” in the decarbonisation of the energy system, with the majority of the supply used as a chemical up to 2030, before demand grows from heavy industry, shipping, aviation and long-distance trucking in the following decades, according to BP’s new Energy Outlook.
“The pace of [clean hydrogen] growth accelerates in the 2030s and 2040s as falling costs of production and tightening carbon emissions policies allow low-carbon hydrogen to compete against incumbent fuels in hard-to-abate processes and activities, especially within industry and transport,” the 53-page report explains.
Between 2030 and 2050, demand for low-carbon hydrogen will grow tenfold in its two scenarios that are “broadly in line” with the Paris Agreement goals, which it calls “Accelerated” and “Net Zero”, reaching about 290 and 460 million tonnes a year by mid-century, respectively.
Production
About 60% of this low-carbon H2 will be green — derived from renewables-powered water electrolysis — in both scenarios in 2030, rising to around 65% by 2050. Most of the remaining clean H2 will be blue — made from fossil fuels with carbon capture and storage (CCS) — with a small proportion coming from bioenergy with CCS.
“At present, the cost of producing blue hydrogen is generally lower than for green hydrogen in most parts of the world,” the report says. “However, the combination of recent policy initiatives (such as the Inflation Reduction Act in the US) and higher natural gas prices in Europe and Asia as a result of the Russia-Ukraine war has reduced this cost advantage in some countries and regions.
“This cost differential is further eroded over the outlook as improvements in technology and manufacturing efficiency lower the price of both renewable power and electrolysers.”
However, it adds: “Blue hydrogen acts as an important complement to green hydrogen, providing a lower-cost alternative in some regions as well as providing a source of firm (non-variable) low-carbon hydrogen supply.
“The growth of blue hydrogen also reduces the extent to which renewable energy is diverted from decarbonising electricity that is consumed directly.”
Trade
BP suggests that only a small proportion of the H2 produced around the world in 2030 and 2050 would be traded internationally, and that pure hydrogen is unlikely to be transported by ship due to prohibitive costs.
However, H2 will be shipped in the form of ammonia, methanol or iron extracted from ore using hydrogen (rather than the coal mainly used today).
“For activities and processes that require hydrogen in its pure form — such as for high-temperature heat processes in industry or for use in road transport — the gas is likely to be imported via pipelines from regional markets, reflecting the high cost of shipping pure hydrogen.”
“In contrast, for activities that can use hydrogen derivatives, such as ammonia and methanol in marine or hydrogen-derived hot briquetted iron (HBI) in iron and steel manufacturing, the lower cost of shipping these derivatives allows imports from the most cost-advantaged locations globally.”
Both compressed and liquefied hydrogen contain less H2 by volume than ammonia and methanol, which are both easier to transport than liquid H2 that must be stored at temperatures below minus 253°C.
The report adds that the EU will produce about 70% of the low-carbon hydrogen it uses in 2030 in both the Accelerated and Net Zero scenarios, with that share falling to roughly 60% by 2050.
“Of the low-carbon hydrogen it imports, around half is transported as pure hydrogen via pipeline from North Africa and other European countries (Norway and the UK); and the other half is imported by sea in the form of hydrogen derivatives from global markets.”
The expected volumes of H2 into the EU are much lower than many international developers might hope for, with only 7.5 million tonnes imported via pipeline and 7 million tonnes by sea in 2050, in the Accelerated scenario.
In the Net Zero scenario, these figures are only slightly higher, at 11 million tonnes and 7.5 million tonnes, respectively.
Usage
The transport sector will use about 42% of the world’s clean H2 in 2050, in BP’s Net Zero scenario, followed by industry (26%), feedstocks (refining and chemicals) (14%), and “other” (including power and heating) (17%).
The figures are similar for the Accelerated scenario: transport (about 36%) industry (27%), feedstocks (22%) and “other” (15%).
“The use of hydrogen within transport is heavily concentrated in the production of hydrogen-derived fuels used to decarbonise long-distance transportation in marine (in the form of ammonia, methanol, and synthetic diesel) and in aviation (in the form of synthetic jet fuel),” the report explains.
“Most of the remainder is used directly in heavy-duty road transport.”
However, battery electric heavy trucks will far outnumber hydrogen-powered ones in 2050, in the Accelerated scenario — about 70 million compared to 17 million. No equivalent figures are presented for Net Zero.
About 80% of all cars and light-duty trucks will be battery electric by 2050 in both scenarios, the document states, with less than 1% being powered by hydrogen.
“The use of low-carbon hydrogen in iron and steel production accounts for around 40% of total industrial hydrogen demand by 2050 in Accelerated and Net Zero, where it acts as an alternative to coal and natural gas as both a reducing agent [to remove oxygen from ore] and a source of energy,” the report adds.
“The remaining industrial use of hydrogen is in other parts of heavy industry, such as chemicals and cement production, which also require high-temperature heat processes.”
BP makes it clear that the report should not be interpreted as company forecasts.
“These scenarios are not predictions of what is likely to happen or what BP would like to happen. Rather they explore the possible implications of different judgements and assumptions concerning the nature of the energy transition and the uncertainties around those judgements,” it says in the introduction to the outlook.
