Green hydrogen costs could reach parity in a decade, report finds

Hydrogen is increasingly being viewed as a potential energy storage solution for difficult-to-decarbonize sectors of the economy, including heavy-duty transportation and industrial uses.

Driving the news: A new analysis by the ICF Climate Center, shared exclusively with Axios, shows that the cost of zero-carbon, green hydrogen could reach parity with more greenhouse-gas intensive ways of making the gas in as little as the next decade.

Why it matters: Hydrogen's environmental impacts are largely determined by how it is manufactured. Currently, most hydrogen for power use is produced using a methane source.

• However, green hydrogen, which is generated using renewable energy like solar and wind power, is drawing increasing interest from electricity producers, manufacturers, trucking companies, investors and the federal government as a clean method of energy storage on the horizon.

How it works: Green hydrogen is a zero-carbon hydrogen production method, but currently costs more than steam methane reforming ("gray hydrogen") and so-called "blue hydrogen," which combines steam methane reforming with carbon capture and storage.

• "Green hydrogen is really energy storage and dispatch-able electricity. So basically when your solar panel's not generating, wind turbines not turning, you're going to turn to hydrogen to produce that energy," study coauthor Mike McCurdy, a managing director for fuels and power at ICF, told Axios.

Yes, but: A new study published this week finds that blue hydrogen emits more greenhouse gases than previously thought.

• While blue hydrogen is currently the least expensive option for low-carbon hydrogen production, ICF’s analysis shows that green hydrogen could become cost-competitive with it within a decade, depending on the deployment of inexpensive renewable power.
• Green hydrogen involves using electrolyzer technology, powered by renewables, that takes in water and splits it up into hydrogen and oxygen, said study co-author Nima Simon.

Details: One advantage that hydrogen has over other forms of renewable energy is that existing infrastructure, including natural gas turbines, storage facilities and pipelines, can potentially be adapted for hydrogen storage and transport, rather than having to first build an entire system for storing and moving the gas.

• For example, ICF points out that salt caverns can be used to store large quantities of hydrogen.

The bottom line: The rate at which the cost of green hydrogen comes down could depend considerably on government incentives, such as a tax credit, to incentivize this technology. The Energy Department, for example, has announced a hydrogen "moonshot" program to invest in new technologies.

• Currently, the U.S. is behind Europe and Japan in investing in green hydrogen technologies.
• That could change quickly, Simon and McCurdy said.
• "Because we can reutilize our existing natural gas infrastructure, we may end up leapfrogging in front of them," McCurdy said.