Lack of clarity holds back green hydrogen, says IEA

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Despite more than a thousand new projects to produce low-emission hydrogen being announced, just 5% are set to get the finance they need to go ahead.

More than 1,200 new projects to produce low-emission hydrogen have been announced to date, yet only 5% have received firm investment decisions, according to International Energy Agency analysis.

Hydrogen has the potential to play a big role in decarbonising the global economy. In particular, it could serve as a clean fuel for heavy industry and long-distance transport, in which emissions are otherwise hard to abate. But so far, its progress has been slow. This may be because of confusion and lack of regulatory clarity. 

The IEA has reported that while a number of different classifications of hydrogen now exist, these are often not well understood and the regulations and certifications of them vary dramatically, making investment decisions hard. 

Labels that include terms like “sustainable” or “clean”, or colours such as “grey”, “blue”, “pink”, or “green” hydrogen, have no agreed definitions. As a result, the terms themselves can obscure the extent to which different hydrogen production methods deliver carbon savings. 

In theory, using grid electricity for electrolysers could be highly sustainable or carbon intensive, depending on the electricity generating mix across the nation’s grid. For so-called “blue” hydrogen produced using natural gas with carbon capture, utilisation and storage (CCUS), emissions can also vary dramatically depending on the technology used and the capture rate.

Lack of international agreement

Multiple low-emission production routes now exist but the lack of clarity stems from a lack of international agreement on them. That lack of international agreement severely diminishes interoperability and holds back investment. 

Universal standards or international agreements would facilitate compliance with regulatory and market requirements. That in turn would help investors seeking to build up export capacity to know that their choice of technology will be compliant in export markets, not just domestically. 

But the problem may be becoming entrenched. Many countries and their regulatory bodies already have or are developing different certification systems or regulatory frameworks. 

While there are some commonalities across these, they diverge in ways that can limit interoperability further. They may differ on what supply chain steps are covered, or the emissions considered within their scope. They may limit the eligible technology and fuel options for production. Such differences can create a barrier for project developers, who need to undertake ad-hoc, time-consuming certification processes for each country where they want to access the domestic market.

A common international standard

The International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE) has developed a standard methodology for calculating the GHG emissions intensity of different hydrogen production routes, which could improve transparency and facilitate market development.

The IPHE methodology will serve as the basis for the first international standard to calculate the GHG emissions of hydrogen supply, which is currently under development by the International Organization for Standardization, who aim to publish the standard by the end of 2024.

This methodology was used in the report prepared by the IEA in collaboration with the IPHE for the G7 Ministerial meeting this April, with the aim of providing a clearer picture for policy makers on calculating the emissions intensity of different hydrogen production routes and implementing a common international emissions accounting framework to define hydrogen. The next steps of designing a common methodology for calculating the emissions intensity for converting hydrogen in carriers and transporting hydrogen are already under way as well. 

To set such a common international methodology would bring significant opportunities. Numerical values that can be calculated directly for a specific production route would provide transparency for potential investors and customers. Additionally, the use of a common methodology to calculate emissions intensities directly enables a degree of interoperability of different regulations, providing clarity on how different products comply with requirements for different countries.

With countries as diverse as Germany and Oman setting out bold plans to become global hydrogen powers, many governments around the world are setting targets for the deployment of low-emission hydrogen production technologies. But the IEA’s latest data show that the industry is failing to meet those ambitions and falling behind growth targets. Until international standards are agreed, that may continue.