Hydrogen is already in high demand, with global demand reaching 94 million metric tons (Mt) in 2021. Most of this demand is driven by the oil refining industry, as well as the production of ammonia for fertilizer and methanol for chemical manufacturing. However, with the increasing need to replace fossil fuels in various sectors, hydrogen is expected to become an important player in transportation, heavy industry, and other fields. If countries continue to honor their climate pledges, the demand for hydrogen could reach 130 Mt by 2030, with a significant portion of this demand coming from new applications.
The primary challenge with hydrogen production today is that it typically relies on fossil fuels, particularly natural gas. This kind of hydrogen is known as known as "gray" hydrogen. An alternative approach to producing hydrogen without carbon emissions is to use renewable electricity .The hydrogen resulting from this process is known as "green" hydrogen.
However, green hydrogen is far more expensive than grey hydrogen, so the European Commission came up with a set of rules in order to define which hydrogen projects will be eligible for special funding and support. As a first rule, green hydrogen producers will need to directly connect to renewable energy sources or obtain electricity from the grid that is generated from renewable sources.
The European Union (EU) has set a goal to reach 10 million metric tons of domestic hydrogen production annually by 2030, in addition to 10 million metric tons of imports. Meeting this domestic production target will require 500 TWh of renewable electricity, which is equivalent to almost 15% of the EU's total electricity consumption. To ensure that hydrogen production does not monopolize the existing renewable energy capacity, the second rule from the European Commission mandates hydrogen producers to use renewable energy projects that have been built recently, within the last three years.
These rules regarding the use of renewable energy for hydrogen production in the EU are still being developed and need to be approved, which could take a few months. In the US, the Biden administration is also developing rules regarding tax credits for hydrogen production as part of the Inflation Reduction Act. These tax credits could incentivize the development of green hydrogen projects and promote the use of renewable energy for hydrogen production.
In case you were wondering how many additional colors hydrogen can have, here’s a list. Black/ brown hydrogen is produced with coal. Blue hydrogen is produced with fossil fuels but the emissions have been captured and stored underground. Pink hydrogen is produced using nuclear power. Gold hydrogen occurs naturally.
Source: MIT Technology Review