How blue and green hydrogen can drive the energy transition

Solving the energy transition can seem deceptively simple. Why don’t we just stop burning fossil fuels and switch to renewable sources of energy and electrification?

It’s a reasonable question, but the reality is far more complicated. This is because many industrial processes and carbon-intensive activities are not easy to electrify. They either require high-levels of heat – such as in iron, steel and glass manufacturing – or current battery technology doesn’t have sufficient power-density for long-distance transport, like shipping or air travel.

But there is a potential solution: hydrogen.

“Clean hydrogen has immense potential as an eco-friendly alternative to fossil fuels,” says Sierra Signorelli, Zurich’s CEO Commercial Insurance, “and we strongly believe it can play a critical role in the energy transition.”

Specifically, it is the environmentally friendly blue and green hydrogen – alongside other hydrogen-based fuels such as synthetic methane, ammonia and methanol – that can lead the way.

Hydrogen’s massive potential

Hydrogen is a naturally occurring gas that is the most abundant element in the universe. It also has enormous potential as an environmentally friendly alternative to fossil fuels as hydrogen only emits water when combusted and produces about three times more energy per unit weight than gasoline.

Hydrogen is also flexible and can be stored, liquefied and transported to where it is needed via pipelines, trucks and ships. It could solve the energy transfer issue for renewables and be used in fuel cells to produce electricity for power generation, transport and domestic heating. In the future, clean-burning hydrogen could also be used to decarbonize heavy industry.

But there’s a catch. Although burning hydrogen does not emit carbon dioxide (CO2), some of the processes used to produce hydrogen do generate harmful emissions. For this reason, hydrogen is now often referred to as grey, blue or green depending on the amount of CO2 that is created during its production.

Understanding grey, blue and green hydrogen

Producing hydrogen is a complex process. It is typically made using a process called steam reforming, which splits natural gas into hydrogen and CO2. But the CO2 byproduct makes this a carbon-intensive process and is why hydrogen produced this way is called “grey” hydrogen – it is worth noting that 96 percent of the world’s hydrogen production is “grey” and still comes from fossil fuels.

Today, new technologies developed for carbon capture utilization and storage (CCUS) can trap the CO2 created during steam reforming before it is released into the atmosphere. Hydrogen produced in this way is more environmentally friendly and is called “blue” hydrogen.

As its name suggests, the cleanest option is “green” hydrogen. It is produced by splitting water (H2O) into hydrogen and oxygen via a process of electrolysis powered by renewable energy. This means that no CO2 is created during production.

Hydrogen’s diverse applications

In general terms, hydrogen can be used as a fuel in two main ways. It can be burned to produce heat, or it can be fed into a hydrogen fuel cell to generate electricity. The good news is that once blue or green hydrogen has been produced, it has a variety of different applications:

• Transport: Hydrogen is already used to fuel buses and other forms of public transport, especially in Japan. It can also power freight trucks and trains, while hydrogen-based fuels such as ammonia can be used in aviation and shipping. More widespread use of hydrogen to power vehicles will depend on the price of hydrogen fuel cells becoming cheaper and hydrogen refueling stations becoming more common.
• Power generation: Hydrogen can be used for turning renewable energy sources into a fuel that can then be stored and transported over long distances. Hydrogen and ammonia can also be used in gas turbines and coal-fired power stations to reduce their emissions.
• Heating buildings: Hydrogen has huge potential to replace natural gas for heating domestic and commercial buildings via existing natural gas infrastructure. Hydrogen boilers and domestic hydrogen fuel cells require further development but could play an important role in the future.
• Industry: Hydrogen is currently used in a wide range of important industrial processes. These include refining petrol, manufacturing steel, treating metals and producing a range of chemicals.

Challenges and solutions

Hydrogen is clearly valuable and versatile. But for green and blue hydrogen to displace fossils fuels, it would require the world to produce enormous quantities of it.

“This will require significant investment to rapidly scale up electrolyzer capacity for green hydrogen, the acceleration in the implementation of industrial scale CCUS required for blue hydrogen, and, in parallel, the development of new hydrogen transport infrastructure,” says John Scott, Head of Sustainability Risk at Zurich Insurance Group.

“Stored hydrogen will also be needed to help balance seasonal fluctuations in electricity demand,” adds Scott. “Retrofitting existing gas‐fired electricity generating capacity will be needed to co‐fire with hydrogen, together with some retrofitting of coal‐fired power plants to co‐fire with ammonia. In the next decade, there will also need to be a large increase in the installation of end‐use equipment for hydrogen, including several million hydrogen fuel cell vehicles on the road by 2030.”

But a key issue is cost. Building a low-emissions hydrogen production plant requires a high level of investment and, according to the IEA, equipment and financial costs are increasing, putting projects at risk. Hydrogen plants also need to be insured, but thankfully insurers like Zurich are creating innovative solutions.

Ultimately, bold government policy is required to create demand for green and blue hydrogen. This would stimulate investment in hydrogen production projects, which could be further incentivized through government grants, subsidies and tax incentives.

As IEA Executive Director Fatih Birol notes: “Greater progress is needed on technology, regulation and demand creation to ensure low-emissions hydrogen can realize its full potential.”

If green and blue hydrogen can fulfil their potential, then a net-zero world would be one step closer.