Fueling the future (II/III): can green hydrogen decarbonise the transport sector?
The transport sector is one of the biggest carbon emitters worldwide. As the world tries to shift away from fossil fuels, green hydrogen is being touted as one key solution. Recently, many countries have adopted legislative proposals to decarbonise the transport sector by facilitating the uptake of green hydrogen.
At Broadpeak, we collaborate with policy experts and investment advisors to understand the world’s most pressing issues. As we examine current trends to watch for, we asked energy experts, does green hydrogen have the potential to become the fuel of the future? What are the major obstacles to its scalability? And how can we develop the best use cases for this innovative alternative energy in the transport sector?
This is the second article of our Green Hydrogen Trilogy. The first article on the role of green hydrogen in the energy transition can be found here.
The Fuel of the Future?
The transportation sector is the second-largest carbon emitter, after electricity and heat generation, accounting for about 25% of global emissions. Produced using renewable energy, green hydrogen and its derivatives — also known as “e-fuels”— such as ammonia, methanol and synthetic kerosene — are increasingly being recognized as essential solutions to help meet climate goals set forth by the Paris Agreement.
In the transport sector, green hydrogen offers promising prospects for decarbonizing sectors that are extremely difficult to decarbonise. Mainly, it will play a vital role in the decarbonisation of the aviation and shipping sectors— according to an academic study modelling the most cost-effective path to net-zero emissions by 2050.
The aviation sector is responsible for 2% of worldwide carbon emissions and is one of the most difficult sectors to decarbonise. The current battery technology is too heavy to be used in larger planes, therefore, one possible solution could be e-fuel produced from green hydrogen. Different players in the sector are now trying to unlock the incredible potential of green hydrogen for disruptive emissions reduction. For instance, Airbus has committed to launching at least one zero-emission commercial hydrogen plane by 2035. The European plane manufacturer also estimates that hydrogen has the potential to reduce carbon emissions in aviation by up to 50%.
The maritime sector is another hard-to-abate sector that currently accounts for 3% of global carbon emissions but is expected to grow to 50% by 2050, making it highly critical for the energy transition. Since this sector is hard-to-electrify, a more cost-effective decarbonisation solution could be using low-carbon fuels like green ammonia produced from green hydrogen. At the recent COP27, ten leading organizations across the shipping value chain signed a joint statement committing to rapid production of low-carbon fuels based on green hydrogen to accelerate the decarbonisation of global shipping.
Given the potential of green hydrogen to decarbonize the transport sector, it is gaining traction globally. Recently, members of the European Parliament decided to support a hydrogen-based green transition in the transport sector. "Green hydrogen is indispensable for a decarbonised economy. Especially in the transport sector, green hydrogen will be pivotal in making our mobility carbon neutral by 2050" highlighted Ismail Ertug, member of the European Parliament.
Is it Real or Just Political Hype?
Although green hydrogen has gained more attention in recent years, high production costs and concerns over efficiency have hampered its scalability – especially in road transport. Currently, green hydrogen is quite expensive, as it requires a massive amount of renewable electricity for its production. Moreover, hydrogen fuel cell cars are less than 40% energy-efficient while most battery-powered electric cars boast around 80% efficiency.
Critics also point to the high environmental costs attached to green hydrogen and express discontent over what they see as misguided hydrogen hype. Many argue that green hydrogen is not sustainable, considering the high amount of water required for its production - around 9kg of water per kilogram of hydrogen produced. “In areas that are already water scarce, hydrogen production could threaten the water supply,” expressed Jurg Grutter, CEO at Grütter Consulting AG. In response to this, Thierry Poupeau, CEO of Knowledge to Beyond Petroleum, explained, “The water challenge is resolvable. You can develop desalination plants to get a sufficient water supply that can also help provide water to places with water scarcity.”
Christopher Headrick, Founder & Executive Chairman of H2 Energy Group disagreed with the desalination solution and highlighted the importance of shifting away from electrolysis-centred solutions and realizing the true potential of high-yield pyrolysis method for efficient, low-cost and sustainable hydrogen production: “There is a reason why desalination is still not a viable option – it’s too expensive. Moreover, the fossil fuel market cannot be disrupted by an electrolysis-only solution. Electrolysis should not be seen as the only way of producing green hydrogen. High-yield fast pyrolysis is a sustainable alternative that uses renewable biomass to produce low-cost green hydrogen without putting a strain on water resources.”
Given these challenges, the debate on green hydrogen has become quite polarized. One side argues that green hydrogen is being over-estimated as a one-size-fits-all solution while the other sees it as highly crucial to solve the net zero paradox. “In transportation, particularly road transport, green hydrogen is more of a hype, than an environmentally friendly solution,” said Grutter. Headrick, however, argued, “There is no reason to believe that green hydrogen is just another spark. It will be critical for the energy transition in all sectors including road transport. However, what is important is that we shift to more sustainable, economic and circular methods of green hydrogen production.”
What to Expect Next?
Moving forward, we need more research to improve the scalability of green hydrogen. Collaborative innovation platforms are necessary to strengthen research for developing efficient and sustainable hydrogen technologies. “Carbon-neutral alternatives to fossil fuels remain a challenge, especially replacement of natural gas. Green hydrogen can become revolutionary for the energy sector; however, more research and technological innovation are needed to increase the efficiency of green hydrogen,” explained Grant Allen, energy expert and Professor at the University of Manchester.
Lastly, it is essential to remember that there are no easy wins regarding climate mitigation. Green hydrogen is a significant part of the climate solution but we need all possible low-carbon solutions on the table to meet our climate targets. While battery technology will be essential, hydrogen is viable in situations where batteries fail. Whether or not green hydrogen will become the game changer the world needs for decarbonizing the transport sector is still unclear. However, it is doubtlessly an important piece of the Net Zero puzzle.
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About the authors
Simon Gupta is the Founder & Managing Director of Broadpeak, a Swiss-based Advisory Company specializing in Impact Finance. He has 20 years of experience in development finance in Latin America, Africa and Asia. He is also a Partner at investment firm Investment Associate AG, where he leads social and environmental impact investing. Simon has been involved in the set-up of multiple blended finance structures on the LP side as well as the GP side. Before founding Broadpeak, he worked for financial institutions DEG, KfW, and ResponsAbility Investments AG.
Fatima Farooq Murawat is Policy Analyst at Broadpeak, a Swiss-based International Advisory company specialised in Impact Finance. Fatima is dedicated to researching the most pressing issues of our time including climate change, energy transition and sustainable development. She has previously worked at the Iqbal Institute of Policy Studies, the National University of Science and Technology and the Civil Society Coalition for Climate Change in Pakistan.