What can we learn from the International Energy Agency – Global Hydrogen Review 2021? – Dr. Julio C. Garcia-Navarro.
By now we have all probably heard about the hydrogen economy and how it is a global challenge and so forth. Many (including myself) are actively attending webinars and reading articles (such as the ones published in Hydrogen Central) in the hopes of getting the most up-to-date information about the new developments. Now and then it is a good idea to sit back and summarize what we have learned so we can start painting the big picture of hydrogen in our heads. One of the most interesting (and critical) points to reflect about hydrogen is the subject of international commitment: how committed is the international community to hydrogen? And how many countries have put their money where their mouth is?
A few weeks ago, the IEA (the International Energy Agency) published the Global Hydrogen Review 2021, where they analyze how the hydrogen economy is developing. It is a very interesting review paper, and I would highly recommend it for when you are sitting in the toilet; although, at over 200 pages long you might need several toilet breaks (or a medical condition) before you can read it all. One of the points the IEA makes is about the topic of national hydrogen strategies and how committed different countries are.
Here is a bit of history of national hydrogen strategies. Way back when (i.e., in 2017) Japan published a hydrogen strategy and became the first in the world to do so. Their strategy came partially fueled by their existing fuel cell automotive industry (I think most people in the hydrogen world know about the Toyota Mirai at this point) and how to propel it worldwide. The Japanese realized that cheap hydrogen might not be produced in Japan, so they positioned themselves as potential importers of hydrogen (back then the colors of hydrogen were not invented yet as far as I know). Sometime after, France and Korea joined the conversation; France wants to use hydrogen to propel its industry (including the nuclear sector) while Korea found itself in a similar position as Japan with regards of hydrogen availability and the strength of their fuel cell car industry (it’s a shame that Hyundai hasn’t been as consistent as Toyota in the naming of their flagship hydrogen car).
The main turning point of the hydrogen conversation at the international level came when Australia developed their hydrogen strategy. Australia is an exporter of LNG (liquefied natural gas) and some of its business partners are Japan and Korea. Australia also has a massive solar power potential (because of the Australian Outback). These two circumstances, aided by the fact that there is already an established energy trade between Australia, Korea, and Japan, caused ripples throughout the world and planted the seed of what would become months later an international conversation. The potential to produce (green and blue) hydrogen in Australia, next to the existing supply chain of cryogenically stored gas, established trade routes, and the existence of off-takers of hydrogen in East Asia, suddenly became an opportunity to become the first transoceanic hydrogen supply chain in the world. It was clear for Australia that this was a massive opportunity: the Australian hydrogen strategy is available in Japanese and Korean while no other hydrogen strategy is available (to my knowledge) in multiple languages, meaning that they clearly knew who their target audience was. The rest is history and is better explained by the timeline below.
Figure 1. Timeline showcasing the publication of different national hydrogen strategies. Source: International Hydrogen Strategies (2020).
Now that we have a bit of a background on the national strategies, the next question is: what do they say; are countries really committed to hydrogen? To answer that I made a breakdown of the information gathered by the IEA on the Global Hydrogen Review 2021 about the commitments showcased in the national hydrogen strategies of different governments. There are two types of commitments showcased in most national hydrogen strategies:
- Public funding committed
- Planned targets by 2030
- Low carbon (green + blue) hydrogen production capacity
- Demand (industry + transport)
The IEA Global Hydrogen Review 2021 gives us an overview of the national hydrogen strategies; It is reassuring to read that the hydrogen economy is slowly taking shape worldwide, with some countries clearly positioning themselves as exporters, others as importers; some countries are focusing on the decarbonization of industry, while some others are focusing on reducing emissions in the transport sector. In the end, we need to concert all efforts to get back on track on the pathway of net-zero by 2050.
Dr. Julio C. Garcia-Navarro
The way I see it, the higher the commitment from one country (either on public funding or on targets), the more attractive it becomes for potential investors and the more likely it is to attract large-scale projects. That being said, increasing the level of public funding committed brings more certainty to projects because it makes clear how much the government will share the risk of investing in hydrogen and, since governments tend to plan for the long-term, this will certainly help bring the hydrogen economy to a success. The following graphs show, in descending order, the level of public funding committed, the target of low-carbon hydrogen production, and the target of fuel cell vehicle fleet size, all by 2030. There are some interesting points to make:
Figure 2. Ranking in descending order targets by 2030 for (top, full green bars) committed public spending, (mid, hollow purple bars) low-carbon hydrogen production capacity, (bottom, hollow orange bars) planned fuel cell vehicle fleet size. Note that the y-axis is on a logarithmic scale, so the differences are larger than how they are depicted. Source: made with data from IEA, Global Hydrogen Review (2021).
The top 4 countries with the largest public spending commitment are technology producers that either have hydrogen-ready or will make hydrogen-ready products. Germany and France have electrolysis, gas, and technology industries along the hydrogen value chain, and Japan and Korea have a strong fuel cell vehicle industry (by far the strongest in the world) as well as many other industries that will certainly benefit from public spending. It will be significantly easier to support the R&D efforts to adapt the existing technology to hydrogen (think of Alstom’s trains as example) and to expand manufacturing capabilities, than it will be to create an entire industry from scratch, and these countries know it for sure.
Massive targets are not always backed up by public spending commitments. Here are two examples.
Chile (seems to be very ambitious with their 25 GW electrolysis target, far ahead of France (6.5 GW) and Germany & the UK (5 GW). The fact that there is little to no pledged public spending could mean that Chile is waiting to attract foreign investment (which arguably they are succeeding at). This would mean that there will be other types of arrangements and subsidies in place (VAT exemptions, income tax reductions, etc.) that do not necessarily appear on a hydrogen strategy and that will only be realizable once there are actual project commitments going to Chile.
The Netherlands is a second example of this: they have the second highest target in fuel cell vehicle fleet (ahead of fuel cell vehicle producer Korea) and their low-carbon hydrogen production is also not negligible (5 GW, slightly below European frontrunner France) but their public spending commitment is minimal compared with these targets. It is less clear what their gameplan is: are they going to attract foreign investment? Are they waiting for other countries to put forward their targets first? Or have they no gameplan yet? I tend to think the last one is more correct, considering that in March there was a federal election and, while the ruling party won majority again, there was a shift in the power distribution that led to there not being a cabinet in place as of October 2021.
There is still no consensus about which sectors to decarbonize first, nor even about how to decarbonize, judging by the different target levels. We see countries such as Hungary with modest low-carbon hydrogen and fuel cell vehicle targets, but no public spending committed yet. Other countries such as the UK and Portugal have a more sizeable public expenditure commitment and a corresponding low-carbon hydrogen target, but no transportation target; perhaps these two countries would like to decarbonize their own transportation on a different way and are focusing on industry first. We see Australia and Norway with public spending but no consumption targets, and this gives me the idea that they solely want to export the hydrogen and decarbonize their own economies on a different way; this might prove more challenging for Australia than for Norway, considering Australia’s large coal consumption and production.
Bottom line
There is still much to be done about hydrogen. It is true that pledges on paper do not mean much with respect of actual developments going on around the world, considering also that the IEA only considered commitments and targets from documents actually called “National Hydrogen Strategy” or similar. This exclusion on the basis of name excluded targets set by other countries in other forms; for example, the US recently announced a target of reducing the cost of electrolysis hydrogen to 1 USD/kg by 2030 and a large 1200 billion USD expenditure target, of which 15 billion will solely be dedicated to electric vehicles and electric public transportation.
Nonetheless, it is actually reassuring that the hydrogen economy is slowly taking shape worldwide, with some countries clearly positioning themselves as exporters, others as importers; some countries are focusing on the decarbonization of industry, while some others are focusing on reducing emissions in the transport sector. In the end, we need to concert all efforts to get back on track on the pathway of net-zero by 2050.
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About the author
Dr. Julio C. Garcia-Navarro is a Hydrogen Project Coordinator at New Energy Coalition. He has worked in the hydrogen industry for nearly a decade, on topics such as hydrogen electrolysis, compression, and transportation. Besides hydrogen, he is passionate about Renewable Energy Systems and the Internet of Things.
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