The International Energy Agency (IEA) has released new guidelines for clean hydrogen production. Nikkei Asia reports that these criteria state that hydrogen produced from fossil fuels, such as natural gas, can be considered clean if the carbon intensity of the production process meets specific standards.
The IEA's comprehensive set of guidelines is designed to assess the carbon intensity of hydrogen production. Under these standards, one kilogram of hydrogen must produce less than seven kilograms of carbon dioxide to qualify as clean.
Green Hydrogen
Although hydrogen fuel can be burned without emitting carbon dioxide, the process of producing it can be carbon-intensive. Green hydrogen is typically produced using renewable energy sources, whereas blue hydrogen is made by combining fossil fuels with carbon-capture technology.
However, the lack of clear standards defining green or blue hydrogen has hampered the growth of the hydrogen market. This ambiguity raises the possibility that investments in clean hydrogen will fail to meet future benchmarks.
The new rules allow blue hydrogen producers who use fossil fuels to be considered clean if they use carbon-capture technology to keep emissions below the 7 kg threshold.
Statista tells us that between 2021 and 2030, global demand for hydrogen is expected to double nearly. In 2021, the global demand for hydrogen was 94.3 million metric tons per year.
The majority of hydrogen is consumed in the chemical and refining industries and is still primarily derived from fossil fuels.
How the Guidelines Will Affect the Market
While the new guidelines are not legally binding, they will undoubtedly impact investment decisions in the hydrogen market.
Nikkei Asia reports that the Japanese government is looking to update its hydrogen strategy and is considering blue hydrogen generated from natural gas as a potential fuel source in the short term.
In related news, Mint reports that the Indian government unveiled India's new green hydrogen policy in February, promising cheaper renewable power and a 25-year fee waiver for inter-state power transmission for projects completed before June 2025.
It also includes land in renewable energy parks and mega manufacturing zones to help local industries transition away from fossil fuels.
Hydrogen in the Global Energy Mix
Hydrogen is predicted to play a significant role in the global energy mix, covering 12% of global end-use energy demand in 2050 if the world achieves net-zero greenhouse gas emissions.
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The Hydrogen Council and US-based consultancy McKinsey & Co. predict that global demand for hydrogen and its derivative products will reach 660 million tonnes in 2050.
Hydrogen and ammonia may become popular as sustainable alternatives to traditional fuels in the steel, aviation, and shipping industries.
The adoption of clear standards for clean hydrogen production is a significant step toward promoting the growth of the hydrogen market. Hydrogen is expected to play an increasingly important role as the world's energy mix shifts away from carbon.
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