Hydrogen – hope or hype?

One of the most controversial issues in the context of decarbonising our economy, is the debate on the use of hydrogen. Hydrogen is the most abundant element in the universe but on earth it only occurs in compound format with other elements (with oxygen as H2O in water) or with carbon (in gas, coal or petroleum).

Therefore, hydrogen is an energy carrier or a secondary source of energy. To turn it into an energy fuel, it has to be produced using energy (from fossil fuels, nuclear, renewables) via different methods (steam reforming, electrolysis etc.). Read more on the basics of hydrogen here.

Hydrogen production could play a major role in decarbonising the EU economy, but there is huge controversy on what type of hydrogen production (green or renewables-based; blue, based on natural gas but with carbon capture and storage; grey, based on fossil fuels, mostly natural gas; black, based on coal; or pink, based on nuclear energy) and for which purposes (industry, transport, power sector, building) it should be prioritised. Moreover, the costs of all of these hydrogen production methods is still very considerable and varies by type of fuel used.

The Energy Cities website has a good article on the different types of hydrogen production called ‘50 shades of (grey and blue and green) hydrogen’.

Currently, most hydrogen (96%) is produced from fossil fuels (‘grey’ hydrogen from natural gas and coal) and has a huge CO2 footprint. According to the International Energy Agency (IEA), production of hydrogen is responsible for CO2 emissions of around 830 million tonnes of carbon dioxide per year, equivalent to the CO2 emissions of the United Kingdom and Indonesia combined.

There is increasing interest in low-carbon hydrogen (blue and green) production but the developments in this area are technically challenging, expensive and slow. Several countries have therefore developed strategies or roadmaps to stimulate more ‘clean’ hydrogen. For a good overview of the state of affairs of hydrogen production, see the IEA’s Hydrogen Tracking Report.

The European Union issued in July 2020 a ‘hydrogen strategy for a carbon-neutral Europe’, aiming to accelerate the development of clean hydrogen. The Commission aims for 100% green hydrogen by 2050 but sees blue hydrogen as a necessary transition path. For a good analysis of the EU policies on hydrogen, Member States’ initiatives and the positions of stakeholders, read the excellent European Parliament’s Research Service briefing ‘EU Hydrogen Policy’ (last update April 2021).

One of the most controversial issues in the hydrogen debate is the role of ‘blue hydrogen’. Some critics see blue hydrogen as an expensive distraction used by the fossil fuel industry to lock our economies into the fossil fuel era. A recent study by Cornell and Stanford University energy experts claims that blue hydrogen is hardly emissions-free (because of methane leaks and less than 100% carbon capture) and could even be ‘worse than gas and coal’. Other experts contest this claim and think that blue hydrogen production could be produced without the methane leaks and with 100% capture of emissions.

Essential reading:

• Oxford Institute for Energy Studies: The Role of Hydrogen in the Energy Transition (18 May 2021)
• European Climate Foundation: Towards fossil-free energy in 2050 (2019)
• EarthJustice : Reclaiming Hydrogen for a Renewable Future (August 2021)
• Bruegel: Hydrogen development strategies: a global perspective (August 2021)
• Carbon Brief: In-depth Q&A: Does the world need hydrogen to solve climate change? (Nov 2020)
• Energy Science and Engineering: How green is blue hydrogen? (12 August 2021)

Macroeconomic impacts of climate policies

A few new studies on the macroeconomic impacts of climate change and climate policies made the headlines this summer. This might have been caused by the extreme weather events seen all over the world, the calls for stronger climate policies following these events and the new IPCC report as well as the warnings of some climate policy deniers that the societal costs of stronger policies would be too high.

French economist and Bruegel senior fellow Jean Pisany-Ferry wrote an interesting policy brief for the Peterson Institute for International Economics (PIIE) in which he warns that the “accelerated transition to a carbon-neutral economy” will “have serious, immediate economic implications”. He compares the impact fo “going zero” to the 1974 oil shock and states that policymakers have not “addressed these implications in a systemic manner”. See also this opinion piece of Pisany-Ferry in Project Syndicate and an interview (in French) in Pour l’Eco.

One major problem of all models which try to measure the economic costs of the climate emergency is that they do not include the impacts of climate ‘tipping points’ such as the thawing of permafrost or the disappearance of the ice sheets. A new academic study published end of August by the PNAS (Proceedings of the National Academy of Sciences of the US) has tried to estimate the social and economic costs of these tipping points by analysing the existing literature on this issue. The main findings of this report have been summarised by one of the researchers, Gernot Wagner, in an article for Bloomberg Green.

Another report which received a lot of media attention looks at the role of influential economists in overestimating the costs of climate policies in order to delay climate action. Written by Stanford University historian Benjamin Franta, the study published in the academic journal Environmental Politics demonstrates “how the fossil fuel industry has funded biased economic analyses to oppose climate policy and highlights the need for greater attention on the role of economists and economic paradigms, doctrines, and models in climate policy delay”.

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