The energy crisis and the drive to reduce dependence on fossil fuels, combined with government and business targets for a net-zero future, have accelerated plans for decarbonisation projects, such as green hydrogen, carbon capture, utilisation and storage (CCUS).
Hydrogen, carbon capture and storage are major parts of net-zero plans. They also present parts of investments in decarbonisation within energy-intensive industries like oil and gas, with many committing to achieving net-zero by 2050. Hydrogen and CCUS require significant government support and investment to develop into a cost-effective solution within the energy transition. Projects are gaining traction with net-zero targets and the disruption after the Russian invasion of Ukraine, prompting further development of hydrogen projects as part of a wider strategy to move away from Russian fossil fuels.
Hydrogen has become a vital part of decarbonisation plans in Europe. Low-carbon hydrogen represents one of the factors within the UK’s Ten Point Plan for a green industrial revolution. The UK Hydrogen Strategy highlights that low-carbon hydrogen will be critical for achieving net zero by 2050. The strategy explains that hydrogen can support extended decarbonisation of the UK economy, especially in challenging to electrify UK industrial sectors and provide a more clean, flexible energy source for power, heat and transport industries.
The UK has a target to reach 10GW of low carbon hydrogen production capacity by 2030, as announced in the Energy Security Bill. The Bill aims to deliver a large village hydrogen heating plan by 2025, providing vital information to make plans on the role of hydrogen in heat decarbonisation. Two possible locations have been identified Whitby and Redcar. The plans also include a target to capture and store carbon dioxide, creating a need for over 12,000 industry jobs across the hydrogen value chain and 50,000 jobs in the CCUS sector.
The appeal of green hydrogen as a vital source of renewable energy has grown as the cost of other types of hydrogen production (blue and grey) have increased with natural gas and coal prices rising. The war in Ukraine has spurred on the green hydrogen industry. Green hydrogen promises energy security as well as potential new economies for renewables. While some countries focus on domestic use, others depend on exports, suggesting that we may move from a world where energy is sourced in several specific regions to production in a more spread-out manner.
The next few years are pivotal for the green hydrogen industry, if production can be increased as planned to over 10 million tonnes worldwide by 2030 and costs reduced, then the industry can become a permanent part of the global energy mix.
While the industry and governments are moving in the right direction, the challenge is reducing the risks for green hydrogen investment and creating the necessary incentives to scale demand and supply.
Another important technology for reducing emissions, CCUS, is expected to experience a significant rise in the coming years. Worldwide, CCUS projects are anticipated to deliver over 550 million tonnes of CO2 out of the atmosphere every year by 2030. This would be a tenfold increase over current figures as the shift to decarbonisation gathers pace.
As a result of better policies and incentives, Europe and North America are predicted to dominate the CCUS market by 2030, contributing 450 million tpa of capture capacity, over 80% of the projected global total of 550 million tonnes. Economic and financial barriers are the main reasons CCUS projects are not progressing, but more areas now recognise the importance of supporting this industry. The demand for carbon capture projects through to 2030 will be driven by policies and support, particularly in the hard-to-decarbonise sectors like cement, steel and chemicals.
There is significant growth worldwide in investing in emerging technologies such as green hydrogen, CCUS and batteries. The pace behind hydrogen has been reinforced by Russia’s invasion of Ukraine. The IEA has explained that clean-hydrogen-focused businesses are raising more money than ever, and the value of these companies has increased considerably. Investment in CCUS has also increased to nearly $1.8 billion in 2021, as six CCUS projects progressed last year. Major capital is starting to move toward younger businesses with the technology to remove carbon dioxide from the air and store or use it.