The attractiveness of hydrogen to enable the decarbonization of several hard-to-abate sectors is partly explained by the absence of carbon in its composition and its high energy density. Several countries and companies have been making supply, demand and investment pledges in the recent months.

According to the IEA’s Net Zero scenario, the demand for hydrogen could grow about 6 times until 2050, reaching 540 Mt [1]. Not all potential uses may prove viable, and most of this demand would likely come from industry (e.g.: refineries, ammonia, steelmaking) and heavy transportation uses. However, in order to be instrumental to the energy transition, it has to be low-carbon, while almost all of the current hydrogen supply is based on unabated fossil fuels.

Thus, the low-carbon varieties which have gathered greater interest are the “green” and “blue” hydrogen. Coupled with CCUS (blue) or produced through water electrolysis from renewable electricity (green), clean technologies have the potential to replace fossil hydrogen and other fossil fuels and raw materials. Although carbon pricing might be required to make those alternatives economically viable, it is expected that low-carbon hydrogen could reach ~US$ 1/kg by 2050 in some parts of the world, driven by cost reductions in renewable generation, electrolysers and CCUS, making it economically competitive.

In this context, the potential relevance of hydrogen in the energy transition is causing countries to adopt different strategies to benefit from the new possibilities related to the molecule. While developed economies can rely on public funds and fiscal incentives to reach their ambitious goals, emerging countries must depend primarily on the competitiveness of their natural resources and the establishment of an attractive business environment.

Brazil, being a renewable superpower, holds the potential of securing a competitive position in a global hydrogen economy. The country launched the guidelines of its National Hydrogen Plan in 2021. Although not limiting technological routes or “colors”, it aims to explore the renewable potential for the production of green hydrogen. In this context, some industrial complexes are positioning themselves as hydrogen hubs, such as the Port of Pecém in Ceará, for which announced hydrogen-related investment amounts to US$ 20.7 billion [2]

In its newest paper, Catavento analyzes the potential of hydrogen in the energy transition, while also assessing the economic and technological challenges of the future demand and supply of low-carbon hydrogen. Lastly the paper illustrates the scale of public and private mobilization globally and in Brazil.

Download the paper here.

References:

[1] IEA. Global Hydrogen Review 2021. 2021

[2] Catavento analysis based on Engie, Enegix and Government of Ceará websites

Photo: Vitor Paladini via Unsplash