Winning the Green Hydrogen Race
by Christina Nagy-McKenna, Enerdynamics Facilitator
Competition is heating up in the global green hydrogen production arena. Green hydrogen technology is now seen as the key to carbon neutrality. If the energy industry’s experience with the solar PV market is any indication, it will be a hard-fought and expensive battle between two powerhouses who have met before. Each possesses a willingness to spend money on new technologies and a desire to dominate the clean energy market.
On one side of the contest, the European Union unveiled an aggressive plan last summer to put its stamp on the hydrogen market and ensure that it retains its position as market leader into perpetuity. On the other side, industry experts believe that China will ramp up its investment and may unseat the Europeans. Given the high cost of entering the fray, other countries aiming to become carbon neutral by mid-century will be watching with great interest to see if the potential commercial rivalry will bring green hydrogen within everyone's reach. And interestingly, the United States seems to be on the sidelines.
The rivalry between the two global energy superpowers is seeded in the solar PV market where the Europeans captured the initial market lead with massive investments in photovoltaics. Then China swooped in to capture market share as prices fell and China leveraged its access to cheaper labor and other resources. China now controls 60 percent market share of solar PV. The Europeans have vowed not to let this happen again.
The European plan
The European Union’s plan involves aggressive investment in the hydrogen market. Such investment will create an industry that provides one million European jobs and will ensure that the region becomes carbon neutral while helping other areas of the world do the same. The plan is similar to Germany’s green hydrogen plan that aims to a become the market leader in technology production while achieving carbon neutrality by 2050. Both plans call for the initial construction of electrolysers to produce green hydrogen. The EU is aiming for 6 GW of electrolyser capacity by 2024, and Germany is targeting 5 GW by 2030.
Wood Mackenzie estimates current global capacity at 250 MW. A key difference between the two plans: The European plan contains more allowances for blue hydrogen technology that relies on fossil fuels. Germany believes producing only green hydrogen will put it on a path to achieve its carbon neutrality goal.
In late September China announced its goal of becoming carbon neutral by 2060. This was a first for the country that previously pledged to reduce emissions but had not publicly discussed carbon neutrality. Because China produces 28 percent of the world’s emission, the announcement carries great importance. China is already the world’s largest producer of hydrogen, however it is produced mostly from coal. For China to become a leader in green hydrogen, it will have to eventually walk away from cheaper coal-produced hydrogen. The recent announcement regarding carbon neutrality may be an early signal that it is willing to do so. The energy industry will wait as China reveals more details as to how it will achieve its goal. Based on past experience, China is likely to be a formidable European competitor.
Rivalry and the global benefit
The commercial rivalry may be just what is needed to push hydrogen costs low enough for the technology to be globally accessible as many countries strive to be carbon neutral by the middle of this century. While today rooftop solar projects seem to be on every corner, not that long ago these projects would have been too expensive. Large amounts of government funding for research and production reduced costs to a point where solar technology is now commonplace. The high cost of research and development for new technologies often leaves smaller and lesser developed countries on the sidelines. A significant decrease in the cost of production could put green hydrogen within the grasp of more countries just as lower production costs made solar more accessible this past decade. Ultimately, everyone may win the race, but it may take the two strongest players to get there.
Not sure what green hydrogen is? Download Enerdynamics’ green hydrogen infographic to understand how it is created and how it is used.
Amelang, Sören, “Europe Vies with China for Clean Hydrogen Superpower Status,” July 24, 2020, Clean Energy Wire. https://www.cleanenergywire.org/news/europe-vies-china-clean-hydrogen-superpower-status#:~:text=One%20focus%20of%20Chinas%20hydrogen,and%201%20million%20by%202030
Appunn, Kerstine, “EU Wants to Become Market Leader in Hydrogen Technologies, Create 1 Million Jobs,” July 8, 2020, Clean Energy Wire. https://www.cleanenergywire.org/news/eu-wants-become-market-leader-hydrogen-technologies-create-1-million-jobs
Myers, Steven Lee, “China’s Pledge to be Carbon Neutral by 2060: What It Means”, September 23, 2020, The New York Times. https://www.nytimes.com/2020/09/23/world/asia/china-climate-change.html
Parnell, John, “Europe Sets Gigawatt-Scale Hydrogen Targets for Green Hydrogen,” July 9, 2020, GTM. https://www.greentechmedia.com/articles/read/eu-sets-green-hydrogen-targets-now-blue-hydrogen-has-to-keep-up
Back to Energy Currents