IEA Releases Forward-Looking Hydrogen Report

Last week the International Energy Agency released The Future of Hydrogen, a 203-page report that “provides an extensive and independent assessment of hydrogen that lays out where things stand now; the ways in which hydrogen can help to achieve a clean, secure and affordable energy future; and how we can go about realising its potential.”  The IEA is an autonomous intergovernmental organization whose mission is to advocate “policies that will enhance the reliability, affordability and sustainability of energy in its 30 member countries and beyond.”  Its membership includes most of the world’s largest economies, so any position it articulates on hydrogen is likely to be influential.

The Future of Hydrogen maps out with specificity the modes of action that are likeliest to advance the hydrogen agenda, and highlights the players who will need to take action within the prescribed modes.  Many reports are useful because they serve as a culmination point at the end of a study process and memorialize the participants’ conclusions.  This is one of the rare ones that could and should be used as an operator’s manual for how to pull off an exceedingly challenging feat of world-scale transition.

The report starts by taking stock of the current hydrogen energy situation:

What is new today is both the breadth of possibilities for hydrogen use being discussed and the depth of political enthusiasm for those possibilities around the world. Hydrogen is increasingly a staple of mainstream energy conversations in almost all regions, with a diverse group of countries and companies all seeing hydrogen as having a potentially valuable and wide-ranging part to play in the future of energy.

Today’s coalition of voices in favour of hydrogen includes renewable electricity suppliers, industrial gas producers, electricity and gas utilities, automakers, oil and gas companies, major engineering firms and the governments of most of the world’s largest economies.

The Future of Hydrogen, International Energy Agency, June 2019.

After acknowledging that hydrogen optimism has waxed and waned since the 1970s, the report articulates a rationale for “why this time around might well be different.”  Essentially, the climate crisis creates an ever more compelling context, and hydrogen can ride on and extend the breakout success that renewable electricity technologies are enjoying.  And just maybe there has been a payoff from the decades of technology development, as inconstant as it may have been: “Many stakeholders today share the opinion that technologies such as fuel cells, water electrolysers, hydrogen refueling and hydrogen turbines are now mainly waiting for large-scale demand and standardisation and not further technological development.”

The most important thrust of the report, though, can be found in the recommendation to launch

. . . the virtuous cycle for hydrogen that has benefited other clean energy technologies: (a) policy support and regulatory changes stimulate first movers in low-risk applications; (b) a positive track record attracts private finance and enables a policy shift from direct support to market-based incentives; (c) high and widespread expectations for deployment unlock public and private investment in long-lasting infrastructure and manufacturing; (d) the creation of a multi-billion dollar marketplace stimulates cost reductions through competition and innovation; (e) customers, investors and suppliers become reliant on the technology and each other, providing long-term stability.

The Future of Hydrogen, International Energy Agency, June 2019.

The key term here is “virtuous cycle,” evoking the spiraling feedback loop in which government support begets private-sector investment which begets tangible success which enables more government support.  The power of this construct is then amplified by the report’s identification of four real-world “complementary value chains,” that represent “springboard opportunities to scale up hydrogen supply and demand, building on existing industries, infrastructure and policies:”

Make industrial clusters the nerve centres for scaling up the use of clean hydrogen.

Use existing gas infrastructure to help boost low-carbon hydrogen supply and make the most of a reliable source of demand.

Give focused support to those transport options where hydrogen has most to offer.

Kick-start the first international shipping routes for hydrogen trade

The Future of Hydrogen, International Energy Agency, June 2019.

This list is galvanizing.  As the report emphasizes, “Governments have a central role to play in setting the overarching long-term policy framework for investment, establishing consensus around national opportunities for hydrogen, and also creating market demand, removing regulatory barriers, directing research and engaging internationally.”  But government actors can only work with what experts and the general public perceive to be in the realm of the possible.  Focusing hydrogen-related investments in specific applications and locales can effectively extend the boundaries of that realm.

This is the first part of a two-part article.  The second part will focus on The Future of Hydrogen’s discussion of ammonia as a contributor to the emerging hydrogen economy.