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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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How Greenwashing Could Undermine Hydrogen’s Future

  • Governments' aggressive plans for grey and blue hydrogen expansion raise concerns about environmental sustainability and the neglect of green hydrogen.
  • The U.K.'s focus on blue hydrogen, with significant taxpayer funding, has sparked criticism due to potential reliance on fossil fuels and doubts about carbon capture effectiveness.
  • Despite the current cost advantages of grey and blue hydrogen, increasing global investment in green hydrogen production is expected to drive down its operational costs.

While there are big plans to expand the clean hydrogen sector, most hydrogen continues to be derived from fossil fuels, with major plans for the expansion of the grey and blue hydrogen industries, which could result in greenwashing to the detriment of the renewable hydrogen industry. As the U.K. and other global powers plan to develop their natural gas-derived hydrogen industries, the rollout of green hydrogen technologies is under threat of being overlooked while governments push for cheaper forms of hydrogen under the guise of being low carbon. 

Hydrogen is viewed by many governments as critical for a green transition, as it is a versatile carrier that can be applied in a range of ways, from powering fuel cells in cars and aviation to heating and cooking. Green hydrogen is produced using electrolysis, powered by renewable energy sources, to split water into oxygen and hydrogen, emitting only vapor in the process. In contrast, grey hydrogen – the most common form of production at present, is produced using natural gas, or methane, to power a steam reforming process, bringing together natural gas and heated water as steam to produce hydrogen. Carbon dioxide is also produced as a by-product. Blue hydrogen is produced in the same way, but the CO2 produced is sequestered using carbon capture and storage (CCS) technology, allowing it to be promoted as “low-carbon” hydrogen. 

At present, most of the world is heavily dependent on natural gas for its fossil fuel production, a trend that is expected to continue, as many countries label gas as a transition fuel. IN 2022, approximately 92 percent of hydrogen produced was grey. Current estimations suggest that blue and green hydrogen could contribute 22 percent of the total hydrogen production by 2035, meaning that the industry will still be largely driven by fossil fuels in over a decade. The hydrogen industry is expected to grow significantly in value over the next decade, from around $159.5 billion at present to $334 billion by 2030.

As green hydrogen projects take off worldwide, the U.K. has big plans to expand its blue hydrogen industry. Earlier this year, the government announced the low carbon hydrogen standard (LCHS) to support its UK Hydrogen Strategy and Energy Security Strategy. The LCHS defines what constitutes ‘low carbon hydrogen’ at the point of production, as well as provides a methodology for calculating the emissions associated with hydrogen production. Yet, the government has big plans to expand the country’s blue hydrogen production at a much faster rate than green hydrogen. 

At present, 84 percent of the U.K.’s “low-carbon” hydrogen production pipeline falls into the blue category, meaning it is produced using methane, with CO2 emissions being captured and stored using CCS technologies. Much of the funding for these blue hydrogen projects comes from taxpayers, as they are deemed to meet LCHS standards. Although the emissions produced during blue hydrogen operations are expected to be captured via CCS tech, they still rely heavily on fossil fuels, which is a major concern for environmentalists. There has been widespread criticism over the efficacy of CCS tech and there is also the potential for methane leaks, with a new independent study suggesting that fugitive emissions from the North Sea could equate to at least 0.72 percent of production, five times more than is assumed by the government. 

Even if successful, the expansion of the industry means that CCS companies will be developing equipment for blue hydrogen companies, when the focus should be on hard-to-abate industries, with further taxpayer funding going to support this. In 2021, Chris Jackson, the chair of a leading hydrogen industry lobby group, resigned from his position citing the cause as the unsustainability of the U.K.’s hydrogen production. Jackson stated that the blue hydrogen projects on offer in the UK are “not sustainable” and “make no sense at all”.

One of the main reasons that governments and private companies continue to opt for grey and green hydrogen production is due to the lower costs involved in operations. Green hydrogen continues to be much more expensive to produce than fossil fuel-derived hydrogen. Adithya Bhashyam, a hydrogen analyst at BloombergNEF, stated, “When it comes to producing green hydrogen today, the numbers are stacked against us.”Bhashyam explained “Gray hydrogen, which comes from natural gas, costs $0.98-$2.93 per kilogram to produce. Blue hydrogen, or hydrogen produced with fossil fuels but subject to carbon capture, costs $1.8-$4.7 per kilogram. And green hydrogen, which is produced by running an electric charge through water, costs a whopping $4.5-$12 per kilo. In every single market we’ve surveyed, green hydrogen is more expensive than its grey counterpart.” However, that could soon change.

Thanks to increasing worldwide investment in green hydrogen production, innovations in technologies and commercial-scale projects are driving down operational costs. Bhashyam believes a tipping point is close ahead. He and his team estimate that by the end of the decade, producing green hydrogen in a new plant could be as much as 18 percent cheaper than continuing to run an existing grey hydrogen plant in five major economies around the world. So, while the U.K.’s blue hydrogen plan may make sense in the short term, it could be detrimental not only environmentally but also economically within the next few years.

By Felicity Bradstock for Oilprice.com


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