According to the report of London-based Carbon Tracker, investors from 25 countries have committed to new investments of $ 73 billion in green hydrogen, in anticipation of the intensification of the search for alternative sources after the war, which Russia started in Ukraine, and the decrease in costs.
According to the London-based financial think tank Carbon Tracker’s report, titled “The Role of Clean Hydrogen in the Energy Transition,” rising gas prices have caused a jump in the leveled energy cost of fossil-sourced hydrogen, prompting plans to invest in green hydrogen.
Since the beginning of the war, natural gas prices increased by 70 percent in international markets, and as this increase also increased the costs of hydrogen produced from fossil fuels, investors turned to cheaper and cleaner sources. While it is predicted that 100 billion dollars of gas-producing hydrogen assets may remain idle by 2030 due to the increase in natural gas prices and supply constraints, this situation is expected to affect the assets in Europe and Asia the most.
Kilogram production cost will decrease below 2 dollars
It is calculated that the cost of hydrogen production from fossil fuels in Europe may increase by 50 percent in the short term to 7.6 dollars per kilogram and to 6.4 dollars in Asia. For green hydrogen, production costs vary between $3.8 and $5.8 per kilogram, depending on regions.
The cost of producing green hydrogen is expected to fall below $2 per kilogram. This situation and investors’ search for alternatives have led to the decision to invest 73 billion dollars in green hydrogen since the beginning of the Russia-Ukraine War.
Germany, Morocco and the USA are among the 25 countries where new investment decisions are made. On the other hand, South Africa, Morocco and Chile are expected to stand out as the dominant markets for green hydrogen production by 2050.
Green hydrogen is not 100 percent environmentally friendly
The report pointed out that green hydrogen production is not 100 percent environmentally friendly, as it causes excessive consumption of clean water.
Kofi Mbuk, Senior Clean Technology Analyst at Carbon Tracker and lead author of the report, stated that green hydrogen has obvious benefits to achieve net zero emission targets in tackling climate change, adding, “However, excessive clean water consumption and energy loss in the green hydrogen production process are very critical issues that need to be resolved. “Until these issues are resolved, green hydrogen is unlikely to be sustainable because access to clean water is already difficult in many parts of the world. Green hydrogen can only be used in some sectors that don’t have a plan B to decarbonize.” Mbuk stated that investors are currently rushing to green hydrogen due to “lack of knowledge” and that green hydrogen can be used as a transition technology until battery costs become economical.