Clean Hydrogen Roadmap: is greater realism leading to more credible paths forward?

The Oxford Institute for Energy Studies (OIES) started researching the role of hydrogen in the energy transition in 2020. Since then the interest in hydrogen has continued to grow globally across the energy industry. A key research question has been the extent to which clean hydrogen can be scaled up at reasonable cost and whether it can play a significant role in the global energy system. In April 2022, OIES launched a new Hydrogen Research Programme under the overarching theme of ’building business cases for a hydrogen economy’. This overarching theme was selected based on the observation that most clean hydrogen developments to date had been relatively small-scale pilot or demonstration projects, typically funded by government grants or subsidies. For clean hydrogen to play a significant role there will need to be business cases developed in order to attract the many hundreds of billions of dollars of investment required, most of which will need to come from the private sector, albeit ultimately underpinned by government-backed decarbonisation policies.

Just over a year has passed since the start of the Hydrogen Research Programme, and the intention of this paper is to pull together key themes which have emerged from the research so far and which can form a useful framework for further research, both by OIES and others. The original 2020 paper1 concluded that ‘hydrogen will certainly play a role in decarbonisation of the energy system, although the size of the role may be more limited than envisaged in some more optimistic projections’. In the intervening three years, we perceive that more realism has developed about the role which hydrogen is likely to play in a decarbonised energy system. Various publications by the Hydrogen Council, a global CEO-led initiative to promote the role of hydrogen, provide evidence of this increasing realism. A 2020 publication included excited references to hydrogen being the most competitive low-carbon solution for many applications including boilers for home heating on an existing network, large passenger vehicles, SUVs, and taxi fleets. It also made reference to the 2019 Energy Ministerial in Japan which had set a ’10-10-10’ global target to reach 10 million fuel cell vehicles and 10,000 hydrogen refuelling stations within the 10 years to 2030. By contrast, the Hydrogen Council’s 2023 Hydrogen Insights made no reference at all to hydrogen boilers and reported a total of 80,000 fuel cell vehicles, with the fleet growing at less than 20,000 units per year. The same Hydrogen Insights report also notes that while $320 billion of investments in hydrogen projects have been announced, only $29 billion of those projects have reached Final Investment Decision (FID). This increasing realism is to be welcomed, as once the challenges are identified, all interested stakeholders can work together to seek solutions to those challenges. The six key themes in this paper, listed below, are intended to create a framework to at least start to address the challenges: 1. Hydrogen is in competition with other decarbonisation alternatives. 2. The business case for clean hydrogen relies on government policy to drive decarbonisation. 3. It is essential to understand emissions associated with potential hydrogen investments. 4. Hydrogen investments need to consider the full value chain and its geopolitics. 5. Transport of hydrogen is expensive and so should be minimised. 6. Storage of hydrogen is an essential part of the value chain and requires more focus. After considering each of these key themes in turn, the paper will draw some conclusions and suggest how to build on the current growing realism to chart a reasonable path forward.