China Daily Global Edition (USA)
Powering change
China’s green hydrogen energy development plan has the potential to transform high-emissions sectors
We stand at a pivotal time in history. Six years into adopting the Paris Agreement, the goal of which is to limit global warming to between 1.5 to 2 C this century, progress is way off track.
The latest report from the United Nations’ Intergovernmental Panel on Climate Change once again stresses the stark reality facing us. As former executive secretary of the UN Framework Convention on Climate Change Christiana Figueres said, the report’s findings are simply “terrifying” and what’s at stake is the “long-term well-being of the entire web of life on this planet”.
While there have been glimmers of hope as countries commit to more ambitious climate targets and roll out new national policies, we need to do more. If we are to follow through on the Paris Agreement and achieve the Sustainable Development Goals within this decade, these commitments must be underpinned by concrete plans and swift actions from all parts of society.
To this end, the recent release of China’s “2021-2035 Plan on Hydrogen Energy Development” by the National Development and Reform Commission and the National Energy Administration is critically important. Emphasizing the need for hydrogen production from renewable energy rather than fossil fuels, the plan sets the stage for game-changing, zero-carbon solutions, which have the potential to fundamentally transform highemissions sectors.
Indeed, the development of China’s green hydrogen sector has long been a priority for the United Nations Development Programme. The UNDP has been working closely with ministries and cities on the production and commercialization of fuel cell vehicles since 2003, and recently expanded its focus to supporting China with renewable energy-based hydrogen production, harnessing the role of green hydrogen in energy and industries, and technical vocational training for a hydrogen economy.
With the new hydrogen plan in place, there are some key issues for its successful roll-out:
First, to deploy green hydrogen at scale, it is important to drive both supply and demand at the same time. On the supply side, reducing the cost of hydrogen, in particular electrolyzers, is critical. According to the International Energy Agency, as of October last year, electrolyzer projects in the pipeline will have a capacity of over 260 gigawatts globally. The International Renewable Energy Agency estimates that the cost of green hydrogen could be reduced by as much as 85 percent through making renewable energy and electrolyzers cheaper and more efficient.
To drive the technological innovation necessary to increase electrolyzer performance, durability, and reliability, we need cross-disciplinary cooperation and joint efforts from research, financiers, and industries. This will allow for the production of low-cost green hydrogen at scale, which can provide a cleaner and more secure energy supply to off-takers, and most importantly, result in a lower carbon footprint.
On the demand side, hydrogenbased energy solutions have the greatest potential for impact in high emission sectors, but industries must act swiftly. Over 78 percent of the world’s greenhouse gas emissions come from the energy, transport, and industrial sectors. The decarbonization of these sectors requires diversified solutions that complement electrification through renewables with green hydrogen. It is therefore encouraging to see China’s new hydrogen plan emphasizing the importance of combining these low-carbon solutions.
However, considering the years of lead-time needed before solutions can be deployed at scale, pilots for fuel shifts need to start now. To this end, decarbonization road maps for high-emissions industries, such as iron and steel making, ammonia and cement production, should be established with ambitious targets and timelines for green hydrogen adoption.
Second, to grow the hydrogen economy, a completely new infrastructure is required starting from the regional level. It’s challenging for investors to commit to developing hydrogen supply and distribution infrastructure when there is no certainty in demand. To solve this problem, the production and consumption of hydrogen can be set up in concentrated geographic clusters. By doing so, a comprehensive hydrogen ecosystem and value chain can be developed with various end-use applications all sharing a common infrastructure. This will help manage costs, attract investment and secure more off-take agreements, allowing for the growth of the hydrogen economy.
Third, the positive impacts of green hydrogen go beyond reducing emissions. According to research, approximately 54,000 jobs are created per megaton of hydrogen produced. This presents an important opportunity in particular for regions with high renewable energy potential but otherwise lower levels of industrialization.
In addition, industries where hydrogen is currently being produced as an unutilized byproduct could harness this resource to create further jobs and help make up for job losses arising in traditional sectors as a result of green economy transition.
Last, strengthened financial regulations are important to help accelerate the adoption of green hydrogen. As energy from renewables continues to become cheaper compared to fossil fuels, it is clear that high-carbon technologies are set to become stranded assets. Targeted policies can help speed up the transition away from fossil fuels toward low-carbon solutions such as green hydrogen by generating price signals factoring in the social and environmental costs of those industries with high energy consumption and pollution.
This can help tip the balance for investors by further narrowing the profit margin of investing in carbon intensive projects, especially given the cost of potentially having to ultimately decommission or retrofit with carbon capture and storage. Combined with institutionalized standards and mandating climaterelated risk disclosure, price-based incentive mechanisms can make green hydrogen an increasingly attractive option, accelerating investments into its wider deployment.
The UNDP will continue to support the future development of green hydrogen. In particular, it will look to further international cooperation and knowledge exchange on green hydrogen production, codevelop and implement pilot projects aiming to expand the use of green hydrogen in powering industries, buildings, and modes of transportation, and help to prepare people for the future of work in the hydrogen economy.
Hydrogen is no longer a future aspiration. The will is clear, the technology is here, and we’re more prepared than ever to bring it to scale.