Hydrogen is currently used in several sectors of the UK economy, mainly for industrial processes that require high-temperature heat or chemical reactions. For example, hydrogen is used to produce ammonia (which is essential for fertilisers), explosives and has potential for e-fuels. Hydrogen is also used to produce steel, glass, and food products, among others. Ironically, refining crude oil into fuels and petrochemicals also uses vast amounts of hydrogen. However, almost all of the hydrogen used in these sectors is produced from a process called steam methane reforming (SMR). This means that hydrogen production is associated with significant carbon dioxide emissions. According to the International Energy Agency (IEA), hydrogen production accounts for about 6% of global CO2 emissions from fuel combustion. In the UK, hydrogen production emits about ten million tonnes of CO2 per year, equivalent to the emissions of six million cars or 1.8% of the UK’s total emissions.
Therefore, there is a need to decarbonise hydrogen production and use, to reduce its environmental impact and align it with the UK’s Net Zero target.
Is all hydrogen created equal?
Other hydrogen production methods have far lower environmental impacts and, currently, much higher prices.
To differentiate these methods, the industry has a loose colour coding system to denote the origins of hydrogen production. For example, the current SMR production method is considered to create grey hydrogen. Hydrogen produced by electrolysis and renewable energy is collectively considered to be green hydrogen and may include yellow and pink hydrogen. Note that hydrogen is a clear gas regardless of the production method; it isn’t like red diesel, where a dye is added to the fuel. As we switch over to more green hydrogen, it will become increasingly important to know what colour the hydrogen that you’re buying is. It would be very lucrative to “recolour” cheap grey hydrogen and fraudulently sell it as green.
The UK currently produces and uses about 0.7megatonnes of grey hydrogen per year. We would need about 40TWh of renewable energy if we wanted to make it all green. That’s a lot of energy, more than a quarter of all our current zero carbon generation and many times the level of renewable curtailment in the UK (using curtailed energy to produce green hydrogen is a cogent option for many). There will need to be a significant infrastructure shift to make all the green hydrogen we will need just to displace the current industrial consumption even before we come up with innovative new uses.
As incentives (carbon taxes?) are applied to encourage industry to use green hydrogen, those industry players are going to be looking to bilaterally contract with green hydrogen producers; this will be the start of a green hydrogen market. New use cases, like net zero steel and concrete, hard to abate transport sectors and long-term energy storage, will compete with the old hydrogen users to make a more vibrant market, one that will require more sophistication than simple bilateral trades. Brokers and traders will see the opportunity and enter the fray. With all this hydrogen being traded, how will everyone be confident that they are buying and using green hydrogen? Luckily, DESNZ has a solution – a hydrogen certification scheme.
How will the Hydrogen Certification Scheme work?
DESNZ has recently announced its intention to develop a hydrogen certification scheme, which would provide information on the provenance and the greenhouse gas emissions of hydrogen. Such a scheme would enable hydrogen producers, consumers, and traders to verify the environmental credentials of hydrogen and to access a low-carbon hydrogen market. Note that DESNZ language is “low carbon hydrogen” (rather than green hydrogen) to encompass blue hydrogen, which is grey hydrogen with carbon capture. A hydrogen certification scheme is a system that tracks and verifies the provenance of hydrogen from production to consumption using certificates. Each unit of hydrogen (1MWh?) gets a certificate that holds information on the source, the process, the location and the date of production, as well as the carbon intensity and the environmental impact of the hydrogen. The certificates can be issued, transferred and redeemed electronically using a platform, such as a distributed ledger. The certificates could also be linked to other schemes and jurisdictions.
Hydrogen is a promising energy carrier, but it’s also an industrial input that needs decarbonising; for this to be effective, it is essential to know the origin and the environmental impact of hydrogen, as not all hydrogen is equally green and clean. A hydrogen certification scheme can provide a solution to this challenge. The UK government’s announcement to develop a hydrogen certification scheme is a welcome initiative. We hope that it will be implemented robustly and effectively in collaboration with the hydrogen industry and the wider energy community.