What the world needs to hear from COP27 on the hydrogen transition

Hydrogen Sector 08.11.22
Written by: HYCAP

A year ago, there was a big buzz in the UK around the annual United Nations Climate Change Conference, COP26, in part because it was hosted in Glasgow and Prime Minister Boris Johnson was determined to demonstrate British leadership on tackling the greatest existential threat we have ever faced.

COP26 was a landmark event for clean hydrogen. The Breakthrough Agenda, signed by 40 world leaders, including the US, India, EU and China, named the global availability of affordable renewable and low carbon hydrogen by 2030 as one of its five pillars.

The First Movers Coalition of 25 major global companies has proposed clean hydrogen as a key technology for their plans to decarbonise the steel, trucking, shipping and aviation sectors. Founding members of the powerful group include Amazon, Boeing, Fortescue, Volvo, AP Moller-Maersk and Vattenfall.

The International Renewable Energy Agency (IRENA) and the World Economic Forum launched a series of enabling roadmaps for green hydrogen, each of which shows the top 10 measures and critical timelines for their implementation in areas such as cost reduction, demand growth, international standards, infrastructure and technology development.

There has been significant progress for clean hydrogen on a number of fronts in the year preceding COP27.

(Pictured) a zero-carbon hydrogen-powered double-deck bus manufactured by UK firm Wrightbus on display in the Green Zone at Glasgow’s COP26 in November 2021.

Accelerated by Russia’s invasion of Ukraine and the subsequent surge in energy prices, countries and companies across the world have brought forward plans to produce, store, transport and consume clean hydrogen.

Green hydrogen has been cheaper than liquefied natural gas (LNG) in much of Europe this year, providing a clear signal to hydrogen investors.

A summer of heatwaves and droughts across Europe and North America has also helped bolster the case for increased investment in hydrogen as climate change reached the northern hemisphere faster than many had predicted.

Landmark legislation on both sides of the Atlantic is helping to bring down the cost of producing clean hydrogen and support the hydrogen economy.

In April, the UK government doubled its low carbon hydrogen production target to 10GW from 5GW and launched the Hydrogen Business Model, the world’s first subsidy scheme for green hydrogen production, clearing the way for billions of pounds of investment in the country’s hydrogen economy.

In the U.S. in August, President Biden passed the Inflation Reduction Act, providing $369 billion for energy and climate projects, including a subsidy of as much as $3/kg for clean hydrogen.

In September, the European Union announced the creation of a €3 billion European Hydrogen Bank, which will act as a “market maker” for hydrogen, helping to create demand for the 20 million tons a year of renewable hydrogen the EU is targeting by 2030. Additionally, the latest iteration of the EU’s Renewable Energy Directive II sets targets for renewable fuels of non-biological origin (RFNBOs) such as green hydrogen and green ammonia at 5.7% of all fuels by 2030, and 1.2% for maritime fuels.

Also in the UK, the government’s £26 million Industrial Hydrogen Accelerator Programme run by the Department for Business, Energy and Industrial Strategy, has awarded millions to projects able to demonstrate end-to-end industrial fuel switching to hydrogen to develop the concepts further.

So, what do we want to see from COP27 on the hydrogen front?

One of the biggest issues facing attendees of this COP is climate finance. Rich countries have repeatedly failed to live up to a pledge to provide poorer nations with $100 billion of climate finance annually, a figure that, even if achieved, is seen as inadequate. One of the goals of this summit is to work out how to implement that goal while working on targets to mobilize trillions of dollars of climate finance in the years ahead.

In September, the European Union announced the creation of a €3 billion European Hydrogen Bank, which will act as a “market maker” for hydrogen, helping to create demand for the 20 million tons a year of renewable hydrogen the EU is targeting by 2030.

Some developing countries are expected to be major players in the production and supply of clean hydrogen in the years ahead, including MoroccoNamibiaKazakhstan and Brazil. Providing the necessary investment in hydrogen to realise those ambitions will be a major step forward.

Carbon markets will also be under scrutiny at COP27 with strict guidelines to ensure that the credits used in the global carbon market represent real emission reductions. This is important for hydrogen watchers because the more effective carbon markets become, the higher the cost of pollution and the lower relative cost of clean alternatives, such as hydrogen.

Nov. 8 will see the Hydrogen Transition Summit in Sharm El-Sheikh, running alongside COP and featuring some major names from public and private sectors, including Dr.Andrew Forrest, founder and executive chairman, Fortescue Future Industries, Mechthild Woersdoerfer, director-general for energy, European Commission, and Dr. Andrea Lovato, executive vice president and global head of hydrogen, ACWA Power.

We will be watching closely as the major hydrogen developments emerge from the conference and the numerous political discussions taking place.

To learn more about specialist hydrogen fund HYCAP click here.