Decades after the process of ‘electrification’ matured the global energy industry, hydrogen is slowly gaining steam as a viable energy carrier as well. As the International Energy Agency stated in May, hydrogen will be essential for the world to reach its target of zero emissions by 2050.
But the US energy industry continues to ride the coattails of a domestic oil and gas boom. An underwhelming level of investment and coherent strategy guiding its hydrogen industry threatens to put the country at a serious disadvantage as hydrogen’s importance grows.
In comparison, the world’s major energy markets and producers have significantly enhanced hydrogen development and cooperation over the last decade.
European countries in particular have been keen to diversify their energy consumption away from fossil fuels. Several European countries have proposed national hydrogen strategies over the last two years, alongside the one put forward by the EU in 2020. The French, German, Italian, Spanish and Portuguese governments alone will invest $44 billion into hydrogen this decade, industry researcher IHS Markit estimated last December.
An assortment of European gas operators have also recently expanded proposals to build a continent-wide hydrogen energy network. By refurbishing gas pipelines and building new infrastructure, the European Hydrogen Backbone (EHB) now plans to grow a 11,600 km transportation network by 2030 to 39,700 by 2040, across 21 countries. Other projects such as NortH2 in Northwest Europe point to further efforts to construct regional integrated hydrogen value chains.
Europe’s growing hydrogen network is expected to meet a range of energy demands. Incoming bans on the production of combustion-powered vehicles over the next two decades will be mostly met by electric vehicles, but hydrogen fuel cell vehicles will also feature prominently. The Dutch gas and power network operator Stedin launched a five-year project in 2018 to experiment with heating a block of homes with hydrogen, with other major projects continuing to introduce hydrogen across the continent.
As Europe’s largest supplier of oil and natural gas, Russia has been particularly sensitive to the economic ramifications of new energy revolutions. The Kremlin approved the Hydrogen Energy Development Plan last year in coordination with Germany’s and the EU’s hydrogen strategies and announced the development of a Russian-German roadmap for hydrogen in December to keep up with changing trends in European energy consumption.
Rosatom, Gazprom, and RusHydro, Russia’s premier nuclear, natural gas, and hydropower companies, will begin operating their own hydrogen plants in the mid-2020s. Their collective approach is intended to safeguard Russia’s traditional European markets and its growing client base in Asia.
The Asian hydrogen market, however, is already extremely competitive. China’s desire to support its enormous economy and diversify its energy consumption for geopolitical reasons have made it the leading hydrogen producer and investor.
The country’s major state-run companies have seized the initiative. In June, China’s Sinopec declared it would spend $4.6 billion towards hydrogen energy development by 2025. This includes the construction of 1,000 hydrogen filling stations, accelerating the transition from gray hydrogen to blue and green sources, and expanding the current pipeline network to connect producers and downstream markets.
Having played a pivotal role in popularizing solar energy over the last decade, Beijing’s efforts in building up its domestic hydrogen industry have shrunk costs for hydrogen production considerably.
South Korea’s SK Group, a major domestic conglomerate, is developing what it says will be the world’s largest gray and blue hydrogen plants in 2023 and 2025, respectively. Additionally, the company has stated it will invest $16 billion into the domestic hydrogen industry over the next five years.
The South Korean government has been actively promoting hydrogen-related business across the public and private sector through the K-Hydrogen Council and other initiatives. Five Korean conglomerates are expected to invest $38 billion into hydrogen technology by 2030 according to the Ministry of Trade, Industry and Energy this month.
Hydrogen has also become a vital part of Japan’s efforts to curb carbon emissions, particularly after the country dramatically reduced its nuclear power capabilities following the Fukushima accident in 2011. In December, Japan put forth a preliminary road map proposing for hydrogen and related fuels to account for 10% of national electricity generation by 2050, as well as powerful roles in shipping and steel manufacturing.
Japan’s government has stated its intention to see 200,000 hydrogen fuel cell vehicles on the road by 2025 and is currently working with other countries to develop the world’s first hydrogen supply chains. After the successful transport of liquified hydrogen from Brunei to Japan last year, the Hydrogen Energy Supply Chain (HESC), currently in its pilot phase, will also transport hydrogen from Australia to Japan in the coming decade.
As the country which pioneered liquefied natural gas in the 1970s, Japan’s ambitious hydrogen transportation initiatives are accelerating hydrogen’s global expansion.
Like Russia, Middle Eastern countries are working to diversify their economies away from oil and natural gas exports. Saudi Arabia has pledged to become the world’s top exporter of hydrogen and has planned a $5 billion project to produce green hydrogen in the country’s futuristic Neom city.
Saudi Arabia and Germany also signed a declaration of intent earlier this year to cooperate in green. Saudi energy companies, as well as other Gulf States (notably the United Arab Emirates) have also increased talks with Asian companies regarding hydrogen development.
Elsewhere around the world, hydrogen continues to dominate energy headlines. Asia’s richest man, India’s Mukesh Ambani, declared his intention to commit to green hydrogen through his company Reliance Industries in August. Germany is meanwhile leading hydrogen development in Africa.
The US, however, has been notably absent from modern hydrogen discussions, despite the use of hydrogen in the national energy mix for decades. US companies began making hydrogen from natural gas in the 1930s, while the Apollo space missions used hydrogen power to produce electricity and water.
But the development of the US’ ‘hydrogen economy’ later stalled. In 2003, US President George W. Bush attempted to revitalize the domestic industry with a $1.2 billion federal initiative aimed at diversifying the nation’s energy consumption. The industry’s revival was cut short after the Obama Administration slashed hydrogen funding in his first term as the US domestic oil and gas booms intensified.
The Trump Administration further focused on developing the US’ oil and gas industries to increase the nation’s energy independence. The US’ hydrogen automotive sector, long seen as the hydrogen’s best bet for growing its commercial appeal, was also steadily overshadowed by electric battery cars.
Under President Joe Biden, the Department of Energy has allocated approximately $400 million towards hydrogen energy in 2022, compared to $285 million this year. Political legislators are currently negotiating a massive infrastructure package that would deliver $8 billion towards hydrogen development.
Political gridlock in Washington continues to stall any financial relief, however, while the proposed $8 billion would still pale in comparison to the investments already made by other countries. Thanks to its energy independence and an electorate generally less concerned over greenhouse gases than their European and Japanese counterparts, the US lacks the nationwide drive to exploit its hydrogen potential.
Some US states and companies have taken the initiative to promote hydrogen. California and New York have mandated that new passenger cars and trucks sold in-state must be zero-emission by 2035. Plug Power has announced plans to construct the west coast’s largest green hydro power plant by 2024, growing its network of plants in New York, Tennessee, and Georgia.
But these sporadic and localized instances will not be enough to shoulder the cost of developing the US’ hydrogen industry. Without the motive of short-term commercialization, there is the risk of stagnation and decline should federal aid dry up again.
The benefits of investing in hydrogen remain clear. Existing oil, coal, and gas infrastructure can be modified to accommodate hydrogen, allowing the US to recycle its legacy energy assets. Hydrogen can be liquefied for maritime transportation and stored and used in fuel cells that are more weight-efficient than electric batteries. Hydrogen will also become more cost competitive due to increased investments and the falling costs of renewables, while the chance to diversify the US’ energy intake is an added bonus.
Perhaps most importantly, as the rest of the world works to connect through hydrogen, the US cannot risk falling further behind.