01 POWER ISLAND / 02 H2+NH3 / The_Future_of_Hydrogen-IEA-2020

The Future of

Hydrogen

Seizing today’s opportunities

Report prepared by the IEA for the G20, Japan

J u n e 2 0 1 9

The Future of

Hydrogen

Seizing today’s opportunities

Report prepared by the IEA for the G20, Japan

The Future of Hydrogen

Foreword

Foreword

This is a critical year for hydrogen. It is enjoying unprecedented momentum around the world and could finally be set on a path to fulfil its longstanding potential as a clean energy solution.

To seize this opportunity, governments and companies need to be taking ambitious and realworld actions now. We are very grateful to the government of Japan for its request under its presidency of the G20 that the International Energy Agency (IEA) prepare this important and timely report.

Our study provides an extensive and independent assessment of hydrogen that lays out where things stand now; the ways in which hydrogen can help to achieve a clean, secure and affordable energy future; and how we can go about realising its potential. To help to get things moving, we have identified the most promising immediate opportunities to provide a springboard for the future.

As the world’s leading energy authority covering all fuels and all technologies, the IEA is ideally placed to help to shape global policy on hydrogen. The rigorous analysis in this report was conducted in close collaboration with governments, industry and academia.

This study on hydrogen is part of a comprehensive approach the IEA is taking to the global energy system. Last month, we published a report on the role of nuclear power in a clean energy system. We are also holding various high-level meetings to underscore the critical elements needed for a sustainable energy future – including a ministerial conference in Dublin this month on energy efficiency and another ministerial on systems integration of renewables in Berlin in October 2019.

I very much hope our report on hydrogen will inform discussions and decisions among G20 countries, as well as those among other governments and companies across the world. I hope it will help to translate hydrogen’s current momentum into real-world action that sets hydrogen firmly on the path to becoming a significant enabler of a clean, secure and affordable energy future.

Beyond this report, the IEA will remain focused on hydrogen, further expanding our expertise in order to monitor progress and provide guidance on technologies, policies and market design.

We will continue to work closely with governments and all other stakeholders to support your efforts to make the most out of hydrogen’s huge potential.

The IEA looks forward to continuing this journey together.

Dr. Fatih Birol

Executive Director

International Energy Agency

PAGE | 3

IEA. All rights reserved.

The Future of Hydrogen

Acknowledgements

Acknowledgements

This study was prepared by a cross-agency hydrogen working group drawn from all relevant directorates and offices of the IEA. The study was designed and directed by Timur Gül (Head of the Energy Technology Policy Division) and Dave Turk (Head of the Strategic Initiatives Office). The analysis and production of the report was co-ordinated by Simon Bennett and Uwe Remme.

Main contributors were Herib Blanco (transport sector), Pierpaolo Cazzola (transport sector), John Dulac (buildings sector), Hiroyuki Fukui (transport sector), Tae-Yoon Kim (oil refining), Zeynep Kurban (transmission, distribution and storage; policy), Peter Levi (industrial applications), Raimund Malischek (hydrogen supply), Christophe McGlade (transmission, distribution and storage), Kristine Petrosyan (oil refining), Cédric Philibert (hydrogen supply), Jacob Teter (transport sector) and Jabbe van Leeuwen (projects and industrial clusters). Other contributors were Thibaut Abergel, Julien Armijo, Araceli Fernandez Pales, Jacopo Tattini, Renske Schuitmaker and Tiffany Vass. Paul Lucchese (Chair of the Hydrogen Technology Collaboration Programme; Commissariat à l’énergie atomique et aux énergies alternatives (CEA) was part of the IEA team and provided expert input throughout the process. Caroline Abettan, Lisa Marie Grenier and Réka Koczka provided essential support.

Edmund Hosker carried editorial responsibility. Justin French-Brooks was the copy-editor.

The report benefited from valuable inputs, comments and feedback from other experts within the IEA, including Paul Simons, Mechthild Wörsdörfer, Laura Cozzi, Laszlo Varro, Paolo Frankl, Peter Fraser, Tim Gould and Julian Prime. Thanks also go to Tom Allen-Olivar, Jon Custer, Astrid Dumond, Christopher Gully, Jad Mouawad, Isabelle Nonain-Semelin, Robert Stone and Therese Walsh of the IEA Communication and Digital Office for their help in producing the report.

The work could not have been achieved without the support provided by: the Japanese Ministry of Economy, Trade and Industry; the Netherlands Ministry of Economic Affairs and Climate Policy; and the New Zealand Ministry of Business, Innovation and Employment.

We are particularly indebted to the expertise and guidance of the High-Level Advisory Panel for this report, chaired by Noé van Hulst (Hydrogen Envoy, Ministry of Economic Affairs & Climate

Policy, Netherlands). Members include The				Honourable Elisabeth Köstinger (Minister of
Sustainability and Tourism, Austria), Ahmad O. Al-Khowaiter, Chief Technology Officer, Saudi
Aramco), Dr. Alan Finkel (Australia’s Chief Scientist, Office of the Chief Scientist), Mikio Kizaki
(Chief Professional Engineer, Toyota Motor Corporation, Japan), Dr. Rebecca Maserumule
(Chief Director of Hydrogen and Energy, Department of Science and Technology, South Africa),
Dr. Ajay Mathur	(Director	General,	The	Energy and Resources Institute, India),
Dominique Ristori	(Director	General	Energy,	European Commission),	Dr. Sunita Satyapal
(Director Fuel Cell Technologies Office, US				Department of Energy,	United States) and

Dr. Adnan Shihab-Eldin (Director General of the Kuwait Foundation for the Advancement of Sciences, Kuwait).

PAGE | 4

IEA. All rights reserved.

The Future of Hydrogen

Acknowledgements

We appreciate the contributions of speakers and participants at the IEA High-Level Workhop on Hydrogen held in February 2019.

Many experts from outside the IEA provided input, commented on the underlying analytical work and reviewed the report. Their comments and suggestions were of great value. They include:

Jørg Aarnes	DNV
Anthy Alexiades	California Air Resources Board
Maria Belen Amunátegui Vallejo	Enagás
Everett Anderson	NEL Hydrogen
Florian Ausfelder	Dechema
Fredrik Bengtsen	Norwegian Ministry of Petroleum and
	Energy
Bart Birbuyck	FCH-JU
Simon Blakey	IHS Markit
Klaus Bonhoff	NOW
Valérie Bouillon-Delporte	Michelin
Chris Bronsdon	Eneus Energy
Tyler Bryant	Fortis BC
Karl Buttiens	Arcelormittal
Jorgo Chatzimarkakis	Hydrogen Europe
Ping Chen	Dalian Institute of Chemical Physics
Jan Cihlar	Navigant
Roberto Cimino	Eni
Elizabeth Connelly	US Department of Energy
Anne-Sophie Corbeau	BP
Paula Coussy	IFP
Mark Crowther	Kiwa Gastek
Jostein Dahl Karlsen	IEA Gas and Oil TCP
Bill David	University of Oxford
Guillaume De Smedt	Air Liquide
Amandine Denis-Ryan	ClimateWorks Australia
Steinar Eikaas	Equinor
Masana Ezawa	Ministry of Economy, Trade and Industry,
	Japan
Alessandro Faldi	Exxon Mobil
Pierre-Etienne Franc	Air Liquide
Sam French	Johnson Matthey
Katharina Giesecke	Permanent Mission of Austria to the OECD
Florie Gonsolin	CEFIC
Jürgen Guldner	BMW
Manfred Hafner	FEEM
Ilkka Hannula	VTT
David Hart	E4tech
Bernd Heid	McKinsey & Company
Emile Herben	Yara
Caroline Hillegeer	Engie
Katsuhiko Hirose	I2CNER
	PAGE | 5

IEA. All rights reserved.

The Future of Hydrogen Acknowledgements

Lindsay Hitchcock	Natural Resources Canada
Théophile Hordé	Safran Group
Andreas Horn	BASF
Brigitta Huckerstein	BASF
Yuki Ishimoto	The Institute of Applied Energy
Nikolas Iwan	H2 Mobility
Emmanouil Kakaras	Mitsubishi Hitachi Power Systems Europe
Tim Karlsson	IPHE
Rob Kelly	ClimateWorks Australia
Roland Käppner	Thyssenkrupp
Phillippe Kavafyan	MHI Vestas Offshore Wind
Vanessa Koh	Ministry of Trade and Industry, Singapore
Pawel Konzal	Chevron
Angel Landa Ugarte	Iberdrola
Jonathan Leaver	Unitec Institute of Technology
Ashish Lele	Reliance Industries
Chiara Marricchi	Enel
Takeshi Matsushita	Mitsubishi Corporation International
	(Europe)
Alicia Mignone	Ministry of Foreign Affairs, Italy
Jongsoo Mok	Hyundai Motor
Pietro Moretto	Joint Research Centre – European
	Commission
Takashi Moriya	Honda R&D
Peter Morris	Minerals Council of Australia
Hechem Nadjar	Shell
Motohiko Nishimura	Kawasaki Heavy Industry
Mikael Nordlander	Vattenfall
Eiji Ohira	NEDO
Matt Pellow	EPRI
Joris Proost	Université catholique de Louvain
Danny Pudjianto	Imperial College London
Carlo Raucci	University Maritime Advisory Services
Alison Reeve	Department of the Environment and
	Energy, Australia
Henk Reimink	World Steel Association
Andrew Renton	Transpower
Martin Robinius	FZ Juelich
Mark Ruth	National Renewable Energy Laboratory
Jacques Saint-Just	H2 Plus
Stanley Santos	Tata Steel Europe
Kazunari Sasaki	Kyushu University
Manfred Schuckert	Daimler
Virginie Schwarz	French Ministry of Ecology, Energy,
	Sustainable Development and Spatial
	Planning
Yoshiaki Shibata	The Institute of Energy Economics, Japan
Bunro Shiozawa	SIP
Tristan Smith	University College London
	PAGE | 6

IEA. All rights reserved.

The Future of Hydrogen

Acknowledgements

Markus Steinhäusler	Voestalpine
Hideyuki Takagi	National Institute of Advanced Industrial
	Science and Technology
Peter Taylor	Leeds University
Daniel Teichmann	Hydrogenious
Denis Thomas	Hydrogenics
Øystein Ulleberg	IFE
Fridtjof Unander	Research Council Norway
Rita Wadey	Department for Business, Energy &
	Industrial Strategy, United Kingdom
Hans-Jörn Weddige	Thyssenkrupp
Liu Wei	China Energy Investment Corporation
Brittany Westlake	EPRI
Ad van Wijk	Delft University of Technology
Juergen Wollschlaeger	Heide Refinery
Linda Wright	NZ Hydrogen Association
Akira Yabumoto	Electric Power Development
Makoto Yasui	Chiyoda
Cheng Yibu	Sinopec Economics and Development
	Research Institute
Rudolf Zauner	Verbund
Robert Zeller	Occidental Petroleum
Christian Zinglersen	Clean Energy Ministerial

PAGE | 7

IEA. All rights reserved.

The Future of Hydrogen

Table of contents

Table of contents

Executive summary......................................................................................................................................	13
The IEA’s 7 key recommendations to scale up hydrogen........................................................................................	16
Chapter 1: Introduction ................................................................................................................................	17
2019: A moment of unprecedented momentum for hydrogen...............................................................................	18
There are multiple mutually reinforcing reasons why this time around might well be different for hydrogen .........	22
The crucial role for governments ..........................................................................................................................	30
Hydrogen and energy: A primer............................................................................................................................	31
References ...........................................................................................................................................................	36
Chapter 2: Producing hydrogen and hydrogen-based products ........................................................................	37
Production of hydrogen today ..............................................................................................................................	38
Hydrogen from natural gas...................................................................................................................................	39
Hydrogen from water and electricity.....................................................................................................................	42
Hydrogen from coal..............................................................................................................................................	49
Hydrogen from biomass .......................................................................................................................................	51
Comparison between alternative hydrogen production pathways.........................................................................	52
Converting hydrogen to hydrogen-based fuels and feedstocks that are easier to store, transport and use.............	55
References ...........................................................................................................................................................	64
Chapter 3: Storage, transmission and distribution of hydrogen........................................................................	67
Hydrogen storage.................................................................................................................................................	69
Hydrogen transmission and distribution ...............................................................................................................	70
Total cost of delivering and storing hydrogen .......................................................................................................	81
References ...........................................................................................................................................................	85
Chapter 4: Present and potential industrial uses of hydrogen .........................................................................	89
Hydrogen in oil refining ........................................................................................................................................	91
Hydrogen in the chemical sector...........................................................................................................................	99
Hydrogen in iron and steel production ................................................................................................................	108
Hydrogen for high-temperature heat..................................................................................................................	116
References .........................................................................................................................................................	120
Chapter 5: Opportunities for hydrogen in transport, buildings and power .......................................................	123
Hydrogen as a basis for clean transport fuels ......................................................................................................	124
Hydrogen as a fuel for heat in buildings ..............................................................................................................	144
Hydrogen for power generation and electricity storage.......................................................................................	150
References .........................................................................................................................................................	160
Chapter 6: Policies to boost momentum in key value chains ..........................................................................	167
Key findings from IEA analysis ............................................................................................................................	168
Near-term opportunities......................................................................................................................................	171
1. Coastal industrial clusters: Gateways to building clean hydrogen hubs .............................................................	177
2. Existing gas infrastructure: Tapping into dependable demand.........................................................................	182
3. Fleets, freight and corridors: Make fuel cell vehicles more competitive ............................................................	185
4. The first shipping routes: Kick-start international hydrogen trade ...................................................................	188
Next steps.................................................................................................................................................	193
What next for analysts? ......................................................................................................................................	193
What next for governments and industry? ..........................................................................................................	194
References .........................................................................................................................................................	194
Abbreviations and acronyms.......................................................................................................................	197

PAGE | 8

IEA. All rights reserved.

The Future of Hydrogen		Table of contents
List of figures
Figure 1.	Global annual demand for hydrogen since 1975...................................................................................		18
Figure 2.	Policies directly supporting hydrogen deployment by target application .............................................		20
Figure 3.	Government RD&D budgets for hydrogen and fuel cells......................................................................		20
Figure 4.	Capacity of new projects for hydrogen production for energy and climate purposes, by technology
	and start date .....................................................................................................................................		26
Figure 5.	A guide to the hydrogen energy value chain, from supply to end use ...................................................		29
Figure 6.	Today’s hydrogen value chains............................................................................................................		32
Figure 7.	Potential pathways for producing hydrogen and hydrogen-based products.........................................		39
Figure 8.	Production process of hydrogen from gas with CCUS..........................................................................		40
Figure 9.	Hydrogen production costs using natural gas in different regions, 2018...............................................		42
Figure 10.	Development of electrolyser capacity additions for energy purposes and their average unit size,
	1990–2019..........................................................................................................................................		45
Figure 11.	Expected reduction in electrolyser CAPEX from the use of multi-stack systems...................................		47
Figure 12.	Future levelised cost of hydrogen production by operating hour for different electrolyser investment
	costs (left) and electricity costs (right).................................................................................................		47
Figure 13.	Hydrogen costs from electrolysis using grid electricity ........................................................................		48
Figure 14.	Hydrogen costs from hybrid solar PV and onshore wind systems in the long term ...............................		49
Figure 15.	Hydrogen production costs in China today ..........................................................................................		51
Figure 16.	Hydrogen production costs for different technology options, 2030......................................................		52
Figure 17.	CO2 intensity of hydrogen production .................................................................................................		53
Figure 18.	Comparison of hydrogen production costs from electricity and natural gas with CCUS in the near term54
Figure 19.	Hydrogen production costs in different parts of the world ...................................................................		55
Figure 20.	Outputs and losses of different pathways for hydrogen-based fuels and feedstocks from electrolytic
	hydrogen ............................................................................................................................................		56
Figure 21.	Number of new projects for making various hydrogen-based fuels and feedstocks from electrolytic
	hydrogen ............................................................................................................................................		57
Figure 22.	Indicative production costs of electricity-based pathways in the near and long term ...........................		60
Figure 23.	Synthetic diesel and methane production costs and CO2 price penalty needed for competitiveness
	with fossil diesel and natural gas in the long term................................................................................		62
Figure 24.	Transmission, distribution and storage elements of hydrogen value chains .........................................		68
Figure 25.	Tolerance of selected existing elements of the natural gas network to hydrogen blend shares by
	volume ...............................................................................................................................................		72
Figure 26.	Current limits on hydrogen blending in natural gas networks ..............................................................		73
Figure 27.	Cost of hydrogen storage and transmission by pipeline and ship, and cost of hydrogen liquefaction
	and conversion ...................................................................................................................................		78
Figure 28.	Cost of hydrogen distribution to a large centralised facility and cost of reconversion to gaseous
	hydrogen ............................................................................................................................................		80
Figure 29.	Full cost of hydrogen delivery to the industrial sector by pipeline or by ship in 2030 for different
	transmission distances........................................................................................................................		81
Figure 30.	Cost of delivering hydrogen or ammonia produced via electrolysis from Australia to an industrial
	customer in Japan in 2030 ...................................................................................................................		82
Figure 31.	Comparison of delivered hydrogen costs for domestically produced and imported hydrogen for
	selected trade routes in 2030 ..............................................................................................................		83
Figure 32.	Cost of electrolytic hydrogen imports from North Africa supplied to a hydrogen refuelling station in
	Europe in 2030....................................................................................................................................		84
Figure 33.	Allowed sulphur content in oil products...............................................................................................		92
Figure 34.	Sources of hydrogen supply for refineries in selected regions, 2018.....................................................		93
Figure 35.	Hydrogen production costs compared to refining margins, 2018 .........................................................		94
Figure 36.	Future hydrogen demand in oil refining under two different pathways ................................................		95
Figure 37.	Hydrogen production costs from natural gas with and without CCUS by region under different carbon
	prices, 2030 ........................................................................................................................................		97
Figure 38.	Hydrogen demand for ammonia and methanol production in 2018 ...................................................		100
Figure 39.	Hydrogen demand for primary chemical production for existing applications under current trends....		102
Figure 40.	The implications of cleaner process routes for methanol and ammonia production ...........................		105
Figure 41.	Costs and CO2 intensities for greenfield ammonia and methanol production in 2018 .........................		106
Figure 42.	Variation of ammonia and methanol production costs with fuel price in the long-term .......................		107
Figure 43.	Hydrogen consumption and production in the iron and steel sector today.........................................		109
Figure 44.	Theoretical potential for dedicated hydrogen demand for primary steel production ..........................		110
Figure 45.	Energy implications of fulfilling hydrogen demand via the DRI-EAF route..........................................		114
Figure 46.	Estimated costs of steel for selected greenfield production routes in 2018..........................................		115
	PAGE | 9

IEA. All rights reserved.

The Future of Hydrogen		Table of contents
Figure 47.	Comparison of cleaner routes for steel production in the long term...................................................		116
Figure 48.	Demand for heat in industry under current trends ..............................................................................		117
Figure 49.	Economics and future potential in the context of a USD 100/tCO2 carbon price .................................		118
Figure 50.	Fuel cell electric cars in circulation, 2017–18 ......................................................................................		126
Figure 51.	Hydrogen refuelling stations and utilisation, 2018 .............................................................................		128
Figure 52.	Road vehicle fleet growth to 2030 under current trends.....................................................................		130
Figure 53.	Benchmarking hydrogen refuelling station capital costs as a function of capacity...............................		133
Figure 54.	Total cost of car ownership by powertrain, range and fuel ..................................................................		135
Figure 55.	Break-even fuel cell cost to be competitive with BEV in the long term ...............................................		136
Figure 56.	Current and future total cost of ownership of fuel/powertrain alternatives in long-haul trucks ............		137
Figure 57.	Current and future total cost of ownership of fuel/powertrain alternatives in a bulk carrier ship .........		141
Figure 58.	Break-even carbon price for ammonia to be competitive with fossil fuels ..........................................		142
Figure 59.	Spread of energy prices, performance and operational costs for gas and electric heating equipment in
	IEA countries, 2017 ............................................................................................................................		147
Figure 60.	Potential hydrogen demand for heating in buildings and spread of competitive energy prices in
	selected markets, 2030 .....................................................................................................................		148
Figure 61.	Development of global stationary fuel cell capacity, 2007–18 .............................................................		153
Figure 62.	Break even for hydrogen CCGT against other flexible power generation options ................................		157
Figure 63.	Levelised electricity generation costs for load balancing from natural gas and hydrogen ...................		158
Figure 64.	Levelised costs of storage as a function of discharge duration ...........................................................		159
Figure 65.	Today’s fuel prices in hydrogen-equivalent terms on an energy basis (left) and accounting for the
	relative efficiencies to provide the same service (right).......................................................................		170
Figure 66.	Global distribution of existing refining, steelmaking and chemical cracking plants..............................		178
Figure 67.	Cost and emissions intensity of blending hydrogen into the gas network at different blend shares ....		183
Figure 68.	Routes for hydrogen trading with long-term costs compared to domestic production. ......................		189
List of boxes
Box 1.	Previous waves of enthusiasm for hydrogen .......................................................................................		19
Box 2.	How this report manages uncertainties about present and future costs and potentials ........................		30
Box 3.	Emerging technologies to produce hydrogen ......................................................................................		41
Box 4.	Thermal routes for hydrogen production – a case for nuclear?.............................................................		46
Box 5.	CO2 sources for synthetic hydrocarbons..............................................................................................		58
Box 6.	Production of hydrogen and ammonia from solar and wind in China ...................................................		62
Box 7.	Advantages and disadvantages of ammonia and LOHCs .....................................................................		75
Box 8.	Can California’s Low Carbon Fuel Standard support low-carbon hydrogen?.........................................		98
Box 9.	Existing and planned low-carbon ammonia and methanol production...............................................		103
Box 10.	Projects for low-emissions steel production .......................................................................................		111
Box 11.	General challenges facing the use of hydrogen for heat in industry....................................................		119
Box 12.	Public and private initiatives for hydrogen in road transport..............................................................		129
Box 13.	Policy opportunities for promoting the use of hydrogen in road transport .........................................		134
Box 14.	The ENE-FARM programme in Japan ................................................................................................		145
Box 15.	Fuel cell technologies for stationary power applications ....................................................................		152
Box 16.	Using fuel cells to provide back-up power and access to electricity ....................................................		154
Box 17.	Putting low-cost energy resources to higher-value uses .....................................................................		173
Box 18.	Focus on the North Sea region ..........................................................................................................		179
Box 19.	Realising existing government targets would drive down costs by 2030.............................................		186
Box 20.	Key ongoing hydrogen projects related to hydrogen trade in Asia Pacific ..........................................		191
List of tables
Table 1.	Selected hydrogen-related government announcements since early 2018...........................................		21
Table 2.	Physical properties of hydrogen ..........................................................................................................		35
Table 3.	Techno-economic characteristics of different electrolyser technologies ..............................................		44
Table 4.	Summary of hydrogen use in industrial applications and future potential ............................................		90
Table 5.	Potential uses of hydrogen and derived products for transport applications ......................................		125
Table 6.	Potential routes to use hydrogen for buildings heat supply................................................................		144
Table 7.	The global buildings stock and share of gas in heat production in 2017 ..............................................		146
Table 8.	2030 natural gas demand for heat in buildings and indicative theoretical hydrogen demand in ...............
	selected regions................................................................................................................................		149
	PAGE | 10

IEA. All rights reserved.