A hydrogen rainbow is emerging, but which colors lead to the pot of gold?

Authors: Sietse van de Riet, Nathalie Bais

In recent years it has become increasingly clear that hydrogen will play a significant role in the future energy system, emphasized by the Hydrogen4EU study [1]. Hydrogen is one of the few carbon-neutral molecules which are required to substitute molecules derived from oil and natural gas. In this way hydrogen, if produced from renewable sources, will enable us to reach our net-zero ambitions. Together with carbon-free electricity, hydrogen molecules will be the cornerstone of our future energy system, utilized as fuels, feedstock, and as a way to store superfluous electricity. 

The current hydrogen economy is in an acceleration phase, rapidly evolving with large investments and commitments from governments and companies. In the Netherlands, the government recently announced that it allocated €750 million to repurpose parts of its extensive natural gas pipeline network to hydrogen, and €35 million to hydrogen storage. With its widespread infrastructure, large potential for wind power and hydrogen storage capacity, the Netherlands has the ability to become an important player in the international hydrogen economy. Overall, we are convinced that hydrogen will flow through Dutch pipelines in the near future, but what ‘color’ will it have? In other words, what will be the production sources of hydrogen, by when and why?

Hydrogen is given various coloring labels based on its production source. There is a large established market for grey hydrogen, produced from natural gas, which is currently mainly used as feedstock in the fertilizer, methanol, and refining industries. Demand in these industries will remain, meaning grey hydrogen production will stay important until a sustainable alternative supply emerges. When more industries shift to utilizing hydrogen molecules and the power sector depends on intermittent sources, central hydrogen storage is needed for supply security and intermittency balancing. Even when our electricity is drawn from renewable sources and hydrogen is produced sustainably, grey hydrogen will likely remain important to balance central storage in moments of shortage, especially in the short term.

Blue hydrogen, where CO2 emissions are captured and stored, is considered a transition solution towards reaching the net-zero targets in 2050. With CCS technology in its early stages, the success of blue hydrogen is highly dependent on several factors: the investment cost to capture, store and transport CO2, the market price of natural gas, the carbon price and underground storage capacity. Several large-scale carbon capture and storage (CCS) projects have been funded by the Dutch government, such as the Porthos project. The use of CCS is not undisputed as critics claim that full life cycle greenhouse gas emissions from burning blue hydrogen for heating are actually higher than emissions from conventional fuels due to methane leakages and poor CCS efficiencies[2]. But this point of view is also challenged on its validity, so further research is needed to accurately estimate emissions.

Green hydrogen is the end-state solution that succeeds in a world with a surplus of renewable power supply and high intermittency. Direct electrification of fossil energy sources makes more sense than producing green hydrogen. Though when the wind blows or the sun shines, overproduction of electricity can be used by electrolyzers to produce green hydrogen, which can be utilized or stored for later use in industry, mobility or the power sector. Recently, several large initiatives have been launched where renewable energy is planned for dedicated green hydrogen production, indicating a potentially attractive business case could be made for green vis-à-vis blue.

A novel technology is being developed where carbon is stored in solid form through methane pyrolysis, labeled turquoise hydrogen, but there is no certainty on its future role yet due to its low technological maturity.

Proponents of nuclear suggest ramping up capacity to produce pink hydrogen, as green supply will be insufficient to meet the growing demand for sustainable hydrogen in the short term. However, if existing nuclear electricity were used, it would negatively affect the electricity mix and although base-load nuclear electricity would increase the utilization of the electrolyzer, new-build nuclear electricity will likely have a higher price than wind or solar electricity, making it a less attractive electricity source.

The Netherlands are aiming for blue hydrogen to play an important role in reducing the emissions in the hard-to-abate sectors, due to the storage opportunities in gas fields around the coast. However, the EU demands that 50% of all the hydrogen use in the industry is green before 2030. Given the cost curves of electrolyzers and renewable electricity, the Netherlands is now forced to enlarge green hydrogen investments and projects to meet the new EU emission goals[3].

Blue, turquoise or green, certification for hydrogen origin will emerge enabling customers to pay a premium, similar to green electrons. However, when hydrogen is imported and shipped across the world through various energy carriers, managing certification becomes quite challenging. Strong efforts are needed by governments to establish a trustworthy and transparent hydrogen market where customers can procure certified sustainable hydrogen.

There is no clear societal definition yet on what sustainable hydrogen is, and whether we will see a colored sustainability label on the shipping certificate of our products. The hydrogen rainbow is slowly turning from grey to blue and green, uncertain what colors it will reflect in the future. What is certain though is that demand is growing, and hydrogen is here to stay.

Table 1: Colors of hydrogen