M
Ref. Ares(2020)160238 - 10/01/2020
Ref. Ares(2020)6966373 - 20/11/2020
ar
MARCO ALVERÀ (New York, 1975) is an executive 
co A
It is 2050, and the world is set to feel the first 
with 20 years’ experience in the energy sector. He 
refreshing drafts of global cooling. Temperatures 
has worked at Enel, a leading utility, and spent 
lv
have stabilised. Rainforests and reefs survive.  
over a decade at Eni, one of the world’s largest oil 
er
We can trade, prosper and travel while respecting 
and gas companies, in upstream, midstream and 
à
Marco Alverà
the equilibrium of our planet. When we take a 
downstream roles.
long-haul flight or turn up the heating, we are 
In 2016 he moved to Snam, Europe’s largest natural 
“The aim of this book is to highlight 
gas utility. Snam has led the experimentation of 
hydrogen blending in existing gas pipelines and 
just how important hydrogen can be 
GENERATION H
using clean energy. Ships, buses and trucks no 
longer belch CO  and fumes, but pure water.  
2
The pipes into our homes carry gas made from 
launched a biomethane and gas mobility business. 
for our planet. We’re not looking at 
An American and Italian citizen, Marco also serves 
G
waste or renewables. We are harnessing the  
an easy job but the effort is worth it.”
Healing the climate
as non-executive director of S&P Global and as 
EN
power of the sun and the wind – transformed  
with hydrogen
into hydrogen.
President of Gas Naturally, a European gas industry 
Marco Alverà
association. He is a visiting fellow at the University 
of Oxford and a member of the General Council of 
ER
Climate change and air pollution are defining 
issues for our generation. 
the Giorgio Cini Foundation in Venice. He holds 
a degree in Philosophy and Economics from the 
A
Current policies to tackle them are not working. 
CO  emissions are still rising. If they go unchecked, 
London School of Economics, and has worked for 
Goldman Sachs in London.
T
2
we could face 4 degrees of global warming by 2100. 
Marco currently lives in Milan with Selvaggia and 
IO
Even 3 degrees could have a very severe impact 
on our planet. 
their two daughters, Greta and Lipsi.
N
To prevent this, we need deep decarbonisation 
 H
across the world, and an approach that transcends 
the boundaries of nations and energy sectors, 
and at the same time supporting employment, 
economic activity and better living standards.
Hydrogen could make that possible. It is a way of 
turning the power of the sun and the wind into 
something that behaves like oil and gas – efficient 
and easy to transport, store, distribute and use – 
but is also infinite and clean. It can use existing 
infrastructure. It can help bring renewables into 
those stubborn sectors like industry, heating 
and heavy transport, where electricity is hard to 
use. Above all, it can bring more green energy to 
a growing population, supporting prosperous, 
productive and secure lives. 
www.electa.it
Illustration by Neva Chieregato 

---

---

Marco Alverà
Healing the climate
with hydrogen
To Lipsi and Greta, 
Preface by Dr Fatih Birol 
who are made of starstuff
Contributions by Dr Gabrielle Walker, 
Lord Turner, Baroness Worthington, 
Luigi Crema, McKinsey & Company

---

Contents
Preface by Dr Fatih Birol 07
Foreword 11
Executive summary 
15
1. The challenge 
19
2. Third time lucky? 
36
3. How hydrogen helps 
42
4. The power couple 
54
5. The world of H 
62
6. The plan 
66
7. Revolutions 
79
8. Conclusions 
83
Contributions from thought leaders  86
•  Gabrielle Walker 88
•  Adair Turner 94
•  Bryony Worthington 104
•  Luigi Crema 110
•  McKinsey & Co. 
115
Glossary 127
Appendices 
133
Bibliography 150

---

Preface 
by Dr Fatih Birol, Executive Director 
of the International Energy Agency
Seizing the hydrogen moment
Has hydrogen’s time finally come? It offers valuable ways to help 
bring down carbon emissions from the global energy system 
and boost efforts to combat climate change – but it faces major 
hurdles in order to reach the necessary scale.
There have been numerous false starts for hydrogen in the 
past. General Motors built its first vehicle powered by hydrogen 
in 1966. But rather than transforming the automobile industry, 
the GM Electrovan ended up in a museum. More than 50 years 
later, we’re still waiting for hydrogen to live up to its promise.
Today, hydrogen is enjoying unprecedented momentum and 
could final y be on a path towards fulfil ing its longstanding potential 
as a clean energy solution. The impressive successes of solar and wind 
power, as well as batteries and electric vehicles, have shown that 
strong policy support and technology innovation can combine with 
entrepreneurial drive to build global clean energy industries. With 
the global energy sector in upheaval, hydrogen is drawing greater 
interest from a diverse group of governments and companies.
7

---

I hope this book will help inform international efforts to enable 
electricity is currently two to three times more expensive than 
hydrogen to play an important role in clean energy transitions.
producing it from natural gas. That said, solar and wind costs 
At the moment, the world is not on track to reach international 
have plunged in recent years – and as they keep dropping, clean 
climate goals that aim to reduce carbon emissions quickly and 
hydrogen will become more affordable.
significantly enough to prevent a dangerous increase in global 
At the same time, electrolysis, the technology that uses 
temperatures. Last year, the world’s energy-related CO2 emissions 
electricity to turn water into hydrogen, needs to be developed 
rose by 1.7% to a historic high of 33 gigatonnes.
on a far greater scale to bring down costs. So do fuel cells and 
To turn things around, renewable energy sources like wind and 
refueling equipment for hydrogen-powered vehicles in order to 
solar will have to account for a much bigger share of global supply, 
make the use of hydrogen affordable.
and fast. But they have obstacles to overcome, including the fact that 
The development of hydrogen infrastructure also presents a 
the amount of electricity they produce can vary depending on the 
challenge. In the transport sector, for example, hydrogen prices for 
weather or the time of day or year. That raises concerns about the 
consumers wanting to drive fuel-cell vehicles are highly dependent 
flexibility of countries’ power systems as renewables’ share increases.
on how many refueling stations there are, how often they are used 
Hydrogen is one of the leading options for storing energy from 
and how much hydrogen is delivered per day. Tackling this is 
renewable energy sources and has the potential to become the least 
likely to require planning and coordination that brings together 
costly way of storing electricity over days, weeks or even months. 
national and local governments, industry and investors.
And storage is just one of the key energy challenges that 
What’s more, regulations are currently limiting the 
hydrogen can help address. It can also fuel trucks and ships and 
development of a global clean hydrogen industry. Government 
serve as a key raw material for refineries, chemical plants and 
and businesses must work together to ensure existing regulations 
steel mills. All of those areas are ones where it is proving difficult 
are not an unnecessary barrier to investment while ensuring that 
to meaningfully reduce emissions.
key objectives such as safety are being met. Trade will benefit 
Today, the predominant way of producing hydrogen is from fossil 
from common international standards for safely transporting and 
fuels. The amount generated from coal and natural gas this year for 
storing large volumes of hydrogen.
industrial uses would be enough, in theory, to run approximately 
Governments will be crucial in determining whether 
half the cars on the road worldwide. But current hydrogen 
hydrogen succeeds or fails. Most of the more than 200 clean 
production releases about the same amount of carbon emissions as 
hydrogen projects under way worldwide still rely heavily on 
the economies of the United Kingdom and Indonesia combined.
direct government funding. But smart policies could encourage 
This can be reduced if industries currently producing hydrogen 
the private sector to secure long-term supplies of clean hydrogen 
capture and store their carbon emissions – or if the supply comes 
and give investors the incentives to back the best businesses.
from hydrogen generated from renewable power sources. That is 
The IEA outlined its recommendations for scaling up clean 
a significant challenge requiring major efforts from governments 
hydrogen in the study published in June at the request of Japan’s 
and businesses around the world. But it’s also a great opportunity 
presidency of the G20 this year. Those recommendations include 
to start establishing a global clean hydrogen industry for the future.
establishing a role for hydrogen in countries’ long-term energy 
Hydrogen also has a cost problem. Producing it from renewable 
strategies, stimulating commercial demand for clean hydrogen, 
8
9

---

providing support for the private sector by reducing the risks of 
Foreword 
early investments in emerging hydrogen projects and putting 
public funds into research and development.
Existing infrastructure – such as the mil ions of kilometres of 
natural gas pipelines around the world – offers one of the clearest 
opportunities to scale up hydrogen. Introducing clean hydrogen to 
replace just 5% of the volume of countries’ natural gas supplies would 
significantly boost global demand for hydrogen and drive down costs.
The transport sector is also very important. Pursuing targets 
to use hydrogen to powering high-mileage cars, trucks and buses 
to carry passengers and goods along popular routes can make 
fuel-cell vehicles more competitive.
We also need to kickstart international hydrogen trade with 
the first shipping routes. Hydrogen and hydrogen-based fuels can 
potentially transport energy from renewables over long distances 
The seeds for this book were sown at an unlikely gathering in Norway 
– from regions with abundant solar and wind resources, such as 
12 years ago. 
Australia or Latin America, to energy-hungry cities thousands of 
I was working at an oil and gas company, heading upstream 
kilometres away.
operations in the Americas, UK, Russia and Norway, and had 
There have been recent encouraging signs. Citing the IEA 
accepted an invitation to spend time at a friend’s house in a remote 
report, G20 energy and environment ministers agreed at their 
village on a fjord called Bjelland. 
June meeting in Karuizawa, Japan, to step up international efforts 
So I took a plane to Stavanger, and then a very small helicopter, 
to foster the development of hydrogen. 
which landed in the middle of a sheep field. In retrospect that had 
China, as the world’s second largest economy and biggest 
quite a carbon footprint, but it led me to a light-bulb moment. On a 
automobile market, will be one of the key players for hydrogen’s 
hike up a mountain with Dr Gabrielle Walker, the climate scientist 
development and has made it clear that it sees hydrogen fuel-cell 
and author1, we talked for hours about climate change, its impact 
vehicles as part of the future of its transport sector.
and what needs to be done.
Following on from our Future of Hydrogen report in June, the 
 Gabrielle talked me through the science, and she knows her stuff, 
IEA will continue to further expand our hydrogen expertise in 
but she landed the winning punch with a sort of Pascal’s wager2 of 
order to monitor progress and provide guidance on technologies, 
energy. She told me that I didn’t have to be a climate change believer 
policies and market design. We will continue to work closely with 
to start doing something about it. If there was even a chance that 
governments and other stakeholders.
the advocates were right, the risks involved in global warming were 
The world should seize today’s golden opportunity to take 
simply too big to take. That rang true. I returned from that hike 
advantage of hydrogen’s vast potential and make it a key part of 
determined to engage with the problem. As my engagement grew, 
our sustainable energy future.
so did my concern. 
10
11

---

I was concerned that our efforts were focused on having more 
Meanwhile, the technological horizon is broadening. We 
wind and solar energy in the electricity mix, when electricity only 
are no longer just talking about greening power and increasing 
accounts for 20% of global energy. There didn’t seem to be any 
electrification, but also about decarbonising industry, transport 
realistic plan to decarbonise the rest of the system. 
and seasonal heating using biomethane, carbon capture and 
I was concerned that, while Europe must demonstrate leadership 
storage (CCS), and hydrogen made from renewable energy.
on climate change, with direct responsibility for a tenth of the globe’s 
Clean hydrogen can be a game changer. It has the potential 
emissions, it cannot win the war alone. We need a global effort, and 
to be an effective, affordable and global solution alongside 
one that brings economic opportunities for all the world’s citizens 
renewable electricity and other low-carbon and renewable fuels. 
while minimising overall costs and sharing them fairly.
It can be a vital source of energy for a growing population while 
And I was concerned that the energy system’s different sectors 
containing climate change. It can also reduce air pollution, which 
found it so difficult to coordinate a response. As I discovered through 
is estimated to kill millions of people a year, and is a huge cost to 
my 20-year working life – moving from electricity to gas supply, to 
society in terms of healthcare.
oil production, commodity trading and then energy infrastructure 
And it can act as a great connector for the fragmented energy 
– the players in the system are not fully aware of what the others 
system. I have never liked the strategy of picking one technology 
do. Energy sources (coal, oil, gas, nuclear, renewables and hydro) 
and opposing all other available routes. In particular, CCS has 
and segments (extraction, trading, electricity production, energy 
long been distrusted by some, who see it as taking resources 
transport and storage, distribution, sales) have distinct and often 
away from renewables. However, its role in the production of 
divergent business objectives, operate in markets that have limited 
low-carbon hydrogen may help persuade naysayers that CCS can 
overlap, and use different language and metrics3. 
contribute to the energy transition. 
This confusion hinders policy-makers too, making it difficult to 
One of the biggest hurdles has been cost, but that is changing, 
overcome inertia in government and business. 
with the reduction in the cost of renewable power improving 
That’s a list of worries. Combined with my growing 
prospects for cheap green hydrogen. This should encourage us to 
understanding of the potential of climate change to bring damage 
work through all the other challenges in hydrogen’s path, so that 
to our lives, it left me downbeat on our ability to find actionable 
we can leverage its full potential. 
solutions to avert the crisis. 
 Snam, the energy infrastructure company I work at now, 
But lately some positive things have been happening.
can play a key role. We are studying the potential to transport 
People have been mobilising, making concrete changes to 
hydrogen in a blend with natural gas, so we can provide the 
their lifestyles. They are using their wallets, their investments 
physical network to connect producers and markets. We also 
and the ballot box to get companies and governments to do 
aim to provide a network for ideas, policies and technological 
better on climate change. Witness the global climate strike on 
dissemination. If the world needs to develop green gases, where 
20 September 2019, the rise of ethical funds, green finance and 
better than a gas infrastructure company to get things moving?
companies with zero-carbon objectives, and the green turn taken 
That’s why we decided to convene a global hydrogen conference 
by the European Parliament in recent elections4, which is leading 
in Rome, and write a paper pulling together the different strands 
to a ratchet on European climate targets.
of our work. And over the summer, as I was writing this paper 
12
13

---

with my team and sharing ideas with leading thinkers on the 
topic – including Fatih Birol, Lord Turner, Baroness Worthington, 
 trade,Executive summary
Luigi Crema and Gabrielle Walker – our ambition grew and we 
decided to turn it into an instant book. 
Clean hydrogen is the missing link that can help the world 
The aim of this book is to highlight just how important 
decarbonise, particularly in hard-to-reach sectors.
hydrogen can be for the future of our planet, and to spur policy-
makers, businesses and consumers to start working to realise its 
potential. 
We hope you like it. 
Marco Alverà 
Fast facts
■  Climate change is a global issue. It doesn’t matter where CO2 
is emitted, just the overall quantity. And it is a stock, rather 
than a flow, issue. What really matters is not how much CO2 
we will emit in a given year, but the total amount accumulated 
over time. Pollution is a separate issue, mainly local and urban, 
caused by other gases and fine particles.
■  Our efforts on climate change are not good enough. We are on 
track for a level of global warming which will have very serious 
consequences.
1 
■  Renewable electricity alone does not provide a pathway to reach 
Gabrielle Walker has written several books on climate change and energy, 
including The Hot Topic.
net zero emissions. We will also need low-carbon and renewable 
2  The philosopher Blaise Pascal argued that believing in God was a bet worth 
gases, including biomethane made from waste, biosyngas, low-
taking, because the potential cost of getting it wrong was to miss out on a few 
carbon gas with carbon capture and storage, and hydrogen. 
luxuries, while the cost of not believing and being wrong was eternal damnation. 
3  In this book, we also give values in megawatt hours (MWh), our Esperanto of 
■  You can make clean hydrogen from solar and wind power. It 
energy. 
4
is a way to bring renewable energy to homes, cars, trucks and 
 Green parties (Group of the Greens/European Free Alliance) obtained 74 seats 
in the 2019 European elections, going from 7% to 10% of the parliament and 
factories. Clean hydrogen can also be produced by capturing 
becoming the fourth political force.
the carbon from natural gas and other fossil fuels. 
14
15

---

■ As well as fighting climate change, hydrogen reduces air 
Hydrogen also has the potential to link countries together in 
pollution because it burns so cleanly. 
a global decarbonisation effort. Areas with abundant solar and 
■  Hydrogen can be transported efficiently over long distances 
wind resources or cheap natural gas and carbon storage capacity 
and stored indefinitely. That could allow us to tap into the vast 
– particularly in the Middle East, North Africa and Russia – 
solar reserves of deserts, which receive enough energy in 4 
could generate competitive hydrogen. And existing hydrocarbon 
hours of sunlight to supply the world’s energy needs for a year. 
infrastructure provides a head start for the development of a 
hydrogen economy as it could potentially be used to transport, 
■  Long-distance transport can level out energy prices to aid 
store, blend and distribute hydrogen at scale.
economic development, and link national and local efforts into 
Getting green hydrogen off the ground will require a lot 
a global solution.
of work. Considerable obstacles in the realm of safety, public 
■  The hydrogen market today is already worth $100bn per year 
perception, adapting or providing infrastructure and appliances 
and could reach $2.5tn in 20505. 
need to be overcome. Reaching the huge scale implied by climate 
objectives would also inevitably imply a whole host of operational 
challenges, including the availablity of space, water, materials 
The world is trying to cut carbon emissions using the tool of 
and the logistics of operation and maintenance. 
green electricity. This has merits, but alone it will not be enough 
But there is good news on cost, which has in the past been one of 
to prevent extreme climate change. It does not fully decarbonise 
the main hurdles holding hydrogen back. The cost of renewable power 
industry, shipping and aviation. It puts a prohibitively high cost 
has fallen dramatically, and will continue to do so. And because the 
on winter heating. It leads to a fragmented response, within the 
electrolyser industry is in its infancy, the cost of converting green 
energy sector and across geographies, with individual nations 
power to hydrogen should fall fast as demand rises. 
each trying to find their own way to reduce emissions.
Our analysis shows that below about $2/kg ($50/MWh), 
Adding clean hydrogen to our palette of options can help solve 
hydrogen should reach a tipping point where it will be competitive 
these problems. 
in large markets without subsidies. This could be achieved 
Synthesized from renewable electricity, and transported and 
through the manufacturing economies of scale from adding 
stored through gas infrastructure, green hydrogen can act as a 
50GW6 of electrolyser capacity between now and 2030. 
connector between the gas and electricity worlds.
A policy that could deliver this extra demand is one that 
Hydrogen has the potential to help renewables to grow further, 
mandates the blending of a limited proportion of hydrogen in the 
penetrating the hard-to-abate sectors. It can power industry. 
natural gas network. More tests are needed on the tolerance to 
It can be used to make energy-dense green fuel for planes and 
hydrogen blends across the transport, storage and distribution 
trucks, improving air quality, and combining the cleanliness and 
networks and some equipment will need to be adapted. But 
efficiency of electric motors with the convenience of fuels. And 
Snam’s initial experiments are promising, implying that blending 
it can store renewable energy to cover seasonal slumps, which 
could be a route to create hydrogen demand without expensive 
could enable it to deliver peak winter heating at lower cost than 
investments in infrastructure or appliances.
other decarbonisation options. 
For an idea of the numbers involved, growing the percentage of 
16
17

---

hydrogen to natural gas transport pipelines in Europe and Japan 
1. The challenge
to 7% by 2030 would more than deliver the required electrolyser 
capacity. The fully ramped up system would cost 0.02% of GDP 
per annum. 
Our efforts to avert climate crisis are not good enough.  
A larger “coalition of the willing” would reduce the percentage 
An effective solution needs to provide a strategy for deep 
of hydrogen in the blend required to reach the tipping point, as 
and fast decarbonisation, be truly global and enable 
well as further cutting the cost per person. There are several 
growth and economic development. 
other areas in which clean hydrogen is being earmarked as an 
ideal decarbonisation lever, including heavy transport (shipping 
and road haulage), that would accelerate the process.
Lowering the cost of green hydrogen would facilitate the 
further spread of this clean resource in other sectors and other 
geographies. This approach would provide a just transition and 
minimise overall costs. Early developers of the technology would 
have a competitive advantage when hydrogen takes off.
Climate change is the existential challenge of our generation. 
To realise its full potential, hydrogen must convince 
Scientists have been warning of dangerous global warming for 
policymakers and consumers that it is safe and reliable. The 
decades, and in recent years politicians and the public have begun 
Hindenburg continues to cast a dark shadow. This means 
to grasp the seriousness and urgency of the problem. 
enshrining a commitment to safety and demonstrating a 
Average global temperatures have risen by almost 1 °C over 
track record of safe use, along with credible, evidence-based 
the past century. This deceptively small number masks a host of 
information campaigns.
growing hazards. For a start, that one-degree average includes 
the oceans, which are slow to warm. On land, meanwhile, average 
temperatures are already 1.5 degrees higher7. This makes extreme 
heat waves much more common, as Europe has seen in 2003, 2006, 
2007, 2010, 2015, 2018, 2019… 
According to a study8 published in July 2019, the climate of 
London in 2050 may resemble that of Barcelona today, and about 
a fifth of cities globally, including Jakarta, Singapore, Yangon and 
Kuala Lumpur will experience climatic conditions currently not 
seen in any major cities in the world. 
In the Arctic, temperatures are rising much faster, melting 
5  http://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-scaling-up- 
sea ice and thawing permafrost. As it thaws, permafrost releases 
Hydrogen-Council.pdf 
6 
powerful greenhouse gas, which could take us over a climate cliff – 
Calculated using BNEF cost curves for the LCOE of renewable power and a 12% 
learning curve for electrolysers.
leading to irreversible and catastrophic warming. 
18
19

---

Rainfall patterns are changing, often making dry areas drier 
Burning coal and oil also causes air pollution, including nitrogen 
and wet areas wetter. Worsening droughts in Asia and Africa 
oxides and fine particles, which is estimated to kill millions of 
lead to famine, mass migration and conflict. Warmer air can 
people per year and is a powerful driver for policy action10. 
hold more moisture, so extreme rainstorms are more frequent 
To date we have emitted more than 2200 billion tonnes of CO2 
and more intense, increasing the risk of floods. Warmer seas 
equivalent (including the effects of other gases). To keep global 
provide more potential energy for storms, and there is evidence 
warming below the 2-degree threshold, and thus give us a chance 
that the most powerful hurricanes are getting fiercer. Dorian’s 
of avoiding the worst consequences of climate change, we can’t 
devastation in the Bahamas this September could be a taste of 
afford more than another 700 billion tonnes or so11. 
things to come.
This does not give us long to solve the problem. Today we emit 
The extra carbon dioxide is acidifying oceans. This is eating 
about 42 billion tonnes a year12 (around 33 billion tonnes are energy 
away at coral reefs, and it could mean that plankton and molluscs 
related) so our remaining budget is less than 17 years at current 
are unable to form shells, threatening ocean food chains.
consumption. 
Sea levels are rising as ice caps pour more and more fresh water 
Of course the hope is that emission levels will soon start to 
into the oceans, and because water expands as it warms. In my 
decline, buying us more time. Which is why giving long-term targets 
home town of Venice, tidal floods are becoming far more frequent, 
such as “net zero by 2050” is worthwhile, but shouldn’t be an excuse 
threatening the fabric of this unique city, already corroding the 
for not acting now. For our carbon budget to 2050, closing a coal 
columns of St Mark’s Basilica. But of course the global problem 
plant today is worth 30 times as much as closing it in 2049. 
is much greater, with rising risk of floods from Bangladesh to 
If we don’t stay within budget, we will have to take a lot of CO2 
Manhattan. Hundreds of millions of people living close to sea level 
out of the air instead. Planting trees and burying charcoal can 
could be displaced9. Worse, ice sheets in Greenland and the West 
help to do this but on a limited scale, so we will probably need to 
Antarctic are thought to be unstable. If warming goes too far, they 
master carbon capture and storage (CCS). Trials have shown that 
could melt and raise the oceans by several metres. 
concentrated streams of CO2 from factories and power plants 
Crucially, today’s global warming is extremely rapid compared 
can be captured, and one day we may capture CO2 directly from 
with climate shifts of the past, which gives nature and civilisation 
the air and store it underground. That will be expensive, and will 
little time to adapt.  
require stable geological reservoirs, meaning that we shouldn’t 
regard CCS as a free pass to emit carbon today; instead it could 
Burning issue 
be a tool to help us meet the budget.
So we don’t know exactly how many years we have before we 
should no longer emit CO2, but Europe’s vision is to get to or near 
This convulsion is clearly linked to human actions. Burning 
net zero by 2050, and the world should follow suit not long after13.
fossil fuels for power, heating, transport and industry; cutting 
Population growth increases the scale of this challenge. By 
down forests for cattle farming; cement manufacture and 
2050, there will be around 9.7 billion of us, up from 7.7 billion today. 
other industrial processes – all of these generate CO2 and other 
And then there is the question of what should be considered a fair 
greenhouse gases that trap solar heat. 
transition. Developing countries can reasonably argue that they 
20
21

---

should have more time to reduce emissions, as they didn’t cause 
I think that we are struggling to gain traction because our 
the problem and they have a right to reach the living standards 
current pathway doesn’t address the energy system as a whole, 
of developed countries. That would create a powerful headwind. 
is difficult to scale up without incurring high costs, and tries to 
Today US citizens consume on average 12 megawatt hours 
solve a global problem with a collection of local solutions.
(MWh) of energy a year; Chinese citizens 4.5 MWh and Indian 
citizens 1.1 MWh, while in Africa it is less than 0.5 MWh. The 
energy Americans use to cool their homes is equal to Mexico’s 
Too narrow
total energy use. If everyone consumed as much energy as 
Americans do, global emissions would rise by 400%.
Renewable electricity has been almost the sole focus of policy 
initiatives. This has two implications for the carbon budget.
Progress
First, the narrow focus on solar and wind has meant that we 
have taken our eye off the ball in other areas, especially coal, 
where the industry has performed something of a perception 
“The struggle to rein in global carbon emissions and 
miracle. When I engage policymakers in Europe on measures to 
keep the planet from melting down has the feel of 
phase out coal with the help of natural gas, I am often told that 
Kafka’s fiction. The goal has been clear for thirty years, 
we are already past coal.
and despite earnest efforts we’ve made essentially no 
Yet coal is still very much with us. It still accounts for 21% of 
progress toward reaching it.” 
European power generation, As a result of coal’s tenacity, the carbon 
Jonathan Franzen, The New Yorker, 8 Sept 2019
intensity of power generation in Germany only decreased by 4% 
from 2012 to 2016, despite €85 billion of investments in renewables. 
We have made a great effort to rise to this challenge. At the 
Even more worryingly, coal accounts for as much as 67% of 
Paris agreement of 2015, most of the world’s nations signed up to 
power generation in China and 74% in India where coal capacity is 
the goal of limiting warming to well below 2 degrees. Meanwhile, 
still growing and existing plants are only 11 years old.
the technology to generate renewable electricity has improved 
Second, the idea that you could clean up power and then 
more quickly than anyone expected. The ambitious targets set by 
electrify everything was always somewhere between lazy and 
Europe drove the industrialization and mass production of solar 
wishful thinking, not least because green power is hard to use 
and wind technology. As a result, the cost of solar capacity fell by 
far away from where it is generated (whether through time or 
75% from 2010 to 2018.
space) and gives us no clear path to decarbonising steelmaking, 
But this positive narrative does not tell the whole story. 
chemicals, air travel, freight and winter heating (see chapter  
Emissions started to rise again in 2017, and reached the highest 
3. How hydrogen helps). 
ever level in 2018. Some European countries – Italy is a virtuous 
Indeed, the International Renewable Energy Agency suggests14 
exception – are set to blow through their CO2 targets also due 
that electricity will reach 49% of global energy consumption 
to higher-than-expected coal consumption. If we carry on as we 
by 2050, and that the energy transition will require significant 
are, we may face catastrophic global warming.
investments across the board; $110 trillion to 2050, of which 18% 
22
23

---

in oil and gas (including CCS), 35% in energy efficiency, 23% in 
Oil
Natural 
Coal
Grey 
Green 
Blue 
infrastructure and 24% in renewables15. 
Gas
Hydrogen
Hydrogen  Hydrogen
One reason we focused on green power and missed out other 
parts of the energy system is a lack of collaboration between 
Energy 
molecules and electricity. This is largely because different 
equivalent 
companies only see their bit of the energy system, with limited 
costs 
43
27
11
50
125
60
areas of overlap. For instance, the electricity sector knows a 
($/MWh)
lot about gas used to generate power, but less about gas use in 
heating, industry and transport. 
Table 2. Energy prices in Europe in 2018 (Brent, TTF, ARA)
This isn’t helped by the alphabet soup of energy units. Other 
industries have consistent units. IT uses bits (Mb, Gb, Tb); telecoms 
The segments of the energy system also have different 
use bits per second; car companies use horsepower. That helps if 
business objectives, with the power industry keen on support for 
you are trying to choose a computer, a phone company or a car. 
renewables, but less keen for their coal-fired assets to become 
If you need energy, it isn’t quite so simple. Electricity 
redundant. There is also opposition to anything involving 
companies think in megawatt hours (MWh); oil producers deal 
natural gas, including the development of CCS, on the basis 
in barrels of oil equivalent (boe); gas companies see the world in 
that it would lock in fossil fuels and hamper the growth of green 
cubic meters (cm), or cubic feet, or million British thermal units 
electricity. Mothballed power plants are the Betamax and CDs 
(MMBTU). Mining companies measure tons of coal equivalent 
of the energy industry – a reminder that stranded assets haven’t 
(TCE). Climate scientists chart gigatonnes of CO2 equivalent 
in the past stopped new technologies from driving the market 
emissions (GtCO2e)16. And do you want to measure capacity, or 
forward. 
hourly, daily or yearly flows? Would you like to find out how much 
that might cost in dollars, euros or yuan? 
This means that thinking about a full-system pathway for 
Expensive 
climate change, and which technologies might be able to do 
what, is a bit like trying to choose a t-shirt on the internet when 
Second, the current path is difficult to reconcile with 
you can see the pictures but can’t quite work out what size each 
population growth, energy access and economic development. 
shirt is, how many per pack and what they cost.
True, the cost of green power has fallen massively. In many 
cases it is cheaper than grid electricity, as measured by levelised 
Energy 
Oil (boe)
Natural 
Natural  
Coal 
Hydrogen 
cost of electricity (LCOE). But this does not take into account the 
(MWh)
Gas (cm)
Gas 
(TCE)
(kg)
investments in transport and storage needed to use renewables 
(MMBTU)
properly (see page 27). These costs rise along with the percentage 
of intermittent power in the mix. And in some applications, for 
1 
0.61
94.79
3.41
0.12
25
instance winter heating and transport, full electrification is more 
Table 1. Energy unit conversion
expensive than other decarbonisation options.
24
25

---

So far, strategies for decarbonisation have focused on 
individual sectors. We haven’t really looked at resource 
Comparing electricity costs
optimization across sectors and geographies. To help us pick the 
The costs of energy sources are usually compared through levelised cost 
lower-hanging fruit first we need a proper CO2 abatement cost 
of energy (LCOE), the average cost of a unit of output, assuming a given 
curve, showing $/CO2 avoided.
load factor. This is calculated by adding up all the costs at plant level and 
As well as being more expensive than it looks, green electricity 
dividing them by the amount of electricity that the plant will produce 
alone provides no way to decarbonise energy intensive industry 
throughout its useful life, discounting at an appropriate rate to allow 
and air travel, and doesn’t sit well with heavy road and maritime 
for the time distribution of costs incurred and production obtained. 
transport. 
However, LCOE may lead to misleading conclusions when used to 
That has led to consumption decline becoming part of the 
compare intermittent renewables with programmable generation. 
decarbonisation advocacy of some, fusing climate concerns with 
It wrongly assumes that the power from different technologies receives the 
same price. In reality, solar and wind power tend to be most productive 
those over income inequality and excessive consumption.
when and where the market value of electricity is very low. By contrast, 
Activists call for people to embrace a simpler way of life, to 
programmable technologies such as fossil fuel generation, bioenergy and 
consume less. The Swedes have invented the word flygskam 
hydroelectric power can be switched on or turned up when the market 
(flight-shame) for a movement to encourage people to take fewer 
value is higher. 
planes and be proud of taking trains (tagskyrt – train-brag) 
And LCOE does not take into account the interactions between a power 
instead. This works particularly well in Sweden, where trains run 
plant and the rest of the electrical system. The intermittency of solar and 
on electricity and electricity is very green. Globally, 25% of train 
wind means that the rest of the system must adapt, by operating at partial 
travel is still diesel-fuelled.
load, switching off, or rapidly increasing or reducing load. This generates 
While this simpler-life narrative may resonate with some 
extra cost and also extra emissions, as the machines don’t work at their 
people in wealthier nations, it takes no account of those who 
most efficient setting. If existing flexible resources are not sufficient, new 
and costly storage capacity is needed. 
seek a better standard of living for themselves, their families and 
Finally, the best sites for sun and wind are often far from the centres of 
their community.
consumption, which implies the need for new power lines. 
Looking at the interests of our planet and our species overall, 
To overcome these limitations, the International Energy Agency 
any solution would be better than no solution, because the 
introduced VALCOE – Value-adjusted Levelized Cost of Electricity, which 
overall costs of climate change are so high. In fact, the costs will 
takes into consideration energy, capacity and flexibility. 
fall disproportionately on those who live in the hottest – usually 
the poorest – areas of the world, and on those yet to be born. 
But try telling that to people in the developing world, who 
Or try to convince those in Europe that already feel left behind 
have done little to cause the problem and who are now increasing 
and who see the factory that employs them close because it has to 
their energy consumption as living standards climb. They won’t 
pay higher costs for clean energy and is competed out of existence. 
take kindly to a global agreement that increases their energy 
As the French gilets jaunes have shown, an increase in fuel costs 
costs, erodes their competitive advantage and limits their growth 
of only 10% can spark rebellion, and it is hard to maintain policy 
potential. 
rigour in the face of popular discontent. Recent reports suggest that 
26
27

---

regional politicians in China may be thinking about scaling back 
but were not playing ball. Hydrocarbon-producing countries 
their climate efforts because of declining GDP growth. With 
were dragging their feet. And the discussions had deteriorated 
energy poverty on the rise and energy costs a big political issue 
into crossed vetos and horse trading; without strong political 
in many countries, any solution that isn’t perceived as fair, and 
commitment, and sticks and carrots, it was difficult to make any 
which negatively impacts a country’s competitive position, has a 
sort of progress. 
poor chance of surviving. 
Upcoming COPs will have a tough job to restore the global 
The relationship between energy costs and jobs will become 
consensus. The Chilean president Sebastián Piñera has launched 
increasingly close with the rise of automation and artificial 
the upcoming summit stressing the sense of urgency that must 
intelligence, which substitute labour costs with energy costs. 
pervade the climate change challenge, and work is already starting 
Cheap labour will no longer provide a competitive edge on the 
to prepare for the Anglo-Italian effort that will be the COP26. 
global playing field. Instead, cheap energy will. Over-reliance 
Even the Paris Agreements were arguably more important as 
on green electricity means nations making their own transition 
a global statement of intent than a precise pathway for a climate 
pathway, which could impose vastly different energy costs on 
change solution. The commitments of the countries which signed 
different regions, resulting in disparate economic performances. 
up (called Nationally Defined Contributions or NDCs) are not 
That may make it difficult for the solution to stick.
enforceable, nor do they add up to the reduction required to limit 
warming to well below 2 degrees. 
Indeed, scenarios such as the IEA New Policies (a bottom-up 
A world divided
view that considers all the initiatives countries have said they will 
pursue) show that with NDCs we can expect a gradual evolution 
Finally, we have struggled to ensure the global approach that 
in the global energy system, rather than the radical improvement 
is necessary to solve a global problem.
we need. From now to 2040, global energy demand is expected to 
The international consensus that made Paris possible was 
increase by 27%, with the share of renewables rising from 4 to 10% 
the product of a remarkable convergence between the US and 
and natural gas going from 22% to 25%, while oil falls from 32% 
China, born of President Obama’s desire to cement his legacy 
today to 28%. The real shocker from my perspective is that this 
and President Xi’s ambition to reassert China’s international 
scenario still has a lot of coal in the mix in 2040: it accounts for 
credentials. With the world’s two biggest emitters committed to 
22% of the energy mix, from 27% today17. Such a scenario would 
working together, other countries had no excuse not to pitch in, 
imply about 3 °C of global warming in 210018. 
and the two huge economies had plenty of carrots and sticks to 
And Paris doesn’t quite add up to global strategy, but rather 
apply to any laggards. 
a collection of national strategies. That is largely due to the fact 
This united front has now broken down. US support for Paris 
that electricity is difficult to transport, so decarbonising through 
has waned, and the relationship between China and the US has 
electricity means solving lots of national or local problems separately.
become more tense. I went to the COP 24 held in Katowice (Poland, 
That creates two issues.:
December 2018), and was surprised at how low morale was in 
■  First, the most virtuous regions can lose out. In order 
the negotiating teams. The US and China had sent delegations 
to incentivise renewables, Europe has added €60bn of 
28
29

---

annual subsidies19 to already high energy costs – an 
expensive initiative on a $/CO2 basis. This has been a 
drag on economic performance, as some companies 
struggle to compete on the global playing field and either 
close down or move operations (and emissions) to other 
countries.  
 
■ Second, if everyone has to be largely self-sufficient you 
lose efficiency. The emphasis on national plans has led to 
Germany putting down solar panels in the Black Forest, 
where they will produce for around 1000 hours per year, 
while sunnier North African countries could yield almost 
double that.
Self-sufficiency could also create political problems. For 
instance, Europe’s 2050 climate objectives imply a long-term 
reduction in natural gas imports from Russia and North Africa, 
which might pose challenges in these regions.
Three key features
The issues that have held us back give clues to what we should 
be trying to do. Our pathway should be: 
Definitive. So far we have approached climate change in an “every 
little helps” way. Now that time is short, we need a plan for how to 
actually meet the carbon budget.
Affordable. To get durable support, we need a solution that doesn’t 
cost too much, and that preserves or even creates employment – 
especially for the poorest nations and parts of society. 
Global. It is no use if Europe reaches zero in 2050 while emissions 
from developing nations keep climbing. The whole world must be 
involved. To enable this we must find a way to trade clean energy, 
creating a global market.
30
31

---

The missing link
The basics
Green hydrogen can help meet all of these needs. It straddles 
“Hydrogen is an odorless, colorless gas which, given enough time, 
the world of molecules and electrons, weaving together different 
produces people.” 
strands of the energy system. It can distribute power between 
Edward R. Harrison – Cosmology: The Science of the Universe
regions and seasons, serving as a buffer to increase energy-
Created in the forge of the early Universe, hydrogen is the prime 
system resilience. Because hydrogen can be used to export green 
ingredient in the Sun and countless other stars, as well as in our bodies. 
energy from regions with ample wind and sun, or from natural 
It is a powerful way to convert, store and use energy. It can be generated 
gas producers with CCS, it could level out clean energy prices 
using potentially limitless inputs; it can act as a fuel, an energy vector 
and so lead to a fairer global economy. Hydrogen can unshackle 
and a chemical feedstock; and it emits no CO2 when it is used. 
industry from its carbon burden, enabling economic growth and 
Make it 
encouraging countries to sign up to a climate solution. And with 
You can use electricity to split water into hydrogen and oxygen, a process 
clean hydrogen the basis for zero-carbon, guilt-free air travel, 
called electrolysis. You may remember making a simple electrolyser at 
tourism can flourish too. Hydrogen also improves air quality 
school with a battery, a beaker of water, pencils and alligator clips, and 
because it burns so cleanly. 
watching the oxygen and hydrogen bubbles form. 
Hydrogen shouldn’t be considered a technology, but a technology 
If the power source is surplus renewables, this is called green hydrogen. 
enabler. Like an internet of energy, hydrogen can connect all the 
Or you can extract hydrogen from natural gas and other fossil fuels, 
sectors of the economy and society to trigger competition and 
using steam reformers. That creates carbon dioxide as a by-product (the 
innovation across sectors and geographies and make energy more 
result is known as grey hydrogen), so carbon capture and storage would 
be needed to make this a climate-friendly option, producing what’s 
affordable, available and abundant for a growing global population.
known as blue hydrogen.
That’s not to say that hydrogen will make the energy transition 
Two newer production methods are methane cracking, which leaves solid 
easy. Climate objectives involve an overhaul of the global 
carbon as a residue, and extracting hydrogen from oil fields by injecting 
energy system that will require unprecedented mobilization of 
oxygen (see Contributions from thought leaders, Luigi Crema, Fondazione 
resources – and a huge scale-up of all available options, with all 
Bruno Kessler, on page 110). There are more than 40 ways of making 
the operational, commercial, financial and policy challenges that 
hydrogen. 
this entails. 
Move it
Hydrogen will not be immune to these challenges – and 
Hydrogen can be sent through pipelines, or carried in tanks as a 
because it is downstream of renewable energy, and requires 
compressed gas or a liquid. Existing gas networks can carry natural gas 
specific midstream, distribution and consumption solutions, its 
blended with some hydrogen.
development will be dependent on what happens elsewhere in the 
Store it 
value chain.
Unlike electricity, hydrogen is cheap and easy to store. Salt caverns 
But if hydrogen isn’t a silver bullet, it can certainly make the 
could hold huge quantities at very low cost.
transition easier. And that is an objective worth pursuing.
32
33

---

Use it
Hydrogen can be burned to drive a turbine. It can be piped into people’s 
homes for hydrogen boilers, cookers and cooling devices. It can be 
converted into electricity using a fuel cell, to power a car or truck. In all 
these cases, the only waste product is pure water.
Hydrogen is used in oil refining and steel making, and is the feedstock 
for many chemical products – including ammonia, which is used to 
make fertilizers; and methanol, a basis for plastics, resins and paints. 
For more detail see Appendix 2. How hydrogen works
7 https://www.ipcc.ch/report/srccl/ 
8 PLOS ONE https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0217592 
9 https://www.ipcc.ch/report/ar5/wg2/ 
10 This appears to be the case in China’s coal-to-gas switch policies, for example. 
In 2017, particulate pol ution in Beijing declined by 54% largely as a result of the 
reduction in coal-boiler use. According to a methodology developed by the University 
of Chicago, these gains would add 2.4 years to the life expectancy of all residents in 
the area if they persisted (Global Gas Report, Snam IGU and BCG, 2018). 
11 https://www.theguardian.com/environment/datablog/2017/jan/19/carbon-countdown- 
clock-how-much-of-the-worlds-carbon-budget-have-we-spent
12 https://www.ipcc.ch/sr15/ 
13 https://www.nytimes.com/paidpost/shell/net-zero-emissions-by-2070.html
14 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Apr/IRENA_ 
Global_Energy _Transformation_2019.pdf 
15 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Apr/IRENA_ 
Global_Energy _Transformation_2019.pdf 
16 To facilitate comparison and communication between different sectors of the 
energy system, all figures in this book are also given in MW and MWh. 
17 In this NDC-consistent scenario, the size of the relative starting positions implies 
that a percentage point switch from coal and oil to gas in power generation and 
transport has the same CO2 benefit as increasing current renewables by 10%.
18 Similar results are given by the BP Evolving Transition scenario, where energy 
demand is expected to rise by 32%, with the share of renewables in the mix going 
to 15%, natural gas to 25%, oil falling to 27% and coal to 20%. 
19  https://ec.europa.eu/transparency/regdoc/rep/10102/2019/EN/SWD-2019-1-F1-
EN-MAIN-PART-4.PDF
34
35

---

A false dawn
2. Third time lucky?
The first time I seriously engaged with the prospects for 
Hydrogen has been touted as an energy solution before.  
Hydrogen was in 2002, when I was heading the Strategy team 
But with new motivation, falling costs and  
at an Italian utility, today one of the world’s largest producers of 
a growing band of supporters, this time is different.
renewable energy. I was sent to Japan for a week, to the global 
hydrogen congress.
There was a buzz around hydrogen at the time. These were the 
years of peak oil and gas. Meanwhile, global warming was starting 
to creep up the policy-making agenda. And of course, we are 
talking about the time of the dot-com boom, when technology’s 
potential to disrupt the communications, information and retail 
industry was becoming clear. 
These threads – geopolitics, global warming and technology – 
First glimmers
were pulled together in Jeremy Rifkin’s book The Hydrogen 
Economy (2002), which argued that the old energy paradigm was 
“I believe that water will one day be employed as 
on its last legs, and that hydrogen was going to be a safe, clean 
fuel, that hydrogen and oxygen which constitute it, 
and locally produced alternative, a new world-wide energy web 
to redistribute global power.
used singly or together, will furnish an inexhaustible 
But I came back from Kyoto feeling that hydrogen was not about 
source of heat and light, of an intensity of which coal 
to take off at all. The concept seemed too narrow, the technology 
is not capable.” 
complex and costly, and the interested parties few and conflicted. 
Jules Verne, 1874
Quite a lot of my conference seemed to be about using 
hydrogen as a way of getting nuclear energy into one’s car, which 
Known in the 18th century as inflammable air, and first 
didn’t fill me with excitement given that Italy had already shut 
synthesised through electoysis in 1798, hydrogen has a long 
down its nuclear power plants following a referendum. While 
history as a potential fuel. 
geopolitics might make petrol more expensive, it would still be 
Arguably the earliest internal combustion engine, built 
competitive with the nuclear-to-hydrogen alternative – also 
by Isaac de Rivaz in 1804, burned hydrogen. Fuel cells were 
given the complexities of rolling out new refueling infrastructure, 
developed in the mid-19th century. In Germany and England in 
changing cars and changing behaviours. And, of course, the cost 
the 1930s, Rudolf Erren converted internal combustion engines 
of solar power was more than ten times higher than it is today, 
of buses and trucks to run on hydrogen. But cheap oil and safety 
making renewable hydrogen unimaginably expensive. 
concerns held it back from hitting the big time. 
Also, I wasn’t quite sure who was meant to be driving the 
new dawn of hydrogen. Traditional energy companies, like the 
36
37

---

big oil & gas producers, had little incentive to cannibalize their 
That stops us just doing more of what comes easy – decarbonising 
own market. Governments looked unlikely to subsidize a new 
electricity generation and hoping that the technology comes through 
energy system unilaterally. Global warming was increasingly 
to decarbonise all the other sectors, like heating, industry and 
being talked about, but certainly G20 prime ministers were not 
transport. That is not where we need to be pushing now, because 
yet discussing zero CO2 policies, and the incentives to develop a 
power is broadly speaking done (we have a clear idea of how to get to 
whole new world just weren’t there. 
zero) while for other sectors our thinking is at a much earlier stage. 
So on my return to Italy I put the idea of hydrogen on the back 
The focus on net zero highlights areas where green gas development 
burner. 
would make sense, especial y those hard-to-abate sectors.
Cheap and cheerful
Sunrise
Just as we are looking for a way to attack non-power sectors, 
hydrogen is looking increasingly affordable. The price of renewable 
Now I think we need to put it front and centre. What’s changed?
electricity has come down much faster than expected. Wind 
and solar power have reached 20-30 dollars per MWh in many 
locations20 including Portugal, Mexico, Morocco, Saudi Arabia 
The hero is zero
and UAE. Solar costs could fall a further 50% in the next 10 years. 
Most importantly, the motivation to reach zero emissions is 
Meanwhile the system CapEx for electrolysers fell by 40 to 50% 
now there. Climate change has gone from being something that 
between 2014 and 201921. Electrolysers should get cheaper still as 
was talked about in the science section of newspapers to front-page 
volumes rise, following a similar pattern to other technologies, 
news – especially in Europe, which has taken a leading role on the 
such as renewables. A smart combination of wind and solar in the 
global stage, but also in, for instance, California and New York State. 
electricity mix, with some storage, will improve the utilisation of 
It is hard to overstate how massive a change this has been, 
for the energy industry especially. In my 20 years in the energy 
electrolysers, further reducing the cost per MWh. 
sector I have gone from devoting maybe 2% of my time to climate 
Production is only the first step of the hydrogen value chain. 
change related work to something like 70% today. 
One reason hydrogen is cheaper than other decarbonisation 
Policy is following. The UK has already committed to net 
solutions is that transporting, storing and using it in final 
zero by 2050. The EU has a target for 2030 of cutting emissions 
consumption is significantly less expensive than the equivalent 
by 40% (relative to 1990 levels) and an objective of 80 to 95% by 
investments required to build all the infrastructure to be able to 
2050, both of which may well be revised up by the new, very green, 
fully electrify final demand. This is even more efficient as existing 
European policy-making bodies. And other areas of the world are 
natural gas infrastructure can be converted to hydrogen (see 
also setting ambitious objectives. 
chapter 4. The power couple).
This net-zero thinking is particularly useful when it comes to 
hydrogen development because it forces countries not just to take 
Everybody loves hydrogen 
incremental steps to reduce emissions, but to decide what a completely 
The third reason why I think this time it is game on for 
green energy system looks like and work backwards from there. 
hydrogen is that a lot of people want it to succeed. 
38
39

---

The renewables industry likes hydrogen because it is a way to 
create a new market for renewables, increasing their penetration 
Hydrocarbons and the spectrum of green
in the energy mix, because conversion to hydrogen allows you to 
Most fuels we use today are hydrocarbons – chemicals built from 
power your steel mill and your winter shower with the sun. 
hydrogen and carbon. Both of these elements, when they combine with 
NGOs like hydrogen for similar reasons, in that it doesn’t 
oxygen, generate energy.
compete with renewables but enables them, and is a good way to 
But the carbon also generates carbon dioxide; the hydrogen only 
harmless water. So the cleaner fuels are the ones with less C and more 
get to a fully decarbonised system. 
H, generating less CO2 for a given amount of energy.
The hydrocarbon industry, which has struggled to envisage a 
role for itself in a zero carbon world, likes hydrogen because it can 
kgCO
Carbon content
Hydrogen content
2 emissions per 
be produced from traditional fuels, which gives value to reserves. 
MWh produced
Hydrogen can also travel in existing infrastructure, which is 
Coal
up to 90%
5%
900
good news for those – like Snam – who own transport and storage 
Crude oil
84-87%
11-13%
565
capacity. Because hydrogen production from methane will 
Natural gas
75%
25%
365
Hydrogen
0
100%
0
require CCS in order to be carbon neutral, it may also revitalize 
a technology that has struggled to gain traction in Europe, but 
which is probably necessary to meet our climate goals. 
Energy intensive industries like hydrogen because it gives 
them a route to net-zero compliance.
Governments like hydrogen because it offers a pathway to 
net zero that improves air quality, uses existing infrastructure 
and promotes supply security; and also gives a roadmap to 
decarbonise industry competitively, easing the trade-off between 
decarbonisation and jobs. Their voters seem to like hydrogen too, 
if the buzz around it is anything to go by. 
Even oil-producing countries may grow to like hydrogen if they 
have large solar or wind resources, as in the Persian Gulf, North 
Africa and Australia, or low fossil fuel costs and CCS potential, 
as in Russia. 
Overall, at a time of intensifying debate on Green New Deals, 
20 
and with technology costs falling rapidly, this is the ideal time 
http://www.gsb.uct.ac.za/files/EEG_GlobalAuctionsReport.pdf 
https://www.pv-tech.org/news/portugal-reveals-winners-of-record-breaking-
to reassess the opportunities and challenges of accelerating the 
solar-auction
development of the hydrogen economy. 
21 “Hydrogen: The Economics of Production From Renewables”, BNEF August 2019.
40
41

---

after it has been combusted. These clean gases share many of the 
3. How hydrogen helps
same attributes as hydrogen, being cheap and easy to transport 
and store, and able to use existing infrastructure. 
Hydrogen’s special abilities could help to achieve  
However, anything “bio” is limited by needing land for its 
deep decarbonisation, especially in the stubborn sectors  
feedstock. Cultivated land has to guarantee a secure and cheap 
of industry, heating and heavy transport.
food supply for all, and land covered by primary forests has to 
maintain its carbon storage capacity. Second-generation biofuels 
based on seaweed or other algae do not have this constraint, 
but could take a long time to scale up. Meanwhile, low-carbon 
gas with CCS currently looks more suitable for large-scale  
applications, rather than to decarbonise heating. Hydrogen has 
the additional benefit of being potentially infinite, with a huge 
potential to cut production costs. (For more detail see Appendix 
3. The world of green gas)
“Whenever I hear an idea for what we can do to 
keep global warming in check – whether it’s over a 
Power: fixing intermittency and security
conference table or over a cheeseburger – I always ask 
this question: what’s your plan for steel?” 
Reducing the carbon intensity of power generation is mainly 
Bill Gates, 27 August 2019
a matter of swapping thermoelectric generation from coal and 
natural gas for solar and wind power: electrons for electrons. 
Hydrogen is the only viable way to store renewable power over 
However, these renewables are intermittent. Sometimes it 
seasons, turning summer sun and autumn winds into winter 
isn’t sunny, and sometimes it isn’t windy, and sometimes it is 
power. Its high energy density means that it can pack a punch 
in shipping and heavy transport, where batteries are often too 
neither sunny nor windy – a state the Germans charmingly call 
heavy to be practical. Green hydrogen can be used to synthesise 
“dunkelflaute”, dark doldrums, or “cold dunkelflaute” for when 
kerosene for aeroplanes. And it can replace fossil fuels in 
power demand is also high. 
steelmaking and other heavy industries. Without hydrogen, it is 
So the more you rely on these energy sources, the harder 
practically impossible to see how we could make manufacturing 
it is to ensure that you don’t end up short. You need to have 
carbon neutral.
more panels and turbines than would be required in optimal 
Hydrogen is not the only low-carbon gas. Biogas and 
conditions, so as to ensure adequate production levels even 
biomethane can be made from agricultural or urban organic 
when conditions are not perfect. You need to transport 
waste, through anaerobic digestion or gasification. Biosyngas is 
electricity from further and further away, on the basis that it 
a synthetic gas made from renewable hydrogen and CO2. Low-
is always going to be sunny/windy somewhere. And you need 
carbon natural gas is made by capturing the CO2 from natural gas 
to store electricity, for instance through batteries or pumped 
42
43

---

storage (where you pump the water up to a higher-altitude 
of our CO2 emissions. Scaling up the use of green electricity, for 
reservoir with surplus power, and let it flow back down to 
example through electric vehicles and heat pumps, will help, but 
generate power when required). 
technical and cost reasons mean it won’t get us all the way. 
These are called integration costs, and they increase rapidly 
as the share of intermittent renewables goes up. 
Industry: hot hydrogen
With hydrogen you can cut integration costs by shifting huge 
Cement and steel-making, which by themselves account for 
amounts of energy between places and times at low cost. You can 
almost half of industrial emissions, produce CO2 by burning fossil 
burn it in power stations to lift the doldrums or meet peak winter 
fuels to supply high-temperature industrial processes (700-1600 °C). 
demand. 
As high-temperature heating is difficult and costly to electrify, 
Such dispatchable power also improves the stability and 
hydrogen, biomass and CCS are being considered as alternatives.
security of the power system. And that is an issue that has been 
The feedstock issue is even thornier. It requires innovation, like 
under the spotlight over the summer. In July 2019, a power outage 
the new low-carbon clinker for cement that is being developed by 
left 72,000 New Yorkers in the dark. In the UK, when a lightning 
Solidia, in partnership with LafargeHolcim, or using hydrogen for 
strike tripped out two generators in August 2019, the network 
direct reduction to produce steel, or the use of biomass or CCS. 
system suffered blackouts, leaving a million homes without 
Hydrogen infrastructure already exists where hydrogen serves as 
power, crippling railway transport and affecting Ipswich hospital 
an input to industrial processes and where it is produced as a by-
and Newcastle airport. The episode raised an alarm over the 
product, for instance in petrochemical clusters.
resilience of the energy system – especially as we move towards 
Hydrogen also allows gradual decarbonisation. For example, 
increased reliance on intermittent renewables. It was a drop in AC 
ethylene crackers do not require big process changes and shifts in 
frequency that led to the blackouts, and wind farms provide less 
safety procedures to switch to hydrogen, making the shift easier 
resistance to such frequency drops than traditional generators.
than a full overhaul towards direct electrification, which would 
Security of supply is much more valuable now than even a 
require new machinery and often investments in transmission 
couple of years ago. An increasing reliance on high-tech data and 
and distribution infrastructure. 
communications systems makes the economy more vulnerable 
to even short interruptions. We need to ensure that critical 
Heating: fixing seasonality 
infrastructure is properly protected, and dispatchable energy 
The characteristics of heating demand make it challenging, 
from hydrogen could help to do that.
inefficient and expensive to decarbonise through electricity 
alone. Even in countries that are not extremely cold, such as Italy 
and the UK, winter peak energy demand is several times the 
Hard-to-abate sectors
capacity of the electricity network (see chart next page). 
Natural gas networks in Europe have been designed to cope 
Broadly speaking, though, power is the easiest sector to 
with this, and ensure supply when required. If the additional 
decarbonise. It is harder to reach zero on industry, transport, 
demand had to be delivered by electricity, it would require a huge 
heating, cooling and cooking, which account for well over 60% 
upgrade of the grid.
44
45

---

What’s more, seasonal heating demand is out of sync with one 
of the main renewable sources, the sun. At European latitudes, 
solar radiation in summer months is 2 to 5 times that in winter. 
Installing enough panels or turbines to meet winter demand 
would mean massive overproduction of renewables during 
the summer, and be a waste of money and land. Meanwhile, 
matching the seasonal load by storing electricity from the 
summer using batteries to do this would be ruinously expensive. 
Europe consumes about 2200 TWh each year for heating and 
cooling, and to store all that energy in batteries the investment 
would be around 500 trillion dollars22. There are not enough 
mountain lakes for pumped storage to take the strain; and that 
would be expensive anyway. The third issue with electrifying heat 
is that people would need to invest heavily in their homes, because 
heat pumps – which move heat from one place to another, and 
are more efficient than simply burning fuel to generate heat – 
require high levels of insulation and have reduced efficiency in 
cold climates. The interventions required are invasive, requiring 
heavy insulation and new piping systems in each house. The total 
cost of these interventions would typically be in the order of $200-
300 per square metre23.
Changes in household behaviour are notoriously difficult and 
slow, also because people don’t like to spend money upfront even 
if the returns might be worth it. And this transformation in the 
heating stock would require mobilising financial resources on a 
scale that is difficult to imagine. National Grid has estimated that 
to decarbonise heat in the UK over 25 years from 2025 to 2050, 
around 20,000 homes per week would need to move to a low-carbon 
heat source24. The characteristics of heating make it an interesting 
niche for any form of green molecule, particularly biomethane 
and hydrogen. Biomethane could deliver decarbonisation of heat 
with no investments in infrastructure and no need to change 
appliances, but of course is limited in availability. 
46
47

---

Hydrogen may provide a solution to many of electrification’s 
challenges. Its high energy density allows much lower storage 
Leeds: the hydrogen city 
costs. You can convert electricity into hydrogen during summer, 
Switching homes to hydrogen is a massive undertaking. Almost 
store it underground and finally use it in boilers or generators or 
impossible, you’d think. Except it has already been done, in reverse.
in district heating networks in the winter.
In the 1960s and 70s, the UK undertook a nationwide gas conversion 
Using pure H2 will require retrofitting the gas grid, and 
programme, from coal gas, which is 50% hydrogen, to natural gas. This 
installing new boilers and cookers in homes. This could be much 
involved changing 40 million appliances, reaching a peak of 2.3 million 
less costly than upgrading electricity distribution and converting 
per year.
homes to electric heating, but it will still be an enormous 
Could this be about to happen again, switching from natural gas 
undertaking. The safety and perception challenges of hydrogen 
to pure hydrogen? The good news is that in the UK the distribution 
would also need to be addressed. However, a research project 
infrastructure is already in place. The Iron Mains Replacement 
in the UK, the H21 Leeds City Gate Project, suggests that this is 
Programme, launched in 2002, has been upgrading the majority of 
feasible (see box opposite page).
distribution pipes to polyethylene, which are considered to be suitable 
Blended hydrogen with natural gas is a way of reducing the 
for transporting 100% hydrogen.
emissions of any form of gas consumption, including heating, 
One city may be about to lead the way. The H21 Leeds City Gate Project, 
and depending on the percentage blend may not require any 
a study launched by Northern Gas Networks and other partners, 
investments in infrastructure or appliances. It may also provide 
suggests that Leeds could be the ideal place to start. With 1.25% of 
a route to scaling up hydrogen production without significant 
the UK’s population, it is a manageable size, while still big enough to 
investments in infrastructure. 
show what’s required to develop a hydrogen network. Leeds is also near 
Crucially, an experiment by Snam in southern Italy has 
existing hydrogen infrastructure at Teesside, and geological sites that 
are suitable for hydrogen storage. 
shown that it is possible to blend 5% of hydrogen with natural 
The study shows that switching the network to 100% hydrogen 
gas in existing gas infrastructure (see box page 50). This has 
would involve minimal disruption for domestic and commercial 
implications not only for heating, but also for integrating green 
customers and require no large-scale modifications to property. In 
hydrogen into the broader energy grid. And it is just the first step 
addition, the availability of low-cost bulk hydrogen in a gas network 
– we are now on track to repeat the experiment by increasing the 
could revolutionise the potential for hydrogen vehicles, and support a 
share of hydrogen to 10%.
decentralised model of combined heat and power and localised power 
This doesn’t mean that all heating everywhere would be 
generation using fuel cells.
delivered through green gas. The end solution will probably be 
The costs, according the report, would be in the region of £2 billion 
a patchwork. A hybrid solution might be optimal under some 
for infrastructure and appliance conversion, and £130 million a year 
conditions, with reversible heat pumps providing summer 
for operation. Who pays for it is then the big question – as it is for the 
cooling and moderate winter heating, plus smaller hydrogen or 
energy transition as a whole.
biomethane boilers to kick in for the really cold snaps. 
In some other cases gas and hydrogen heat pumps can be the 
optimal choice to supply both heating and cooling.
48
49

---

Hydrogen powered buses are already gaining traction. 
Hydrogen-powered pasta
Hydrogen buses can go more than 500 km on a full tank, versus 
“It’s not like Mama used to make. Your next plate of fusilli might have an 
about 200 km for electric ones. European funds and money 
extra twist: it could be produced using hydrogen”. This sentence opens 
from national and regional governments are being used to 
a Bloomberg News story on the Snam pilot project that in April 2019 
deliver almost 300 fuel cell buses and more hydrogen refueling 
introduced a 5% hydrogen and natural gas blend into the Italian gas 
stations to 22 European cities by 2023. China has the biggest 
transmission network. 
ambitions with more than 400 buses registered at the end of 
The experiment, the first of its kind in Europe, was conducted for one 
2018 for demonstration projects. In Korea, 30 buses will be 
month in Contursi Terme, in the province of Salerno, and involved 
running by the end of 2019, ramping up rapidly to 2000 by the 
the supply of H2NG (a blend of hydrogen and gas) to two industrial 
end of 2022. Tokyo plans to deploy 100 hydrogen fuel cells buses 
companies in the area, including the pasta maker Orogiallo. “We are 
during next year’s Olympic Games. All of this should bring costs 
the first in the world to produce hydrogen-powered pasta. Thank you 
down, strengthen the supply chain and raise public awareness 
Snam”, wrote Orogiallo on its Facebook page. 
The initiative was defined by Bloomberg News as “a shift toward greener 
of hydrogen fuel cells.
energy sources”. If all the gas transported annually by Snam were the same 
Turning to trucks, several manufacturers (Hyundai, Scania, 
blend, 3.5 billion cubic metres of hydrogen (11 TWh) could be injected 
Toyota, Volkswagen, Daimler and PSA) are developing models. 
into the network each year, equivalent to the annual consumption of  
The main requirement to make trucks competitive is reducing 
1.5 million households. This would reduce carbon dioxide emissions by 
the delivered price of hydrogen.
2.5 million tons, equal to the total emissions of all cars in Rome.
According to the IEA, if all the 1 billion cars, 190 million trucks 
and 25 million buses currently on the road globally were replaced 
by FCEVs, hydrogen demand would grow fourfold compared with 
the current global demand for pure hydrogen. 
Travel: free range 
Moving onto the rails, fuel cell trains can be an alternative 
to electrification for short and medium distances. The world’s 
first fuel cell passenger train entered commercial service in 2018 
Mobility is where the whole hydrogen craze started. Almost 
on a 100 km regional line in Germany, and hydrogen-powered 
any form of transport can be powered using hydrogen, by 
fuel cell trains will run in the UK as early as 2022. Light rail and 
combustion of hydrogen gas or hydrogen-based fuels, or by using 
trams have already been developed by China and are in testing 
fuel cells, which convert hydrogen into electricity to power an 
electric motor. Hydrogen has much higher energy density than 
for passenger operation in the near term. 
existing batteries, providing a similar range to vehicles powered 
Shipping and aviation are even harder to decarbonise, 
by gasoline or diesel. 
requiring a very high energy content. One option is second 
Hydrogen could yet provide healthy competition for electric 
generation biofuels, based on waste or seaweed, but hydrogen 
cars and other light transport (see box below); but its energy 
may be easier to scale up. 
density makes it especially valuable for the challenge of 
 
Ships could run on hydrogen or ammonia. As well as cutting 
decarbonising heavy transport, shipping, and aviation.
greenhouse gas emissions, this would reduce local pollution and 
50
51

---

and captured carbon could be combined to synthesise kerosene, 
Gas in the tank
fuelling conventional engines. One study concludes that by 2030, 
this synthetic fuel could match the price of fossil kerosene25. 
Hydrogen has long been considered the automotive fuel of the future 
– the joke was that it would always remain so – but now hydrogen fuel 
cell cars are on the road and in production lines.
By the end of 2018, more than 11,000 hydrogen powered cars were on the 
road. This is still a tiny number compared with the 5.1 million battery 
electric cars and the global car stock of more than 1 billion, but there 
is huge potential for growth because hydrogen brings big advantages: 
compared with battery cars, fuel cell cars can cover long distances on a 
single tank, and they take only a few minutes to refuel. 
Almost all hydrogen passenger cars are made by Japanese and Korean 
manufacturers (Toyota, Honda and Hyundai). Toyota has announced 
an annual production target of 30,000 fuel cell cars after 2020 from 
about 3000 today. Japan wants to have 200,000 fuel cell vehicles on the 
road within six years. 
For FCEV cars to be competitive we need many more hydrogen refueling 
stations. According to IEA, there were 381 stations at the end of 2018, 
including 100 in Japan, 69 in Germany and 63 in the United States. The 
target for California, Japan, Korea and China together is 3200 stations 
by 2030.
The other priority is to bring down the cost of fuel cells and on-board 
hydrogen storage, so they become cost-competitive with battery electric 
vehicles at ranges of 400-500 km. 
Many industry experts now think that with government support, 
technological advances and increased scale, costs will go down and 
demand will rise. Bosch, the world’s leading automotive supplier, 
estimates that by 2030 20% of electric vehicles worldwide will be 
powered by hydrogen.
enable compliance with Sulphur Emission Control Area (SECA) 
22 Calculated assuming capital cost of batteries of $200/kwh.
requirements. However, the production cost of ammonia and 
23 Snam analysis.
hydrogen is still high relative to oil-based fuels. 
24 http://futureofgas.uk/wp-content/uploads/2018/03/The-Future-of-Gas_Conclusion 
Aviation could exploit hydrogen in several forms. Light 
_web.pdf
25 https://sites.google.com/a/sanegeest.nl/www/climate-neutral-aviation/Climate
aircraft could use hydrogen fuel cells. Jet engines could be 
%20Neutral%20Aviation%20with%20current%20engine%20technology%20
redesigned to burn hydrogen, stored as a liquid. Or hydrogen 
%281%29.pdf?attredirects=1&d=1
52
53

---

enormous amount of energy in the gas that always fills its 
4. The power couple
pipes, and which allows injection and withdrawals to be 
decoupled.
Hydrogen can connect the supply systems for gas  
 
■ And it preserves energy. A lot of electrical power is lost as it 
and electricity to meet our climate challenges.
is transported over long distances, and storing electricity 
is relatively costly, while the gas system can carry and 
store energy cheaply with barely any loss.
Hydrogen enables the gas and electricity grids to collaborate, 
as it can be produced through green electricity and also from 
natural gas, transported in the gas grid (in blended form, or 
pure with retrofits), burned for electricity, and used in hard-to-
electrify sectors. 
It can enable the two grids to work as an interconnected 
energy network, able to carry, store, transform and deliver 
renewable energy in different forms, continuously optimising for 
Energy companies in different sectors rarely used to talk to each 
cost and supply security. 
other.  Companies that produced and sold energy, and infrastructure 
companies in gas and electricity, generally identified their own 
needs – for new gas sources and consumers, or new power plants 
Internet dating
say – and solved them in the best way they could identify in their 
field of vision. It worked OK because coal, oil, gas and electricity 
In the early stages of the energy transition, when the world is 
were mostly produced and consumed separately.
still using large amounts of fossil fuels, we can explore “virtual” 
However, the energy transition is changing all that. As we have 
power to gas. Rather than transporting renewables over long 
seen above, we must find ways to transport and store renewables, 
distances it makes more sense to consume them at the point of 
and produce green fuels to decarbonise the sectors that cannot 
production, displace fossil fuels in that region, and export the 
easily be electrified, like industry, heavy transport and peak 
equivalent amount of energy through the existing natural gas 
winter heating.
network.
The gas grid has several characteristics that can be useful for 
An example of virtual power to gas is a plan that Snam has 
the electricity grid as it seeks to rise to these challenges: 
identified, which we are informally calling PPWS (put the panels 
 
■ It is much larger. In Italy, in cold winter days, the gas grid 
where it is sunny), involving the export of renewable power from 
can deliver 4-5 times the energy of the electricity grid.
North Africa to Europe. Rather than investing in renewables on 
■  It is very flexible. While the electricity grid must balance 
European soil, where it is often neither sunny nor windy, and 
supply and demand in real time and maintain a frequency 
burning fossil fuels in North Africa, where power plants are old 
level at equilibrium all the time, the gas grid stores an 
and inefficient, the two regions should organize a swap. European 
54
55

---

 
■ Third, using the natural gas in efficient European power 
stations (55% efficiency and above) which are running few 
hours per year, instead of the old North African versions 
(40% efficiency) would yield 30-35% more electricity for the 
same gas.
Overall, the savings would be huge. Moving €10 billion 
of solar energy investments today from central Europe to 
North Africa would generate 80% more renewable power (18 
TWh compared with 10 TWh) and displace 4.3 billion cubic 
metres of gas for export. That gas would generate 7 TWh more 
electricity in European power stations than it would have 
yielded in North Africa. The greater efficiency of the solar 
panels and the power stations would also cut more CO2 per 
energy produced in the swap scenario (-40%) than in the “each 
to their own” version27.
Of course this only makes sense while there is natural gas 
countries would fund installation of panels in North Africa, then 
being used in North Africa for solar power to displace, but that is 
share the profits. This would also support Europe’s strategy to 
likely to be the case for a while yet.
foster economic development in neighbouring countries to 
 
contain political instability and migratory pressures. This would 
give three layers of efficiency.
Conscious coupling
 
■ First, solar panels in the Algerian desert would be around 
80% more productive per unit of capital expenditure than 
As a first physical link between electricity and power grids, 
panels in Germany. Land is much less expensive, and 
compression stations used in the gas infrastructure could become 
integration costs are lower.
dual fuel – able to use both electricity and gas. Each compressor 
 
■ Second, the panels would displace natural gas that is 
could be managed to optimise the use of gas and electricity in 
now used for local power generation, and that could be 
different conditions.
transported to Europe with no additional infrastructure 
This would add flexibility to the system, because electric 
investments since there is already 30 billion cubic metres of 
compressors provide potentially significant demand for 
spare capacity in existing pipelines under the Mediterranean. 
electricity, and so could be used to balance demand across 
Contrast this with the cost of laying a power line to Europe, 
distances and over time. At times of excess renewable production 
which was estimated as $50bn to $110bn26 in the Desertec 
one could use the electric compressors to store more gas in the 
project. This may be why the project website now includes 
pipeline, increasing the pressure. This gas could then be used 
the power to gas (and power to liquids) option.
when needed.
56
57

---

any blend up to 100% if you use salt caverns, like the ones in UK, 
Getting hitched 
Germay and USA. The Chevron Phillips Clemens Terminal in 
Texas has stored hydrogen since the 1980s in a solution-mined 
Finally, the gas grid can be used to carry hydrogen, whether from 
salt cavern. 
excess electricity generation or from dedicated renewable or low-
For countries like Italy, which rely on geological storage in 
carbon energy sources. This approach avoids costly investments 
depleted gas fields, tests are being conducted on what the effect 
in transporting power over long distances, heavy grid integration 
of different blends of hydrogen will be. RING is a European 
costs, curtailment costs and investments in the electrification of 
project to investigate chemical and microbiological processes 
final consumption. Meanwhile, investments on the gas side may 
among rocks, water and hydrogen-blended gas at different H2 
be limited – or even negligible – depending on the percentage of 
percentage. The Austrian RAG project aims to demonstrate that 
hydrogen that is blended into the natural gas network.
depleted fields can tolerate hydrogen up to 10%.
Snam has made a vital first demonstration of the feasibility of 
When it comes to distributing gas, the UK has a strong 
blending with the Contursi experiment, blending 5% hydrogen 
advantage because it has started a project to substitute its 
into the pipeline network in Italy (see chapter 3. How hydrogen 
network with plastic low-pressure pipes, which can carry any 
helps).
blend of hydrogen up to 100%. Countries with steel distribution 
pipelines can go up to 25% with no investments, and 100% with 
limited retrofits. And where the distribution is cast-iron, the 
The blending challenge 
pipelines need to be changed anyway.
Another constraint on the blending of hydrogen is end 
How much hydrogen can be blended into the gas grid depends 
consumption. The lowest tolerance is for old compressed natural 
on the different components of the system, each of which has 
gas vehicles’ tanks, which can manage 2% hydrogen only (but 
a different threshold for hydrogen tolerance. For instance, 
are rapidly being phased out). At the other end of the spectrum, 
carbon steel high pressure pipelines – commonly used for high 
industrial users of hydrogen for ammonia production and refining 
pressure gas pipelines – should be fine to carry hydrogen at 10% 
processes, and end users converted to hydrogen for domestic or 
(by volume) blend, and may be able to get to 100% with limited 
industrial heating, power generation etc., require pure hydrogen, 
investments. 
so would not be able to use a blend with natural gas. 
Other elements in the transmission network also look 
Something that could give the whole network flexibility is 
promising for high percentage blending. For instance, existing 
the development of membranes – filters that separate the bigger 
compressor stations appear to be compatible with a 5% blend, 
CH4 molecules from the smaller H2 ones and allow to feed both 
rising to 10% with limited investments. Snam’s market research 
the end users of natural gas and hydrogen through the same 
suggests that new compressor turbines are becoming available 
pipeline. 
that could cope with blends of up to 30% – as long as the 
All of this means that the gas grid could help integrate 
percentage is stable. 
renewables far from the point of consumption, but there is still 
Looking at the storage system, hydrogen can be stored at 
much work to do. 
58
59

---

Gasunie Deutschland and Thyssengas are currently developing 
Long-distance travel 
a 100 MW power-to-gas project in Lower Saxony, northwestern 
Germany. The project, Element One, will entail the conversion 
In North Africa, as renewable penetration in the region rises, 
into gas of offshore wind power mostly from the North Sea. 
adding electrolysers can turn virtual power-to-gas into physical 
The generated green gas is expected to be channelled through 
power-to-gas. Existing pipelines under the Mediterranean can 
existing lines from the North Sea to consumers in the Ruhr 
potentially carry hydrogen up to 100%, but depending on the 
area of Germany. However, it may also be used for mobility via 
percentage we may need to adapt some plant components and 
hydrogen filling stations and made available to industry through 
revamp the compressor stations. 
storage caverns. The plant is planned to be gradually connected 
For an idea of the potential, on a spreadsheet, meeting all 
to the network from 2022, and is an example of sector coupling 
of Europe’s transport, industry and heating needs with green 
involving energy, transport and industry.
hydrogen could be supplied with 0.8% of the Sahara’s surface. 
Clearly, turning spreadsheets into reality is all but straightforward, 
and it is not only about geopolitical risk, but also about availability 
of water, snags or constraints in the electrolyser manufacturing 
process, logistics, and of course lots of sandstorms and dust. But 
this is potentially a huge opportunity.
In the North Sea, Dogger Bank could do the same for wind. 
This is an ideal place to harvest wind power, with optimal wind 
conditions and a shallow sea that means low construction costs. 
The North Sea Wind Power Hub, a consortium of transmission 
system operators (TSOs) consisting of  TenneT, Energinet, Gasunie 
and Port of Rotterdam, has proposed developing artificial islands 
at the northeast end of Dogger Bank, and installing wind farms 
around them in a “hub and spoke” model. 
This overcomes problems dogging offshore wind: projects 
close to shore get lower wind speeds and not much space; while 
those further offshore are costly to maintain. They also need 
expensive direct current (DC) cables, as alternating current (AC) 
haemorrhages too much power over long distances. So the plan 
is to build an island to collect all the electricity produced in the 
Dogger Bank region via AC cables. From there the power could be 
transformed into DC – or converted into renewable hydrogen for 
26  http://analysis.newenergyupdate.com/csp-today/markets/unravelling-financials- 
transport to shore. Another potential project has been identified 
desertec
in Germany. German transmission system operator TenneT, 
27 Assuming the solar PV in North Africa displaces natural gas.
60
61

---

5. The world of H
British Navy to reach the same speeds as the German one. Think 
also of the efforts the European Union has made, so far without 
much success, to reduce its dependence on Russia for natural gas. 
By linking together different regions, hydrogen  
Russia currently supplies 34% of EU consumption vs 21% in 2010.
can unite nations and play the role of pacifier.
Could renewable energy solve these tensions? For many, the 
idea that these energy sources can be locally produced, leading 
to energy self-sufficiency, is part of the appeal. And of course that 
will happen, at least in part, making the distribution of energy 
resources fairer.
But moving from an integrated energy system to one that is 
wholly local or national is not quite as good an idea as it may 
sound.
For a start, green electricity cannot be locally produced in 
the amounts required for everyone to reach net zero. In many 
Oil and gas have always been considered as drivers of international 
countries, there just isn’t enough space. And a collection of 
geopolitics. Many believe that colonialism, wars and the battle 
local or national energy systems, each with its own specific 
for spheres of influence have as their ultimate goal the access 
characteristics and with limited capacity for international trade, 
to these energy sources. The “energy cold war” narrative has the 
could be bad for supply security. Finally, targeting energy self-
United States pitted against Russia and Iran, and courting Saudi 
sufficiency would not free us from the critical issues related to 
Arabia and other Gulf states for energy interests. And the rise 
geopolitics, but would actually risk increasing tensions.
of US domestic production has opened the way to a geopolitical 
Energy dependence has always been a double-edged sword. 
upheaval, bringing Saudi and Russia closer together as these 
Those who need energy are dependent, but so are those who sell 
historic producers now face a market flooded by shale oil and gas. 
it. Algeria, Libya, Egypt, and to a lesser extent the Gulf Countries 
Greater energy independence is also perhaps one of the reasons 
have a common problem: a demographic explosion with lots of 
behind the different approach to global politics advanced by the 
young people who have ever-increasing demands. That puts a lot 
US administration.
of pressure on government spending, which is largely financed by 
In traditional thinking, energy dependence gets a bad rap. No 
proceeds from the sale of oil and gas. 
one likes to be shackled to another country for such an essential 
What would happen to these States if revenues from 
good. Energy dependence is often perceived as a game which 
hydrocarbon production declined, rapidly, to nothing? There is 
endows producers with an undue competitive advantage, and 
a risk that this would significantly disrupt the fragile balance of 
from which consumer countries should break free. Indeed, one 
the region with spill-overs in immigration and security.
of the reasons why Winston Churchill nationalized the Anglo 
This is a particularly acute concern for Europe, which has 
Iranian oil company (an ancestor of the modern-day BP) was to 
limited energy resources of its own and is almost entirely 
ensure control over the supply of oil, which was necessary for the 
dependent on a small number of producers just across its 
62
63

---

border – North Africa, Russia and Norway. As the tensions over 
through international cooperation involving producer and 
immigration have shown, the EU would probably have trouble 
consumer countries, as well as international organisations such 
managing the impact of imbalances in its neighbouring regions.
as OPEC, IEA and IRENA.
Hydrogen provides a solution to combine regional cooperation 
Much of the existing energy transport infrastructure is 
and the fight against climate change because it allows us to use 
already transnational, and such connections do not need to be a 
cheap renewables from areas of the world that are rich in solar 
cause of friction. As the experience of importing natural gas from 
and wind resources, but far from consumption. IEA analysis 
Russia and North Africa has shown, these links can also provide 
shows that for Japan it will be cheaper to import hydrogen 
long term mutual incentives to cooperate. 
Not least, these export opportunities and this level of 
from the Australian desert or the Middle East than to make it 
interdependence could encourage otherwise resistant countries 
domestically. Europe could import from North Africa, Norway 
to join the global effort against climate change.
and Russia, the same trio supplying fossil fuels today. This could 
balance falling imports of oil and gas to allay tensions. 
The six economies of the Gulf Cooperation Council (GCC) 
have already launched some of the largest solar energy projects 
in the world. If these can be coupled with a similarly ambitious 
hydrogen scheme, the GCC could become a world leader in the 
field. The abundance of land for large solar plants, the strong 
industrial and intellectual capacity in the oil and gas sector 
and the strategic geographical location make the Gulf a natural 
hydrogen hub. This could offset declining oil and gas revenues. 
Indeed, if 20% of the UAE’s land surface were used for solar plants 
producing green hydrogen for export, that would suffice to match 
its current oil and gas revenues28.
A similar opportunity exists for other Gulf countries to 
future-proof their economies. Gradually switching to profitable 
and efficient hydrogen-based solutions at home would also 
allow traditional oil and gas industries to export more of their 
energy and to bond with cleantech companies. Jobs could be 
saved and multiplied through these new opportunities. Existing 
infrastructure is key to accelerating the development of hydrogen 
and as such becomes a competitive advantage for existing oil 
and gas exporters. Investments in existing installations can be 
upgraded and adapted.
Clearly, a global hydrogen market can only be developed 
28 https://revolve.media/the-new-oil-green-hydrogen-from-the-arabian-gulf/
64
65

---

a service station in Norway in June 2019 is a timely reminder of the 
6. The plan
need to define, design and implement rigorous safety protocols. 
However, 70 million tonnes of pure hydrogen is already being 
A single, simple policy move by a small group of countries 
produced and used across the world; and of course we have been 
could be enough to spark the hydrogen revolution.
able to safely handle hazardous substances before. It has been 
said that hydrogen is no better or worse than any other fuel – you 
just have to know how to work with it. One upside is that it tends 
to burn away very quickly, resulting in a relatively limited threat 
in the event of a tank or pipeline rupture. 
Security is a priority for all those dealing with hydrogen, as 
shown for example by the declaration signed last year by the 
European Union’s energy ministers, or by international initiatives 
such as the US Hydrogen and Fuel Cells Program and the EU’s 
Fuel Cells and Hydrogen Joint Undertaking.
Safety tests on hydrogen fuel cell vehicles have also been 
“The stone age did not end because the world ran out 
carried out. Toyota once ran demonstrations where it loaded its 
of stones, and the oil age will not end because we run 
Mirai car with two full tanks of hydrogen and dropped it from 10 
out of oil” 
metres before shooting the tanks with military-grade rifles29. The 
Attributed to Don Huberts, 1999  
result? A harmlessly dissipating gas, which would be picked up 
(then head of Shell Hydrogen) 
by on-board sensors anyway. But the volatility of hydrogen could 
become a concern when we think about distributing it directly 
Today green hydrogen is small fry. With somewhere between 100 
into people’s homes.
and 150 MW of recently installed capacity, it amounts to only  
There is also the problem of public perception. Hydrogen is not 
4% of global hydrogen consumption. How can it fulfil its potential 
an everyday commodity. You can’t see or smell it or buy it at the 
and make the leap into the energy mainstream?
supermarket. And the word is associated with “bomb” and “explosion”, 
It needs to overcome several hurdles, especially the challenges 
and the disaster that befell the German airship Hindenburg in 1937. 
of safety, perception, infrastructure and cost. 
One strength of hydrogen can also be its Achilles heel here: the fact 
that it can be used in different energy contexts – from fuel cells to 
gas networks – makes it vulnerable, in case of accidents, to a domino 
Safety and perception
effect that could undermine its whole reputation. 
 
The solution will be a track record of safe utilisation, especially 
Hydrogen is explosive. It is flammable over an exceptionally 
through transport.
wide range in concentrations. This makes safety one of the most 
Fuel cell cars and trains can help build confidence, increase 
important challenges that needs to be addressed. The incident at 
the popularity of hydrogen with laypeople and accelerate its mass 
66
67

---

use. With a hydrogen car, no behaviour change is required once 
million natural gas vehicles on the road in Italy. This contributes 
the infrastructure is in place: you go to the same gas stations and 
to reducing CO2 emissions, eliminating pollution and provides 
fuel up in the same amount of time.
important savings for households. Snam also created the 
Then we need evidence-based information campaigns to 
natural gas market in Italy, 75 years ago, where potential 
inform the public about the applications and implications of 
demand centres were identified and then pipelines were built to 
hydrogen technologies. We should focus not only on climate 
open up these markets.
change, air quality and energy security for coming generations, 
I think the way to address the hydrogen infrastructure 
but also on the immediate benefits that hydrogen can deliver for 
challenge is three-fold – and not necessarily sequential.
individuals, companies and communities. 
First we need to continue and extend our studies and trials 
on blending, to ensure that blends up to say 10% of the mix are 
compatible with existing infrastructure.
Infrastructure
Second, we should create initial demand for green hydrogen in 
 
markets that already exist, and don’t require new infrastructure 
One of the common criticisms of hydrogen is lack of specific 
and appliances. That can get the upstream costs down to a 
infrastructure and technology for final consumers, for instance 
reasonable level without needing to fiddle with the market or 
dedicated pipelines, filling stations, boilers and cars.
change consumer behaviour too much.
Clearly, this is true. And the logjam – where manufacturers 
Third, we need to work on full value-chain solutions, where 
don’t make appliances because there is no supply infrastructure, 
demand in one area is aggregated into a cluster, and then this 
and infrastructure companies don’t build the pipes because 
scale of demand is used to justify investments in infrastructure 
there are no appliances – isn’t easy to break.
and in appliances. We see significant interest from potential long-
We at Snam know something about that, through our work 
term buyers of renewable hydrogen, who are keen to decarbonise 
with compressed natural gas vehicles. For years, natural gas 
at costs that could be comparable to other energy sources, with 
mobility has struggled to take off precisely because of this 
high supply security and low price volatility. 
chicken and egg situation, despite making sense on a total cost 
This is why I am a fan of the Leeds City Gate study, which 
of ownership basis (for an Italian family, owning a gas car would 
makes an effort to stimulate value-chain thinking, and also of the 
cost an extra €1000-2000 to buy, but save €600 on fuel costs a 
Liverpool Manchester Hydrogen Clusters Project, which I think 
year). CNG vehicles also make sense for policymakers because 
will be key milestones on the pathway to hydrogen development.
they are a quick and easy solution to air-quality concerns and 
the desire to reduce the market share of diesel. 
 
But it isn’t as though the world has never built infrastructure 
Cost
before. On the CNG front, Snam has partnered with vehicle 
manufacturers including FCA and the VW group to coordinate 
 
the stations and vehicles side of the equation, which has helped 
This is obviously an important consideration for any new 
get the market moving to some extent. With 250 new CNG 
technology, but in this case a hurdle that may not be as high as 
stations (+25%) in less than 3 years, we now have over one 
we thought.
68
69

---

Today green hydrogen from electrolysis costs about $5 per 
the hydrogen value chain. There are three ingredients to this. 
kilogram, equivalent to $125/MWh. Blue hydrogen, from fossil 
The first is the cost of renewables, which as we know is falling 
fuels and CCS, is much cheaper at about $2.5/kg30 ($60/MWh); but 
fast. The other two factors are the cost of capital and the cost of 
it is constrained by CCS capacity, which is not being developed 
electrolysers.
at scale in Europe yet. These are production costs. At the pump, 
where a small amount of hydrogen currently has to pay for a lot of 
infrastructure, the price of hydrogen can be as high as $10-12/kg.
Access to cheaper capital
At these levels, hydrogen is still a relatively expensive compared 
to other decarbonisation options – except new-build nuclear – and 
The industry needs capital, for instance to build electrolyser 
certainly more expensive than fossil fuels in most sectors.
plants, so the cost of capital feeds into the price of hydrogen. I 
Price landmarks are: 
am optimistic about this because there is a lot of funding chasing 
 
■ At $4-5/kg, green hydrogen would only be competitive with 
sustainable investments, either because of ethical considerations 
very small-scale applications that already use hydrogen 
or because exposure to the energy transition is thought to be a 
delivered in trucks. 
better investment strategy. 
 
■ To reach parity with diesel in long-distance heavy transport, 
In addition, many hydrogen investments will be backed by 
hydrogen would need to cost around $3/kg ($75/MW). This 
policy drivers, which will help guarantee revenues. There is no 
would potentially open a 4000 TWh market for Europe, the 
commodity price exposure, such as that faced by power plants, 
USA and China, but addressing it would be a relatively slow 
which will lower the cost of capital further. And with its wide 
process, requiring a lot of additional infrastructure. 
distribution of potential source regions, and its scalable and 
 
■ Between $1.5 and 2/kg it becomes competitive with the 
replicable model, hydrogen should require lower returns on 
grey hydrogen (generated from fossil fuels without carbon 
capital than the existing fossil fuel industry. 
capture) used as feedstock for ammonia and in refineries. 
Traditionally, oil and gas upstream projects have looked for 
This would open a 70 million tonne market worth more 
returns above 10%, and arguably that should be even higher now to 
than $100bn a year, which could be addressed relatively 
attract capital when so many seem inclined to divest and  when, as 
quickly because the market already exists. 
the Bank of England highlights, risks to the business model such as 
 
■ To compete with natural gas in heating you need to get 
stranded assets and CO2 costs need to be accounted for. In contrast, 
some-where below $1/kg, at which level hydrogen would 
renewable auctions are won at a 5% return on capital, with massive 
begin to be competitive with fossil fuels in many sectors 
liquidity looking for lower-risk renewable opportunities. 
around the world.
This price scale suggests that clean hydrogen development 
Driving down electrolyser costs 
may start to speed up when it gets to $3/kg and reach a tipping 
point below $2/kg, where it becomes cost-competitive in an 
existing market. 
Recently installed green hydrogen capacity is only between 
The great news is there is lots of room to optimise costs along 
100 and 150 MW. For comparison, we are installing 94 GW 
70
71

---

of solar capacity a year31, around 500 times as much as all the 
developments that could make it higher include the next generation 
cumulative green hydrogen capacity that has ever been built. 
of technologies such as solid oxide electrolysers (see Appendix 2. 
But this is actually good news. It means economies of scale will 
How hydrogen works). 
quickly drive down prices. 
We spoke to manufacturers and saw that some factories today 
are making just one big electrolyser a month. With such low 
The policy push
volumes, industrialization hasn’t happened at all; electrolysers 
are essentially still hand-made, This means the cost curve can go 
The learning rate for electrolysers, coupled with the expected 
down and volumes can be ramped up very quickly. 
cost curve for renewable power33, gives us the essential numbers to 
The next generation of factories will build at least 10 times as 
work out how much demand is needed to get to the tipping point. 
many electrolysers as current ones. To get an idea of the room to 
Using these inputs we have calculated that building 50 GW 
optimise by scaling and automating, just think that only around 
of electrolyser capacity by 2030 would get hydrogen to below our 
40% of the price of electrolysers today is the cost of the goods 
tipping point of $2/kg (see Appendix 4. Electrolyser maths). 
sold32– and even that overstates the cost of raw materials given 
That’s not a huge number, but it is still quite a lot higher than 
that electrolyser-producers buy ready-made parts. As production 
the 3 GW pipeline of announced projects according to the IEA. So 
scales up, so will the volume for suppliers along the value chain, 
we do need some kind of push to get us to 50GW. Policies should 
which will further drive down the cost of the finished product.
initially be designed to address markets that already exist and 
Increasing demand will also support modular design, mass 
don’t require additional infrastructure investments, rather than 
production and bigger, higher-power devices, which brings costs 
waiting for the vehicle and household conversions that would 
down because doubling the power of the electrolyser doesn’t 
require more upfront spend and changes in consumer behaviour. 
double the cost.
From today’s cost of around $1 per watt, some firms reckon 
they could build electrolysers for $0.15 per watt under optimal 
The blending opportunity 
conditions. 
In terms of the speed with which this reduction will happen, 
A quick win would be to start by blending hydrogen with 
we are assuming that every doubling of cumulative installed 
natural gas in the current network. 
capacity should give a cost reduction of 12%. This number is 
This would use existing infrastructure to deliver hydrogen 
known as the learning rate. 
to existing markets for natural gas. It doesn’t require any 
As a reference, onshore wind turbines have improved with 
behavioural changes, or any investments for infrastructure or 
a 12% learning rate in the last decade, while photovoltaic 
industry users.
technology has achieved as much as 24%. Comparable analysis 
While studies are still being conducted with regards to how 
from BNEF has arrived at learning rates of 18% and 20% for 
much hydrogen can be blended in which parts of the gas network 
alkaline and PEM electrolysis.
and particularly whether it could be blended in underground 
So an electrolyser learning curve of 12% is conservative. Other 
storage, there are good reasons to believe that significant parts 
72
73

---

of the grid could carry a share of between 5 and 10%. And 
as electrolyser and renewable costs fall, but it can get a leg-up. 
policies to mandate such a blend have the potential to create a 
If Europe decided to gradually increase the penetration of green 
lot of demand (and scale) for green hydrogen virtually overnight. 
in its hydrogen mix, to say 10% by 2030, that would require 
If Europe and Japan blended 7% of hydrogen into their 
electrolyser capacity of 15 GW. 
natural gas networks, that would get us to well over 50GW of 
Heavy transport is another potential sector where green 
installed capacity. 
hydrogen could get a boost. This requires new infrastructure, 
The cost would be low. Say that you started the blending in 
but much less than passenger cars, and should be one of the first 
2020 and got to 7% in 2030, in 2030 the fully ramped up system 
uses to be profitable. Truck-makers, who know the market best, 
would cost 0.02% of combined GDP, or less than $9 per capita, 
believe this will happen if the €250 million investment by CNH 
per year. This is much less than the cost of existing renewables 
in hydrogen truck-motor maker Nikola is anything to go by. If 
incentives in Europe. Italy is paying €12bn a year for renewables, 
10% of the European trucking fleet were hydrogen-powered, 
or €200 per capita per year. 
that would require 25 GW of electrolyser capacity. 
This one measure could be enough to get hydrogen down 
Shipping is also a promising segment because, as Baroness 
below $2/kg, and tip the hydrogen snowball over the edge 
Worthington highlights (see page 104) it has a global governing 
globally.
body, the IMO, that is very keen on decarbonisation. As a point 
of reference, if 5% of global shipping were hydrogen-powered 
through ammonia, that would add 100GW. 
Light the afterburners
 What about passenger cars? The business case for hydrogen 
isn’t as strong as in trucks and ships, but I do think a Tesla of 
hydrogen could do for hydrogen cars what Elon Musk did for 
Our calculation implies that a blending policy alone could 
EVs. Perhaps it could be Wan Gang, the well-connected former 
be enough to reach hydrogen’s tipping point, but of course the 
Audi executive, widely considered to be the father of electric 
future is never certain, and the uptake of hydrogen would also 
cars in China. He now thinks a hydrogen society is the next big 
depend on a number of local circumstances and complexities. In 
thing, and cars are a central part of that.
any case the urgency of the climate crisis and the need to meet 
our carbon budget mean that the sooner we can decarbonise, 
the better. 
So what other policies could accelerate the process of scaling 
How much hydrogen?
up hydrogen? 
Electrolyser capacity required to generate 
required volumes of green hydrogen
Grey hydrogen in industry is another market that could be 
addressed, because grey hydrogen is relatively expensive and 
o   ….   7% blend in the European and Japanese gas grids …. >50GW
all the consumption infrastructure is there. It is also very grey 
o   …. 10% of the current hydrogen market ...............................   15GW
indeed, because it emits 830 million tonnes of CO
o   …. 10% of European trucking …...............................................   25GW
2 per year, 
equivalent to the combined emissions of Indonesia and the UK. 
o   ….   5% of global shipping .......................................................... 100GW
Green hydrogen would be well placed to replace this eventually, 
74
75

---

As infrastructure build is such an important challenge in all this, 
sectors and other countries, to the point where hydrogen could 
two more important areas to look at are industrial clusters, which 
compete on its own in a host of applications. 
can aggregate demand for industry that uses hydrogen as a feedstock 
A coalition of the willing has a lot going for it. It minimizes 
and also to provide heat, and city projects like Leeds, which are 
the overall cost of the transition, exploiting market forces to 
harder to roll out but bring hydrogen close to the consumer. 
reach deep decarbonisation. It is also simpler to enact, I think, 
Requiring industry participants to produce, procure, blend 
than the massive industrial and social re-engineering implied 
or sell gradually increasing percentages of green hydrogen can 
by some of the “Green New Deal” policies, which address valid 
get us way beyond the tipping point without creating disruption 
concerns but require complex policy reforms. 
and without significant upfront costs for the economies 
I think there is plenty that can be improved in the way we create 
involved. This is nothing new. Most European motorists are 
and distribute wealth; and issues of social justice need a lot of 
unaware that they are already paying extra at the pump for 
attention. Growing inequality is the second existential challenge 
mandated biofuels, which are being blended with their petrol. 
for our generation, and I like some of the ideas in the Green New 
Already, the EU has a target of 10% renewable penetration in 
Deal proposals. But taxes aren’t always good or easy and social 
transport by 2020, rising to 14% by 2030.
justice and global warming are distinct issues. We shouldn’t think 
we have to solve capitalism to solve climate change.
And in fact our “Hydrogen Club of Countries” makes for 
Who should do the pushing?
a just energy transition, putting most of the burden on the 
wealthiest countries and those who have emitted the lion’s 
share of the CO2, as they bear the costs of the initial policies 
In theory some sort of international agreement, ideally 
to drive hydrogen growth. Of course, policies applied internally 
setting a global carbon price, could highlight the niches where 
by our hydrogen club can be structured to encourage other 
hydrogen is already competitive and gradually increase its 
countries to follow suit. Europe, for instance, has huge market 
penetration in the market. But that looks like a big ask given 
power and could easily impose some sort of border restriction, 
the unravelling global consensus on climate change, and 
or tax the import of CO2, adopting the idea advocated by a group 
the reluctance many emerging economies have to commit 
of distinguished US economists in January 2019 (see Appendix 5. 
themselves to costly energy sources.
A Nobel approach). This would raise some money to support any 
A better option would be for a group of Countries and regions 
loss of competitiveness in exports, reduce carbon leakage, and 
at the forefront of the energy transition to form a coalition of 
also encourage other countries to clean up their acts. 
the willing, and take it upon themselves to create a framework 
for the first hydrogen expansion. The coalition might be some 
subset of Europe, China, Japan, South Korea, Canada, and US 
Blue and green
States such as California, Hawaii and New York. 
These countries could agree to put in place the policies 
 
and bear the modest cost required from now to 2030, to drive 
Will our low-carbon hydrogen be blue or green? Probably 
volumes and lower the cost of hydrogen technology for other 
both. That’s because the two routes to clean hydrogen will 
76
77

---

cost different amounts in different regions. In the sunniest and 
windiest areas of the world, green hydrogen would have a huge 
7. Revolutions
cost advantage, because the CapEx of the electrolyser is spread 
over a lot of hours of production. 
By our analysis, 50GW of new hydrogen capacity gives you 
$2/kg green hydrogen because we have assumed an average 
load factor of 35%, But in the best areas, load factors may be 
65% with a combination of solar, wind and batteries – cutting 
the cost to $1.6/kg34 for the same capacity build.
Other regions, with cheap fossil fuels and geological storage 
space for carbon, may go for blue hydrogen instead. Take Russia, as 
an example. If you assume natural gas cash costs of $1/MMBTU, it 
could potentially produce blue hydrogen at a cost of less than $1.2 
today – less than the cost of grey hydrogen in most regions.
This suggests that blue and green hydrogen will compete. 
“Look at the world around you. It may seem like an 
Blue hydrogen can be a trailblazer for green, opening new 
immovable, implacable place. It is not. With the 
markets for hydrogen (for example replacing diesel in trucks) 
slightest push – in just the right place – it can be 
and then being supplanted by green hydrogen as the cost of 
tipped.” 
electrolysers falls. And if green hydrogen does take off, it will 
Malcolm Gladwell, The Tipping Point
start displacing fossil fuels, making them cheaper, which in 
turn will lower the cost of blue hydrogen. 
When I trade thoughts about hydrogen with other people in the 
industry, some are enthusiastic, some are sceptical, and some are 
sensibly cautious. Many seem to think that the energy sector is 
not one for rapid change. But while energy is not as disruptive as 
IT, we have had our share of game-changers. 
29 https://blog.toyota.co.uk/toyota-mirai-safety-facts
30  Internal analysis based on Eurostat (gas price at around $20/MWh), E4tech 
Shale shock
(CCS cost), H21 project (CO2 transport and storage).
31 IRENA, Renewable Capacity Statistics in 2018.
32 This includes materials, parts, and direct labour costs.
For instance, the energy world was upended by the shale gas 
33 In our analysis we are using the optimized BNEF cost curves (which find the 
revolution in the US. When I started working in energy in 2002, 
sweet spot between production, batteries and load factors), and which get us to 
there was a lot of talk about peak oil, and especially peak gas, 
around $23/MWh in 2030 and $14/MWh in 2050.
34 BNEF: Hydrogen, the economics of production from renewables.
which had around 25 years of known reserves left in the world. 
78
79

---

As a consequence, prices were very high. Russia, Europe’s main 
repercussions for the energy system. I am fascinated by the 
gas provider, had a lot of power over us, as exemplified by the 
public rage against plastic, because the issue has gone from being 
2006 dispute with Ukraine. And the US was preparing to a 15-
something that we all know is bad, to public enemy number 1 in 
fold increase in LNG imports in the period from 2000 to 201935. 
the space of a couple of years. 
Fast forward to 2019, and shale oil (and gas) have made the US 
What happened? I think it may be a revolution that has been 
one of the world’s largest natural gas exporters. Import facilities 
sparked by kids.  About a year ago, I was in a bar with my daughter 
were quickly turned around to become export facilities, flooding 
and ordered a coke. It came with a straw. She said, “Dad don’t use 
the world with American gas, driving liquidity and lowering prices.
that, it’s bad”. I said, “I know sweetie, plastic is terrible, but it is 
What happened? The power of the market. 
everywhere”. And she said, “no really Dad, don’t use it. Straws stay 
High gas prices led US maverick drillers to start extracting 
in the ocean for ever and ever, and turtles eat them”. I put the 
shale gas, which the industry had long known about but which 
straw back down, and took out my phone instead. Turned out she 
was previously too expensive. And as they started, they innovated, 
was right. I’ve always hated plastic, ever since I was a kid and saw 
rationalized, industrialized and scaled their operations and 
a whole dump of plastic on a desert island. But I hadn’t realised 
lowered production costs almost by a factor of 10. 
that straws were a particularly dangerous kind of plastic because 
they were so hard to recycle and ended up in fish. 
Weeks later, almost every time I went into a bar I heard 
Renewable boom
someone say something about straws. Months later, and straws 
in bars were replaced by paper or metal alternatives. In Italy, 
The other recent energy revolution started with a policy push. 
some bars are using straws made out of pasta. 
Driven by strong environmental ambitions, very high energy 
One year down the line, and the UN has declared a war on 
prices and a desire to strengthen security of supply, Europe 
single-use plastics. In 2018, the UK Royal Mail struggled to 
decided to kickstart the renewable transition. Four countries, 
deal with the number of angry customers that sent their crisp 
Germany, Italy, Spain and the UK, jointly committed subsidies 
packets back to manufacturers in protest about them not being 
to develop solar and wind. Having created a predictable and 
recyclable. And then British naturalist and national treasure 
lucrative market for 100 GW of solar panels36, more than 20 very 
David Attenborough, in the final episode of the TV series Blue 
ambitious and efficient Chinese companies set up to build panels 
Planet II, devoted time to the terrible effect of plastic on the 
for the European market competing fiercely between themselves. 
creatures of the ocean. The David Attenborough effect is credited 
This drove down the cost of solar dramatically.
with reducing single use plastic significantly. 
I don’t think many campaigns in history have done quite as 
well as the anti-plastics one. 
Straws in the wind
The life of the climate change activist is tougher, because 
global warming is harder to see, and solutions are conceptually 
The third revolution is the consumer-led disruption to 
more nuanced. But I think the lesson here, about the power of the 
single-use plastic. It isn’t directly an energy issue, but has huge 
consumer and civil society, is one that we should take note of.
80
81

---

And coming up next… 
8. Conclusions
In my mind, the development of hydrogen would probably 
look most like solar – a policy push and then a market reaction. 
But we also want to harness the power of the consumer, 
which has never been higher than today. For that, we need to 
make CO2 real. Enough with the gigatonnes of CO2 emitted. And 
even telling the average consumer that they need to get their own 
annual energy-related emissions down from 4.6 tonnes today to 
1.1 tonnes isn’t terribly helpful. What we need is some sort of a 
5-a-day labelling system, or something like a calorie counter for 
CO2 indicating the percentage of daily allowance that is being 
consumed by each action or purchase. That could be a handy app 
on our phones.
“We should look into establishing a hydrogen society.” 
Wan Gang, Chinese People’s Political Consultative 
Conference, Beijing, June 2019 
I approached our work on hydrogen with a sense that we urgently 
need additional solutions to address climate change. While 
electrification, on the one side, and the push to reduce individual 
consumption through “flight-shame”-type initiatives, both have 
merits, neither is definitive. 
The limits of both approaches, for me, were crystallized in 
the challenge of decarbonising winter heating, which is the core 
business of the gas grid. I couldn’t see how electricity and electric 
storage were going to get us all the way to zero, as batteries 
cannot hold energy for long-enough periods. And I hoped we 
weren’t going to have to sit in the cold. 
With the seasonality challenge top of mind, I intuitively 
felt that green gas would be an important piece of the puzzle. 
Biomethane, to the extent that it is available, and hydrogen, 
35 https://www.eia.gov/outlooks/archive/aeo06/supplement/pdf/supplement_
tables(2006).pdf
which – while being more complex to imagine in a residential 
36 IRENA, Renewable power generation costs in 2017.
setting – has the advantage of being practically infinite. 
82
83

---

However, having been involved with hydrogen almost 20 years 
demand and getting new infrastructure built – like Snam and 
ago, I was well aware of the challenges of getting it off the ground 
other pioneers did to get the natural gas market up and running 
both in terms of cost and in terms of the time it would take to 
in Europe almost 80 years ago. 
develop the infrastructure make it mainstream. 
Of course, as it penetrates different markets, a whole host 
So when Snam embarked on a study of the potential of 
of operational challenges will inevitably need to be addressed, 
hydrogen, it was because we thought it was worth looking at 
concerning for instance resource constraints on water, on 
as a long-term decarbonisation option for Europe and for our 
materials used for the electrolysers and so on. 
company. 
So we’re not looking at an easy job. But then, transforming 
our energy system to cut CO2 emissions to zero isn’t an easy task. 
Our work is yielding encouraging results. 
And the development of green hydrogen gives us an option to 
We learned that the electrolyser industry is still in its infancy, 
decarbonise that is compatible with new businesses and new jobs 
with equipment still essentially hand-made. So a relatively small 
– a greener and fairer world. The effort is worth it. 
new capacity could reduce the cost of these devices – and of green 
hydrogen – significantly. This, coupled with the rapidly declining 
cost of renewables, gave us a line of sight to $2/kg hydrogen, the 
“tipping point” from where it may be competitive in large markets 
without subsidies.
And we learned that blending hydrogen in the existing gas 
network may provide a policy tool to scale up demand relatively 
quickly. Snam has experimented with 5% in a limited portion of 
the network, and we are working both to increase that percentage 
and to study and address constraints in other areas of the grid.
Policies to gradually increase the penetration of green 
hydrogen in other key sectors – like grey hydrogen, industrial use, 
heavy transport and even targeted local projects for heat – would 
also contribute to its scaling up, providing the demand boost 
that would lower prices, making clean hydrogen increasingly 
competitive. 
Of course, getting the hydrogen ball rolling won’t just be about 
costs. Every element of the value chain will need to be tested, and 
safety protocols developed. 
Midstream companies will have a particularly relevant role to 
play, because they will need to ensure that their infrastructure 
can accept increasing blends of hydrogen. As hydrogen scales up, 
midstreamers will also be instrumental in aggregating supply, 
84
85

---

Baroness Worthington looks into shipping – a sector that 
Contributions 
doesn’t get as much attention as it deserves and that can be a 
candidate to lead the way on hydrogen.
from thought leaders
Luigi Crema, of the Fondazione Bruno Kessler, gives us an 
insight into the upcoming technologies that might yet disrupt 
hydrogen production.
Bernd Heid and the McKinsey team explain how, according 
to their analysis, hydrogen is not a question of “if” but of “when”. 
Winning the hydrogen challenge will be far from straightforward. 
Every aspect of its production, transport and use presents 
complexities and opportunities that would need to be explored 
more fully than the space and timeline for this instant-book allow.
A wealth of thought exists on hydrogen today, thanks to 
leading experts in their fields who have put their time and effort 
into the subject. Their work is not just important because of the 
content that it adds, but also because of their energy and their 
commitment.
Hydrogen will only get off the ground if far-sighted thought-
leaders can gain traction with the wider community. I am 
fortunate enough to have come into contact with a number 
of such thought leaders, and am delighted to host their expert 
contributions in the following pages.
Dr Gabrielle Walker makes an impassioned case for the need 
to rebuild trust between business and society to face the big 
challenges of our day.
Lord Turner digs deep into the hard-to-abate sectors, high-
lighting the work done by the Energy Transitions Commission to 
figure out a cost-efficient route to zero.
86
87

---

and famines. But back then, much of this still seemed as if it lay 
Hydrogen: 
in the future. The argument that convinced Marco, and others at 
the time, that we should act on all this was more as an insurance 
the great connector 
policy than as a clear and present danger.
by Dr Gabrielle Walker 
Now such a conversation seems almost quaint. Climate change 
is already here – and it’s not subtle. When I prepare slides to give 
talks on this topic to business executives like Marco, the hard 
thing these days is not finding images to illustrate the dangers – 
but choosing which ones to use. Should I show the unprecedented 
wildfires that recently tore across California, or Chile, or Russia, or 
Sweden? Should I show hurricane Harvey dumping so much rain 
on the city of Houston that it actually sank by several centimetres? 
Or hurricane Irma sweeping across the island of Barbuda with 
so much force that there was literally nothing left standing? 
And which of the heat waves in Australia, in Europe, in northern 
I vividly remember the first conversation about climate change 
Russia, in Greenland, as temperatures the world over break record 
that I had with Marco, as we climbed up the side of that Norwegian 
after record? Even the migrations that have been wreaking such 
mountain 12 years ago. We mainly talked about the science. I recall 
geopolitical havoc on Europe and the USA can trace their origins in 
describing the bubbles of air that had been trapped in Antarctic 
part to drought, and they look set to get much worse. One military 
ice, the deepest ones nearly 800,000 years old, and how I was 
general told me that the human migrations we are experiencing 
present at the field station when scientists drilled down to release 
now will look like a “walk in the park” compared to what will 
through the ice to excavate these bubbles, layer by layer. The tiny 
happen if we let climate change take greater hold.
pieces of air they collected spanned all of human history and more. 
Though I am a scientist by training, and we are a cautious bunch 
They contained a true record of all the changes our atmosphere 
when it comes to apocalyptic predictions, I no longer talk about an 
has experienced since before homo sapiens sapiens appeared on 
insurance policy. Now, I talk about a full-on, existential crisis.
the scene. And that record shows us beyond doubt the dramatic 
So, what do we do about it? Well, we already have a whole 
change that took place after the industrial revolution, when we 
started flooding the air with greenhouse gases. For me this was 
toolbox of potential solutions many of which, frustratingly, have 
the concrete proof that the forms of energy we had been using to 
been with us for decades without being deployed at anything like 
make our collective living on earth were causing a radical change 
the scale we need. The challenge now is not just scale but also 
to our own life support system.
urgency. It’s hugely important to remember that climate change is a 
We talked about other parts of the science too, how, in lockstep 
“stock” problem not a “flow” problem. In other words, what matters 
with the rising greenhouse gas concentrations, we could also see 
is how much additional CO2 and other greenhouse gases get into 
the Earth’s temperature changing year by year; and about the 
the atmosphere, not how quickly they get there. And that means 
potential implications of this for fires, droughts, floods, storms 
we have to do everything we possibly can to reduce emissions now.
88
89

---

To my mind, this means that we can’t afford to wait for some 
These champions also have to be willing to form new alliances 
mythical perfect solution. We need to get all options on the table 
across ideological divides. 
as quickly as we can, and scale them up as quickly as we can. 
It is so maddening that we have taken so long to pour energy 
Which brings me to hydrogen. There used to be a lot of talk 
into technological solutions to the climate crisis that were already 
about the “Hydrogen Economy” in the early noughties, mainly 
available that lately I have been asking myself why. I found some 
focused on cars that could be powered by hydrogen fuel cells 
answers in Nathaniel Rich’s book Losing Earth: The Decade We 
and produce in the way of emissions nothing but pure water. 
Could Have Stopped Climate Change. Rich traces the actions and 
But as the appetite for electric vehicles took hold, it seemed that 
missteps on climate throughout the 1980s, and some of them are 
hydrogen had fallen away. 
them are astonishing. In the wildly polarised world of today, it’s 
I’m so glad it’s back, and this time with a much bigger remit. 
easy to forget not just that we knew all about global warming even 
Now it’s clear that hydrogen can provide climate solutions that 
then, but that it was also considered a fully bipartisan issue, all the 
go far beyond cars. It could be used to decarbonise heating, fuel 
way to the top. George W. Bush even said in 1988 that “those who 
ships and short-haul planes, solve some of the hardest climate 
think we are powerless to do anything about the greenhouse effect 
problems in heavy industry, store up renewable energy from 
are forgetting about the White House effect.”
season to season and place to place and yield the stored energy 
I believe that one of the unsung reasons we missed so many 
exactly just when and where it’s needed. It is the great connector; 
chances to act decisively in the past is the way the efforts to fight 
the miracle molecule.
climate change became so polarised, with different tribes giving 
Elsewhere in this book there are many more details about all 
certain technologies favoured status and vilifying others. What’s 
these opportunities and more. And in addition to demonstrating 
more, the atrocious and cynical disinformation campaigns and 
the many roles that hydrogen can play in solving the climate 
targeted denialism of the 90s didn’t just cost us precious time – they 
crisis, this book also highlights what has been stopping the use 
also reinforced these divides and made collective action even harder.
of hydrogen, and how to break down those barriers. To the many 
And yet, to fight off climate disaster we will need radical new 
barriers and strategies described elsewhere, involving policy, 
collaborations, between business, unions, NGOs, policy makers, 
economics, technical issues and the like, I would add one further 
storytellers and everyone else with a stake in the survival of 
crucial requirement for scaling hydrogen as a climate solution: 
humanity. And that can’t happen if we all paint ourselves into 
the need for passionate champions for hydrogen from all the 
our own respective corners. Moreover, I am worried about a 
different sectors that will have to be involved. 
burgeoning divide between climate activists (who are bringing 
That’s because, in my experience, hard things only happen 
the urgency and seriousness of the problem brilliantly out into the 
when influential people spend all their waking hours trying to 
open) and businesses (who are often mistrusted, but will need – in 
make them happen. I believe we need new cohorts of hydrogen 
many cases – to be the delivery arms of the solutions we are trying 
champions who understand and care deeply about the potential, 
to scale).
to be urgently seeking the opportunities, pushing for the policies, 
That’s why, while many others are working on the technical 
securing the financing and telling the hydrogen story, in order to 
part of the issue, the policy, economics and technology, my work 
realise this vision.
since that conversation with Marco twelve years ago has been 
90
91

---

increasingly focused on creating energised climate champions, 
in the past. NGOs realise that CCS will have to be delivered by 
building trust and bridging ideological divides; I am trying to help 
the only industry in the world that understands how to transport 
turn some of the most important climate narratives from “saints 
and bury molecules in geological formations – the oil and gas 
and sinners” to putting some of the world’s smartest people round 
industry. And they remain suspicious that any support by oil and 
the same tables, so they can find collective solutions together. 
gas companies for CCS could just be a delaying tactic, or a way to 
Hydrogen has many advantages in this regard. It’s not just 
prolong the use of fossil fuels.
the great connector from a technical point of view (uniting 
And yet, in each of our workshops, in the end, everyone has 
many different climate solutions). It’s also never been owned, or 
agreed that we will need at least some CCS to solve climate 
change. Now the challenge is to build the trust and broker the 
stigmatised, by any individual sector. Hydrogen really does have 
collaborations that could make it happen.
something for everyone. It can be an enabler of renewable energy 
Hydrogen plays a fascinating role in this story. First, as 
(through its storage capacity); it can be introduced incrementally, 
Adair Turner points out on next page, we already make large 
using existing infrastructure such as pipelines and gas turbines; 
amounts of hydrogen for chemical purposes, using methane as 
and it might also be able to help us realise the most unloved, 
a feedstock. One of the waste products of this process is a very 
unwanted and vilified climate technology of all – carbon capture 
concentrated stream of carbon dioxide. Bolting on CCS would 
and storage (CCS).
help to neutralise its climate impacts by removing most or all of 
CCS actually covers a small army of technologies, all of which 
the emitted carbon dioxide, providing a stream of clean hydrogen 
involve capturing carbon dioxide from big point sources (such as 
that could help kickstart the hydrogen economy. This could also, 
cement or steel factories, fossil fuel power plants and the like), 
in turn, promote the development of CCS itself, which we will 
transporting the carbon dioxide, and burying it in geological 
need for certain solutions that other climate technologies can’t 
formations. And although climate scientists have been saying 
reach. Win, win.
for years that we will need this technology to close the emissions 
None of this will be easy – but I believe we have to make it 
gap, it has struggled repeatedly to get beyond the pilot stage.
happen. Because we don’t have time to argue any more. This is 
Over the past year and a half, I have been leading a project on 
an emergency. I am excited about hydrogen for all of the reasons 
CCS called the “Alliance of Champions”, specifically designed to 
scattered throughout this book. But perhaps most of all because 
try to understand the non-technical reasons why CCS has never 
it is the ultimate connector. Polarisation and divisions have 
happened at scale. My colleagues at Valence Solutions and I have 
got us into much of this mess. Perhaps this little molecule that 
spoken to more than 130 people in Europe and North America, 
often slips through the cracks could be one of the instruments 
hailing from organisations as diverse as Greenpeace and the 
that helps us bring together all the people of good will and brain 
oil and gas industry. We have also run several cross-sectoral 
who are genuinely fighting the climate crisis, to accelerate action 
workshops. And we have come to the conclusion that one of the 
before it really is too late.
biggest barriers facing CCS is lack of trust. 
Much of this distrust has been well earned. Companies don’t 
trust the government to follow through on their policy promises 
since they have had the rug pulled from under them too often 
92
93

---

of energy storage options now make it possible to plan for cost-
Mission Possible 
competitive power systems which are nearly entirely dependent 
by Lord Turner
on wind and solar (e.g. at 85-90%). 
But green electricity will only get us part of the way there. 
One of the biggest challenges to reaching a fully decarbonised 
economy stems from what we have labelled the “harder-to-abate” 
sectors. 
These are the sectors of heavy industry (in particular 
cement, steel and chemicals) and heavy-duty transport (heavy-
duty road transport, shipping and aviation), which currently 
account for 10Gt (30%) of total global CO2 emissions. On 
current trends, their emissions could account for 16Gt by 2050 
and a growing share of remaining emissions as the rest of the 
economy decarbonises. Despite the magnitude of their impact, 
The mission is clear. 
many national strategies – as set out in Nationally Determined 
In line with the commitments taken in Paris at the COP21, 
Contributions (NDCs) to the Paris agreement – focus little 
and in line with the recommendations of the latest IPCC report, 
attention on these sectors.
we need to limit global warming to well below 2 °C, and as close 
The good news is that reaching net-zero CO2 emissions in 
as possible to 1.5 °C. 
these sectors by mid-century is possible – and not as costly as 
What is often called into question is whether achieving these 
one might imagine. 
targets is actually possible. The answer is yes, but we need to apply 
The technologies required to achieve this decarbonisation 
an ample and diversified toolkit of technologies to get there. 
already exist: several still need to reach commercial viability, but 
As the Energy Transitions Commission (ETC), the coalition 
we do not need to assume fundamental and currently unknown 
of business, finance and civil society leaders from across the 
research breakthroughs to be confident that net-zero carbon 
spectrum of energy producing and using industries which I am 
emissions can be reached. 
currently chairing, has demonstrated, reaching net zero CO2 
Moreover, the cost of decarbonisation can be very significantly 
emissions is possible – by 2050 in developed economies and 2060 
reduced by making better use of carbon-intensive materials 
in developing economies. 
(through greater materials efficiency and recycling) and by 
A key pillar of this effort will be using less energy. We should 
limiting demand growth for carbon-intensive transport (through 
also seek to decarbonise power and gradually electrify as much 
greater logistics efficiency and modal shift).
of the economy as possible. In 2017, the Energy Transitions 
Indeed, the ETC has found that it is technically possible to 
Commission’s first report – Better Energy, Greater Prosperity –  
reach net-zero CO2 emissions in the harder-to-abate sectors by 
tackled these challenges, demonstrating that dramatic 
mid-century at a cost to the economy of less than 0.5% of global 
reductions in the cost of renewable electricity generation and 
GDP with a minor impact on consumer living standards. 
94
95

---

sectors, but will need to be tightly regulated to avoid 
Three routes to decarbonisation in harder-to-
adverse environmental impact (such as deforestation), 
abate sectors
and its use should be focused on priority sectors where 
alternatives are least available, such as aviation.
In more depth, the route to decarbonisation involves three 
 
■ Carbon capture (combined with use or storage) will likely 
complementary sets of actions: 
be required to capture process emissions from cement and 
1.  Reducing demand for carbon-intensive products and services, 
may also be the most cost-competitive decarbonisation 
which can greatly reduce the cost of industrial decarbonisation 
option for other sectors in several geographies. However, 
and, to a lower extent, of heavy-duty transport decarbonisation. 
it does not need to play a major role in power generation, 
A circular economy – based on greater material efficiency 
where a range of storage and grid management technologies 
and recycling – can reduce CO2 emissions from four major 
can limit the need for peaking capacity.
industry sectors (plastics, steel, aluminum and cement) by 
 
■  Hydrogen will play a major role, leading to a 7-11x demand 
40% globally, and by 56% in developed economies like Europe 
increase by mid-century.
by 2050, whilst modal shifts and logistics efficiency could 
reduce emissions by 20% in heavy-duty transport.
2.  Improving energy efficiency, which can enable early progress in 
A major role for hydrogen 
emissions reduction and reduce overall decarbonisation costs. 
In the industrial sector, opportunities for energy efficiency 
within existing processes (through advanced production 
Hydrogen is likely to be a pillar of cost-effective decarbonisation 
techniques or the application of digital technologies) can 
in several of the harder-to-abate sectors and may also be important 
enable short-term emissions reductions. They are unlikely to 
in residential heat and flexibility provision in the power system. 
exceed 15-20% of energy consumption, but will be essential to 
Achieving a net-zero-CO2-emissions economy will require an 
reduce emissions from existing, long-lived industrial assets, 
increase in global hydrogen production from 60 Mt per annum today 
in particular in developing countries.
to something like 425-650 Mt by mid-century, even if hydrogen fuel-
3.  Applying decarbonisation technologies, which will be 
cell vehicles play only a small role in the light-duty transport sector. 
essential to achieving net-zero CO2 emissions from the energy 
It is therefore essential to foster large-scale and cost-effective 
and industrial systems. In each sector, there are four main 
production of zero-carbon hydrogen via one of two major routes: 
pathways for the decarbonisation of production:
Electrolysis using zero-carbon electricity: This will be 
■  Electricity – direct and indirect electrification (through 
increasingly cost-effective as renewable electricity prices fall and 
hydrogen) – will likely play a significant role in most sectors 
as electrolysis equipment costs decline. If 50% of future hydrogen 
of industry and transport, leading to a sharp increase in 
demand were met by electrolysis, the total volume of electrolysis 
power demand – growing 4-6 times from today’s 20,000 
production would increase 100 times from today’s level creating 
TWh to reach around 100,000 TWh by mid-century.
enormous potential for cost reduction through economies of 
■  Bioenergy and bio-feedstock will be required in several 
scale and learning curve effects.
96
97

---

 
■ And it preserves energy. A lot of electrical power is lost as it 
level of modal shift for both freight and passenger transport could 
is transported over long distances, and storing electricity 
reduce the size of the transition challenge.
is relatively costly, while the gas system can carry and 
In industry, more efficient use of materials and greatly 
store energy cheaply with barely any loss.
increased recycling and reuse within a more circular economy 
could reduce primary production and emissions by as much 
 
■ The application of carbon capture to steam methane 
as 40% globally – and more in developed economies – with 
reforming, and the subsequent storage or use of the captured 
the greatest opportunities in plastics and metals. Reaching 
CO2: This may be one of the most cost-effective forms of 
full decarbonisation will therefore require a portfolio of 
carbon capture given the high purity of the CO2 stream 
decarbonisation technologies, and the optimal route to net-zero 
produced from the chemical reaction, if energy inputs to the 
carbon will vary across location depending on local resources.
process are electrified. For hydrogen from SMR plus CCS to 
Investments will also be required, but on a scale that does 
really be near-zero-carbon, however, carbon leakage in the 
not threatens economic viability. 
capture process, as well as methane emissions throughout 
At European level, incremental investment could be 25% 
the gas value chain, would have to be brought down to 
higher than in a business-as-usual scenario, with the greatest 
a minimum. If 50% of future hydrogen demand were met 
investment required not in transport infrastructure or industrial 
using SMR with carbon capture on chemical reaction, the 
assets, but in the power sector to enable very high increases 
related carbon sequestration needs would amount to 2-3Gt.
of power use across the economy. For example, in heavy-road 
 
■ Biomethane reforming: SMR could also in principle be 
transport, the European Commission estimates suggest that 
made zero-carbon if biogas were used rather than natural 
the investments required for recharging or hydrogen refueling 
gas, but this route is unlikely to play a major role, given 
infrastructure would be less than 5% of business-as-usual 
other higher priority demands on limited sustainable 
investment in transport infrastructure.
biomass resources.
The impact of decarbonisation on prices faced by end 
consumers will vary by sector, but will overall be small. For 
example, green steel use would add approximately $180 on the 
Feasible pathways
price of a car; green shipping would add less than 1% to the price 
of an imported pair of jeans, and low-carbon plastics would add 
$0.01 on the price of a bottle of soda. 
In practical terms, all these pathways translate into the 
following shifts.
In heavy-duty transport, electric trucks and buses (either 
How to get there – overcoming the challenges 
battery or hydrogen fuel cells) are likely to become cost-
and designing a strategy
competitive by the 2030s, while, in shipping and aviation, liquid 
fuels are likely to remain the preferred option for long distances, 
but can be made zero-carbon by using bio or synthetic fuels. 
Achieving net-zero CO2 emissions by mid-century, at low 
Improved energy efficiency, greater logistics efficiency and some 
cost to the global economy and to the end consumer, requires 
98
99

---

recognising and resolving the different sets of challenges which 
employment in some regions. It is therefore important that policy 
represent the main obstacles to decarbonisation. 
anticipates and compensates for these distributional effects 
through just transition strategies. 
Technical challenges
The most pressing challenge to decarbonisation is that many 
Institutional challenges
of the relevant technologies are not yet commercially ready. While 
Finally, institutional challenges also emerge. Current 
electric trucks could be cost-competitive by 2030, cement kiln 
innovation systems are poorly connected, with little coordination 
electrification may not be commercially ready till a decade later. 
between public and private R&D, and a lack of international 
Hydrogen-based industrial processes also require significant 
forums to carry an innovation agenda focused on harder-to-
development. Accelerating development and scaling deployment 
abate sectors. In sectors exposed to international competition, 
of key technologies is therefore vital. 
domestic carbon prices or regulations could produce harmful 
effects on competitiveness and movement of production location. 
Economic challenges
This implies the need for international policy coordination, or 
Since most decarbonisation routes will entail a net cost, 
alternatively the use of downstream rather than upstream taxes, 
market forces alone will not drive progress; and strong policies – 
border tax adjustments, or free allocation within emissions 
combining regulations and support – must create incentives for 
trading schemes or compensation schemes (combined with 
rapid decarbonisation. A particular difficulty is to create strong 
increasingly ambitious benchmark technology standards). 
enough financial incentives today to trigger the search for optimal 
Furthermore, some industries, like shipping or construction, 
decarbonisation pathways without imposing a disproportionate 
are so fragmented that incentives are split. Even cost-effective 
burden on sectors for which full decarbonisation technologies 
efficiency technologies and circular practices are not easily 
are not yet available. 
deployed. In these sectors, innovative policy should strengthen 
In heavy industry, very long asset lives will delay the 
incentives. 
deployment of new technologies, unless there are strong policy 
Given these technical, economic and institutional barriers, 
incentives for early asset write-offs. In steel, for instance, a switch 
transition paths will vary significantly by sector. For example, 
from blast furnace reduction to hydrogen-based direct reduction 
in the industrial sectors, progress to full decarbonisation will 
may require scrapping of existing plant before end of useful life. 
inevitably take several decades. Public policy must provide strong 
High upfront investment costs may also act as a barrier to 
incentives for long-term change, established well in advance, 
progress even where carbon prices make a shift to zero-carbon 
whether via carbon pricing, regulations, or financial support. 
technologies in theory economic, in particular in sectors or 
Proactive action from industries over the next decade would 
companies facing low margins. Direct public investment support 
reduce costs of subsequent decarbonisation efforts. 
may therefore be required. 
On the other hand, in the transport sectors, transition paths 
Furthermore, although beneficial on an aggregate scale, 
are less complicated. In heavy road transport, considerably 
the transition to a zero-carbon economy will inevitably create 
shorter asset lives could allow rapid decarbonisation of truck 
winners and losers, impacting local economic development and 
fleets once alternative vehicles (whether battery electric or 
100
101

---

hydrogen fuel-cell) become cost-competitive at point of new 
climate objectives achievable. Key policy levers to accelerate the 
purchase. In long-distance shipping and aviation, the likely 
decarbonisation of harder-to-abate sectors include: 
route to full decarbonisation entails the use of zero-carbon fuels 
1.  Tightening carbon-intensity mandates on industrial 
within existing engines, meaning that the pace of transition 
processes, heavy-duty transport and the carbon content of 
will be determined by the relative costs of zero-carbon versus 
consumer products.
conventional fuels. 
2.  Introducing adequate carbon pricing, strongly pursuing the 
Every sector will require an adapted and different response, 
ideal objective of internationally agreed and comprehensive 
but overall, these will all be determined by efficiency improvement 
pricing systems, but recognising the potential also to use 
and demand-side reductions. These steps are essential not only to 
prices which are differentiated by sector, potentially applied 
deliver short-term emissions reductions, but to decrease the cost 
to downstream consumer products and defined in advance.
of long-term decarbonisation by reducing the volume of primary 
industrial production or mobility services to which supply-side 
3.  Encouraging the shift from a linear to a circular economy 
decarbonisation technologies need to be applied.
through appropriate regulation on materials efficiency and 
recycling.
4.  Investing in the green industry, through R&D support, 
Working together to win the climate war
deployment support, and the use of public procurement to 
create initial demand for “green” products and services.
Winning the climate war would not only limit the harmful 
5.  Accelerating public-private collaboration to build necessary 
impact of climate change; it would also drive prosperity, through 
energy and transport infrastructure.
rapid technological innovation and job creation in new industries, 
Together, through shared responsibilities and collective 
and deliver important local environmental benefits. National and 
action, the world can win the climate war and achieve net-zero 
local governments, businesses, investors and consumers should 
CO2 emissions.
therefore take the actions needed to achieve this objective. 
It will be key to encourage collective action. Energy companies 
must commit to producing low-cost zero-carbon energy; 
investors must finance low-carbon industrial assets as well as 
energy and transport infrastructure; consumers (businesses, 
public procurement services and end consumers) must demand 
zero-emissions materials and mobility; policy-makers must drive 
and support a green industry revolution; and harder-to-abate 
sectors must prepare for a profound transformation. 
In the wake of the IPCC’s urgent call for action, the “Mission 
Possible” report sends a clear signal to policymakers, investors and 
businesses: full decarbonisation is possible, making ambitious 
102
103

---

is still contributing the most to the problem.  By focusing on 
Getting Shipshape 
cleaning the power sector other options for decarbonising other 
by Baroness Worthington
sectors are opened up. Clean electricity can directly replace fossil 
fuel use in transport and heat markets through electrification – 
and this is applicable in more sectors than we might first imagine 
– large electric ovens can be used to replace kilns, arc furnaces 
forge metals from recycled content, even long distance trucks 
can be electrified using overhead cabling on major roads and 
motorways. 
But where electricity on its own is not a practical alternative 
to fossil fuel use, it can also be used to make combustible fuels 
by using excess electricity to create hydrogen and combining 
hydrogen with nitrogen from the air to manufacture ammonia. 
Both hydrogen, and hydrogen rich ammonia, can be used 
immediately in conventional combustion engines, with little 
A global market in hydrogen based fuels could be about to emerge 
modification, or later, in specially designed fuel cells. Both are 
– can it help avert a climate crisis? 
also well-known, globally traded commodities.  Neither produces 
The escalating climate emergency is now hard to ignore. The 
any greenhouse gases at point of use. 
scale and speed of the observable impacts of a warming planet are 
An additional route to a hydrogen fuel based economy 
taking even the most pessimistic climate scientists by surprise. 
opens up if fossil fuels are used in processes that strip out and 
The last 50 years of industrial growth in particular has contributed 
sustainably bury the greenhouse gases to produce the hydrogen. 
a huge and growing volume of emissions of greenhouse gases to 
The cost comparisons between the two routes will vary depending 
the atmosphere which have not yet showed any signs of slowing 
on many starting conditions. Where, for example, natural gas is 
and we now are deep into uncharted climatic territory. What is 
abundant and easily extractable a carbon capture to hydrogen 
becoming clear is the global experiment we are now conducting 
route may be most cost effective. In places where there is 
will have serious consequences for all inhabitants of this our 
shared and only home. 
abundant untapped renewable electricity capacity, hydrogen fuel 
The key question is what can be done about it? What needs to 
production could offer the better investment returns.
happen to apply the brakes quickly? And how can this be done 
So with so much potential what’s stopping this emissions free 
with minimum negative impact on the poorest in our society? 
energy system from emerging?  The answer is cost.
First and foremost we need to turn off the tap of manmade 
Put simply these alternative energy supply chains are highly 
greenhouse gas emissions. In terms of impact the quickest and 
capital intensive and cannot compete with the highly mature 
easiest way to do this is to focus on phasing out coal from the 
incumbent industries. To bring hydrogen based solutions to 
global power sector. Despite great progress this sector has 
market will therefore require a concerted effort. Government 
contributed the lion’s share of the build-up of emissions and 
intervention will almost certainly be needed. But just how 
104
105

---

and where will the political capital be found to kickstart the 
fossil fuels towards cleaner alternatives opens up the potential for 
deployment of these solutions at scale such that repeated 
many more ports and fuel providers to enter the market to provide 
deployment and economies of scale can bring them down the 
clean hydrogen based “electrofuels”, i.e. fuels such as hydrogen 
cost curve? 
and ammonia that can be derived from renewable electricity. 
A relatively obscure corner of the UN provides an answer: 
The ability to create a combustible fuel from sunlight (or wind, or 
international shipping, regulated by its own international 
water) to create hydrogen separated out of water, combined with 
governing body, can be the key to unlocking large-scale 
 
nitrogen taken from the air, opens up a huge potential market 
investment in clean energy developments across the world. It is 
to a range of new actors. Our recent report Sailing on Solar37 
responsible every year for about the same amount of greenhouse 
included a close look at the potential for fuels for ships to drive 
gas emissions as the entire German economy. It’s agreed it needs 
investment in Morocco and we plan a follow up study centred 
to decarbonise. It has also already helped reduce the cost of 
on Chile. But the potential benefits also extend to Europe where 
electrolysis to generate hydrogen, thanks to new requirement 
untapped renewable potential in the north and the south could 
on fuel suppliers to strip the Sulphur out of maritime fuels – a 
be brought to market in the service of ships of all classes. In the 
process that commonly uses hydrogen. 
UK and Norway excess wind and hydro power is already being 
But shipping could prove a much more significant catalyst. 
converted for use in ferries and there is huge potential in the 
There is no shortage of capital in the world seeking a home but 
Mediterranean for supply chains based on solar and wind.
investor confidence in clean energy is still low. In many places 
There are of course caveats to the proposed use of hydrogen 
with abundant renewable potential, there is not enough reliable 
derived fuels in the shipping industry. One is the safety 
energy demand for investors to put their money into large-scale  
implications, while both hydrogen and ammonia are carried 
projects. But the solution to this problem, unlocking trillions 
at sea at the moment with established safety protocols, if these 
of dollars in new investments, could come from international 
fuels are to be used more widely, then broader safeguards need 
shipping. The energy demand from large ocean going vessels 
to be considered. Further, these fuels are only climate friendly if 
is large and consistent – many routes are regular and many 
they are produced using renewable electricity as discussed here, 
of the least developed countries, lacking traditional energy 
or through use of fossil fuels with permanent carbon capture 
infrastructure, have well established ports. 
and storage, so any support needs to be carefully targeted using 
Shipping fuel today is a chunky porridge of unrefined 
robust accounting rules that account for the full impacts of 
petroleum, almost raw from the well. As well as greenhouse 
the supply chain. However, neither of these caveats presents an 
gases it produces smog-forming nitrogen oxides, lung-clogging 
insurmountable challenge and indeed, can be easily overcome 
particulates and climate-polluting black carbon. The visible 
through sensible regulation.
blight this bring to cities with port terminals is hard to ignore. 
International shipping is lucky, it has its own dedicated UN 
Yet 90,000 ships use this fuel to ply the world’s oceans, carrying 
agency: the International Maritime Organization (IMO). This 
everything from grain to toys to car parts all over the globe.
is where global shipping policy is developed, allowing shipping 
At the moment, the bulk of the filthy maritime fuel is sold 
to sit outside much of the standard political dynamics that are 
from just a handful of mega ports but the need to move away from 
holding back multilateral cooperation on climate issues. But 
106
107

---

little progress has been made on climate at the IMO to date 
powerful actors controlling existing fossil fuel supply chains who 
because for years it was thought that there was little shipping 
have thus far shown little sign of taking the existential risk of 
could do as a servant of international trade – if trade increased, 
climate change seriously. A new market in clean fuels will help 
shipping’s emissions increased. But recent studies have shown 
decide the relative role fossil fuels with capture and storage will 
that the move to electrofuels can begin almost immediately, 
play compared to a zero carbon electricity plus water (and air) 
the technology is available and both hydrogen and ammonia 
supply chain and may the best providers win. 
are known commercial products. It is time to start getting 
As the IMO gathers annually to discuss potential climate 
demonstration projects deployed. 
policies it is entirely possible that with couple of years a new 
The world has been trying to figure out how to fight climate 
incentive derisking investment can be agreed and implemented 
change for decades now so we have a fair idea of which policies 
early in the new decade. A hydrogen-based economy is within our 
work in which scenarios. At the moment building out ammonia 
grasp but a concerted effort will be needed to make it a reality. All 
or hydrogen supply chains for shipping looks astronomically 
those who want to move on from this reckless era of manmade 
expensive compared to the status quo and no shipping company 
impact on our climate would do well to turn their attention for a 
has any incentive to do so. So an obvious first solution is to put a 
little while to the negotiations taking place there. A seismic shift 
price on the damage that the emissions of the use of current fossil 
in transport fuels could be about to occur there – and it would 
fuels causes. The second part, which is not always as obvious, 
be highly fitting for shipping, with its inherent efficiencies and 
is to spend the money collected from that price developing 
long history of zero carbon propulsion, to re-occupy the green 
moral high ground and lead the fight against climate change. 
early hydrogen and ammonia supply chains for shipping to 
But it will require those of us committed to bending the curve in 
help bring costs down through repeated deployment. This has 
global greenhouse gas emissions to engage. So we look forward to 
worked extremely effectively in the solar and wind industries 
seeing you at the IMO. 
which have now reached price parity with fossil based electricity 
production in many places. There are no legal impediments to 
the IMO introducing a policy that funds the rapid scaling up of 
clean shipping fuels – in fact the IMO has a good track record of 
implementing globally standardised environmental regulations. 
Having recently adopted a strategy to at least halve emissions by 
mid-century the focus in upcoming meetings of parties is now on 
determining the policies to get us there. 
If ship owners, shippers and port states can be convinced to 
adopt a sensible policy framework that incentivizes new clean 
fuel supply chains and vessel modifications, the global maritime 
sector could usher in a new era of clean abundant energy, 
sustaining global trade and boosting international development. 
37  https://europe.edf.org/news/2019/02/05/shipping-can-reduce-climate-pollution 
In doing so it will help to drive change among a handful of 
-and-draw-investment-developing-countries
108
109

---

Methane thermal cracking
Potentially disruptive 
technologies for clean hydrogen
This is the first of two processes that extract hydrogen from 
by Luigi Crema, Fondazione Bruno Kessler
methane and provides an alternative to steam methane reforming. 
In this case, the reaction of thermal catalytic decomposition 
induces the cracking of methane from which hydrogen and solid 
carbon result. This type of reaction, which is a one-step reaction, 
does not produce CO2 during its process.
Due to the chemical stability of the methane molecule, 
reactions aimed at splitting it usually require very high 
temperatures – reaching about 1200 °C. But, by using catalyst 
materials, cracking temperatures can be significantly reduced to 
well below 700 °C. A great energy saving. Furthermore, the energy 
requirements for catalytic cracking of methane are about half of 
The cheapest and most widely used hydrogen-production 
those required for steam reforming.
methods are far from green. The International Energy Agency 
The setback is that, unfortunately, metals and oxides suffer 
(IEA) estimates that hydrogen production globally releases 
from coking and are intolerant to sulphur poisoning. The carbon 
830MtCO2 per year – equivalent to 2.2% of global emissions in 
produced by the cracking of methane therefore usually occurs in 
2018, because it is produced almost exclusively from fossil fuels 
the form of carbon black or graphite.
with no carbon capture and storage.
Research underway seems to point to processes capable 
One route to low-carbon hydrogen is, of course, to add Carbon 
of producing higher-value carbon forms such as nanotubes or 
Capture and Storage to existing hydrogen production methods. 
Graphene. These still need to be developed fully.
And green hydrogen can also be produced using electricity, 
through electrolysis of water, as liquid or steam. But while 
significant high efficiencies exist, at the moment this process is 
Plasma methane cracking
not always competitive economically with the fossil-fuel route. 
Electrolysis therefore plays a minor role in current hydrogen 
Another process which aims to extract hydrogen from methane 
production, accounting for only 4%.
is through plasma cracking. Here, the decomposition of methane 
There are five other “clean” technologies, currently at an earlier 
using plasma is based on non-thermal processing which employs 
stage of development, that could in future produce hydrogen 
high-energy electrons to begin the decomposition of methane, 
without emitting CO2. Three of them derive the hydrogen from 
thus also significantly lowering the temperature requirements. 
methane, and two from water.
Amongst these, some very advanced processes, such as low-
pressure plasmas, can even crack the methane molecule at room 
110
111

---

temperature, therefore requiring very low energy inputs. And the 
Photocatalysis hydrolysis
good news is that these plasma-cracking processes seem to have 
a relatively good ratio of success, with around 50-60% resulting 
Also aiming to extract hydrogen from water in an alternative 
effective.
way, photocatalysis is a process that achieves water hydrolysis 
Although they demonstrate great potential, these 
through the use of sunlight and catalyst materials within the 
processes nonetheless require equipment which is much more 
photoelectric cell.
sophisticated than mere thermochemical reactors. For example, 
Unlike electrolysis, the cell does not need to be provided with 
one must use plasma sources with generators from microwave, 
an electrical current to activate the process of water hydrolysis. 
radio-frequency or medium-frequency systems. These plasma 
The cathode is usually coated with a photo-active ceramic and 
generators must then be implemented in reaction chambers 
exposed to sunlight. Sunlight induces the formation of surface 
that sometimes require complex technologies such as vacuum 
excitons that promote reductive oxide reactions with water. This 
technologies.
results in the conversion of water into oxygen and hydrogen.
Although the carbon produced by plasma methane cracking 
The advantage of this technology lies in the fact that a direct 
is usually carbon black or graphite, there are processes under 
conversion of hydrogen solar energy can be achieved. However, it 
development that seem able to produce forms of higher-value, 
is not without limits. Unfortunately, the technology still has a low 
such as hard amorphous carbon, nanotubes or Graphene. Yet 
conversion efficiency, currently as low as 2%, and only in small 
these are still in a highly experimentation phase. Furthermore, 
for now, most of these processes are made by Chemical Vapour 
scale and short-term tests at a slightly higher conversion value. 
Deposition, which is mainly used in the production of carbon-
Nonetheless, research continues, and significant improvements 
based materials but not for the production of hydrogen.
have already been achieved in terms of efficiency using novel 
materials.
Metal hydrolysis
Solar thermochemical gas splitting 
Another promising approach for generating small (every bit 
helps) amounts of H2 are through water-metal reactions. The 
Finally, an emerging and fascinating technology, that could 
most prominent among these is the water-magnesium reaction. 
provide the ultimate breakthrough, is “solar thermochemical 
In this context, aluminum, magnesium and manganese have 
gas splitting” (STGS), also known as the solar thermochemical 
been identified as the most effective “combustible metals” for 
separation of gases. The process is based on a thermochemical 
Hydrogen generation.
reaction that is triggered by the sun’s energy. Here, sunlight is 
These processes offer great promise, but their main limitation is 
diverted onto thermochemical reactors containing water vapour 
that they are not capable of producing Hydrogen in large amounts, 
and a ceramic catalyst such as Ceria. The reaction leads to the 
and that the reversibility of the compounds produced is difficult 
formation of hydrogen and carbon monoxide. The latter can be 
and it would require a large-scale chemical conversion plant. 
used for the production of solar fuels. 
112
113

---

In the STGS, the reaction takes place in two stages: the 
concentrated sunlight leads to the reduction of a metal oxide, 
Building momentum for a 
and oxygen is released. The advantage of this technology lies in 
global hydrogen market –  
the fact that there is a direct production of hydrogen from water 
by means of thermochemical cycle, where solar energy is used to 
the McKinsey view
regenerate the catalyst. However, this process too is not without 
limits, which once again lies in the technology’s low efficiency.
by Bernd Heid, Markus Wilthaner  
Given their respective limits, there are still some obstacles to 
and Alessandro Agosta, McKinsey 
many of these processes used as alternatives to the traditional 
methods for hydrogen production. However, if and once they 
reach completion, their potential as disruptors in the hydrogen 
production of the future is infinite. 
As things stand, the technology that seems to be the closest 
to commercial maturity – and thus to more widespread use – 
is methane thermal cracking. This is because the technologies 
used in the process, such as the thermochemical reactors, which 
Can the stuff that powers stars fuel a cleaner future for our 
function at temperatures between 400 and 700 °C, are already on 
planet? Hydrogen is the most plentiful element in the universe 
the market, and the raw material they use, methane, is already 
but one of the least utilised sources of green energy on Earth. 
widely available. Thermal methane cracking process could 
Recent developments suggest that’s about to change, however. 
therefore become a viable substitute for steam methane cracking 
Industry is jointly investing in a variety of large-scale flagship 
in the short term, offsetting a large part of hydrogen production 
projects involving hydrogen, with initiatives ranging from 
emissions. Yet the technology still requires some engineering steps 
developing hydrogen-powered fuel-cell trucks to producing 
to be applied commercially. Meanwhile, research and development 
“green,” carbon-free steel. Other projects aim use hydrogen to heat 
on the other processes is also advancing. For example, plasma 
buildings, produce ammonia as a shipping fuel and as an input 
technologies, that are also looking technologically interesting, 
to low-carbon fertilizer production, for storing and generation 
could find application from 2025.
carbon-free electricity, and to create liquid hydrogen supply 
chains. But hydrogen has been talked about a lot previously – so 
what is fueling the unprecedented momentum we see now?
It’s a matter of when, not if.
Three key factors are accelerating global hydrogen deployment. 
The first, and maybe most important, driver is the sharp drop 
114
115

---

in the costs of renewables – a decline in the cost of renewables 
more strongly on R&D and market activation. China, for example, 
implies a direct decline in costs of green hydrogen. 
which had been a laggard on fuel cell and hydrogen technology, has 
As wind and solar power are deployed at large scale, their 
leapfrogged to be the biggest market for hydrogen trucks in only 
costs are falling dramatically. The trend has historically been 
18 months. The national FCEV fleet deployment targets for 2030 
tremendously underestimated: today’s forecast for photovoltaic 
for China, Japan, California, and South Korea began at 1 million 
capacity in 2030 is 14x that of the forecast from 2006 for the same 
vehicles two years ago and have reached 4 million today. South 
year. Regularly, auction results are breaking records – recently with 
Korea has set itself an ambitious target for FCEV production of  
a €15/MWh bid for solar in Portugal and a $18/MWh bid for onshore 
6.3 million vehicles per year by 2040.
The final energising element in this equation involves 
wind in Saudi Arabia. And while these are best cases, we expect 
industry alliances. In many countries and at a global level, 
the average cost of a newly installed megawatt-hour (MWh) of solar 
industry alliances to further the development and deployment 
power production in 2030 to be 80% lower compared to 2010. 
of hydrogen have formed. On the global level, the Hydrogen 
At such costs, generation from renewables becomes competitive 
Council has formed in January 2017 with 13 members, out of 
with power production from natural gas. This is great news for 
which five were European, Japanese and Korean automotive 
hydrogen made from electrolysis, since 70% of its cost depend 
OEMs and two Oil&Gas majors. Today, the Council has 
 
on the price of the input energy. If fed from renewable sources, 
60 members, represents more than $1.7tn market capitalization, 
hydrogen produced with electrolysis is also carbon free. And 
and includes 6 more Oil&Gas companies as well as companies 
while global electrolyser capacity is limited today, we expect it to 
interested in decarbonising steel, rail and aviation, to name a 
increase steeply over the next several years. Looking at announced 
projects, for example, a doubling of capacity is likely by 2020 and a 
staggering 35-fold increase has been announced until 2025.
The second driver is the renewed commitment by many 
A primer on hydrogen production
governments to limit carbon emissions, supported by rising 
Today, almost 95% of the hydrogen produced globally comes from 
awareness and interest of citizens to reduce global warming. 
reforming and gasification of fossil feedstocks. The key production 
When targeting a significant reduction of carbon emissions, as 
technology used is steam methane reforming (SMR), and the most 
experts deem required to remain below 1.5 degrees of global 
prevalent feedstocks are natural gas, naphtha and coal. 
warming, hydrogen is a key technology without which such deep 
Their cost depend mostly on the used feedstock and the produced 
decarbonisation is unlikely to be achieved.
hydrogen has different carbon footprints, depending on the feedstock 
and process. These production pathways could be combined with 
Combining this necessity of hydrogen in the future with the 
carbon capture and storage (CCS) for removing carbon dioxide.
prospect of developing new industries and employment, has led a 
Alternative reforming processes, for example autothermal reforming 
number of governments to embrace the technology. China, Japan, 
(ATR), could prove useful in this context, as they allow for a higher share 
Korea, Germany, France, Norway, the Netherlands, Australia and 
of carbon capture. CCS would slightly increase the capital (CapEx) and 
a number of other countries – among which we hope to see Italy 
operating expenditures (OpEx) of hydrogen production, and slightly 
soon – have now put forth hydrogen roadmaps or national plans. 
lower efficiency. 
Some have laid out ambitious deployment figures, others focus 
116
117

---

share of that new demand in the short term. Electrolysis, however, 
Low-carbon and carbon-free hydrogen can also be produced by using 
has big disruptive potential. It can provide the link with the power 
biomass or biogas as feedstocks.
sector, stabilize grids and make use of intermittent renewable 
Electrolysis is currently used in about 5% of hydrogen production. 
power supply. It can produce hydrogen at small scale, close to the 
Three technologies are employed. 
point of use, for example in refilling stations. 
The first, alkaline electrolysis, is a mature technology. 
The costs for hydrogen from electrolysis will be reduced by 
The second, polymer electrolyte membrane (PEM) electrolysis is 
lower cost renewables and cheaper electrolysers. Combining 
currently more expensive, but has strong cost reduction potential via 
electrolysers directly with renewables avoids the costs of 
industrialization. 
transmission and distribution grids and allows electrolysers to 
The third is the so-called “high temperature” approach using a solid 
profit directly from cost reductions in renewables. For this to 
oxide electrolyser cell (SOEC). It can achieve the highest efficiencies out 
of the three technologies, but it’s difficult to build SOEC electrolysers at 
work out, however, electrolysers also need to get cheaper. 
large scale due to the size limitations for the ceramic membranes. 
Electrolysers are produced today in relatively low volumes 
The carbon content of hydrogen from electrolysis depends on the used 
and even a small share of the future hydrogen market provides 
carbon content of the used electricity and can be very low if powered 
sizable growth prospects for electrolysers. This growth will drive 
from renewables.
the industrialisation of the manufacturing process, a scale up of 
Besides these, several other production technologies are in a research 
the value chain for electrolysers and thereby significantly reduce 
stage. These include biological and bacterial production, direct solar 
costs. Globally more than 650 MW of electrolyser projects have 
water splitting and pyrolysis (the thermal decomposition of materials 
been announced for the next few years and we have already 
at elevated temperatures). 
observed drastic cost reductions.
Besides hydrogen production, its distribution and retail will 
also fall with a scale up. For the transport applications, for example, 
few examples. Such alliances can play outsized roles during the 
green hydrogen from the pump could fall by more than 50% in 
tenuous early days of a new market, as few companies have the 
costs between 2020 and 2030. The cost reduction in production 
resources (or the commitment) to “go-it-alone” when it comes to 
is only partially responsible (15%) – the bigger share of reduction 
building up supply chains and deploying solutions in lockstep.
comes from large, better utilised refueling stations (40%) and 
Out of the three drivers, the underlying cost-competitiveness 
more efficient distribution (10%). Where production takes place 
of hydrogen is probably the most important and will prove 
on-site or a pipeline network is available, costs will be even lower.
decisive to the speed of the deployment of hydrogen solutions.
As hydrogen cost declines, solutions become 
Hydrogen supply costs are falling fast
competitive
The momentum in hydrogen will create new hydrogen demand. 
Given its lower relative cost, technological maturity and availability 
With renewables and electrolyser costs falling we can see a 
at scale, hydrogen production via SMR is likely to provide a sizable 
pathway to hydrogen below $2/kg (roughly $50/MWh) where 
118
119

---

access to good renewables is possible. This already brings a 
number of hydrogen applications “into the money”: on a total 
to build one, two and even five MW modules, and improvements could 
cost of ownership (TCO) basis, and at scale, we estimate that 
lead to step changes in cost. Compared to other technologies, a learning 
medium- and heavy-duty transport, buses and even light-
rate of 12% is on the conservative side: onshore wind turbines have 
duty fuel cell vehicles for fleet applications can break even at 
improved with a 12% learning rate in the last decade, while photovoltaic 
hydrogen production costs of around $100/MWh. Trains, ships, 
technology has achieved as much as 24%. Comparable analysis from 
backup power solutions, forklifts and many other applications 
BNEF has arrived at learning rates of 18% and 20% for alkaline and PEM 
are also in or close to break even at such cost levels. At $50/
electrolysis, suggesting more potential upside than we see here. 
MWh, green hydrogen becomes cost-competitive with hydrogen 
from natural gas in some regions, opening a large and already 
existing market.
This is not a done deal yet. Hydrogen still needs to overcome 
barriers to adoption – infrastructure needs to be built, value 
chains and manufacturing scaled up and products brought to 
market. But the underlying drivers are reducing production costs 
rapidly, and pointing towards a very large opportunity indeed. 
Industrialization will drive reduction in electrolyser costs
Through analogies and our marker researches we estimate that the 
learning rate for electrolysers in the coming decade is at least 12%. That 
means, for every doubling of cumulative installed capacity, we expect 
electrolyser costs to drop by at least 12%. To estimate the learning 
rate, we have both looked at electrolyser cost from a bottom-up point 
analysis as well as by applying analogous learning rates from other 
industries to the main components of an electrolyser. We expect the 
biggest lever to be the increase of the stack size, which reduces not only 
the cost per capacity of the stack, but also decreases the costs of the 
balance of plant, including the rack, electronics, etc. Significant cost 
improvements are also possible through the scale up of manufacturing 
and the value chain.
We believe there is room for even faster improvements, in particular 
in the early years of electrolysers. Cell stack design and size are still 
at an early stage, companies are aggressively investing into research 
120
121

---

Dr Gabrielle Walker is a strategist, author and speaker focused 
on climate change. She works as an advisor at boardroom-level 
with a wide range of global companies and has covered many 
different sectors. Her team at Valence Solutions helps to build 
bridges between stakeholders in the climate space, restructuring 
narratives and identifying broadly supported solutions to non-
technical barriers. 
Gabrielle has presented dozens of TV and radio programs for 
the BBC, reporting from all seven continents, and has written 
very extensively for international newspapers and magazines, 
including The Economist, The Wall Street Journal and The New 
York Times. She has written four books including co-authoring 
the bestselling book The Hot Topic, how to avoid global warming 
while still keeping the lights on, which was described by Al Gore 
as “a beacon of clarity” and by The Times as “a material gain for 
the axis of good”. Gabrielle has a PhD from Cambridge University 
and has taught at both Cambridge and Princeton Universities. 
Lord Turner chairs the Energy Transitions Commission, a 
diverse group of individuals from the energy and climate 
communities: investors, incumbent energy companies, industry 
disruptors, equipment suppliers, energy-intensive industries, 
non-profit organisations, advisors, and academics from across 
the developed and developing world. Its aim is to accelerate 
change towards low-carbon energy systems that enable robust 
economic development and limit the rise in global temperature 
to well below 2 ˚C and as close as possible to 1.5 ˚C. 
He is a businessman, academic and former chairman of 
the Financial Services Authority. He has chaired the Pensions 
Commission, the Low Pay Commission, and the Committee 
on Climate Change in the UK. During his time at McKinsey 
(1982-1995) he built McKinsey’s practice in Eastern Europe and 
Russia (1992-1995). From 1995-1999, he was director general 
123

---

of the Confederation of British Industry and vice chairman 
Thereby he helps his clients in the transport, industrial and energy 
of Merrill Lynch Europe from 2000-2006. He was also non-
sector develop and implement decarbonisation strategies. In 
executive director of a number of companies, including Standard 
addition, Bernd is a member of the leadership team of McKinsey’s 
Chartered plc, and currently holds this position at OakNorth and 
automotive sector.
Prudential plc. As well as being chairman of the Institute for New 
Economic Thinking, Adair is a visiting professor at the LSE and 
Markus Wilthaner is an Associate Partner in the Vienna office 
Cass Business School.
and a member of McKinsey’s Center for Future Mobility, where 
he leads the Hydrogen and Battery Teams. He brings his deep 
expertise to clients in automotive, power, oil and gas, and cleantech 
Baroness Worthington is the Executive Director of 
to master the complex challenges arising from the energy and 
Environmental Defense Fund Europe. She was appointed a life 
mobility transition. He holds an MA from Johns Hopkins SAIS 
peer to the British Parliament’s House of Lords in 2011. She is a 
and a MSc from the Vienna University of Technology.
leading expert on climate change and energy policy and carbon 
trading. She recently served as the Shadow Minister for Energy 
Alessandro Agosta, Partner in the Milan office, leads the 
and Climate Change in the House of Lords, leading on two 
development of McKinsey’s natural-gas knowledge, helping to 
Energy Bills for the Shadow Ministerial team. In 2006, Bryony 
build a distinctive perspective on gas-market discontinuities, the 
helped launch a Friends of the Earth campaign for a new legal 
role of natural gas in the energy transition, and LNG, and serves 
climate framework, which led to her selection as a lead author on 
clients globally on their most complex strategic challenges.
the United Kingdom’s Climate Change Act. In 2008 Bryony then 
founded the Sandbag Climate Campaign, a group dedicated to 
scrutinising the EU’s Emissions Trading Scheme. 
Bryony also worked for the UK’s Department for Environment, 
Food and Rural Affairs and worked for energy company Scottish 
and Southern Energy, advising them on sustainability issues.
Luigi Crema is Head of Applied Research on Energy Systems 
(ARES unit) at the Fondazione Bruno Kessler. The Fondazione 
Bruno Kessler is a leading Italian non-profit research institute, 
founded more than 50 years ago. It aims to achieve excellence 
in science and technology, with particular emphasis on 
interdisciplinary approaches and applications.
Bernd Heid, Senior Partner in the Cologne office, leads McKinsey’s 
global Hydrogen Service Line, focusing his work on hydrogen 
mobility and alternative powertrain solutions including fuel cells. 
124
125

---

Glossary
Adapted from the National Academy of Sciences Energy Glossary
AC
Alternating current.
British thermal unit
A unit of measure for the energy content of fuels. One Btu is the amount of 
energy needed to raise the temperature of a pound of water by 1 °F.
Carbon capture and storage (CCS)
The act of capturing gaseous carbon, usually in the form of CO2, and placing it 
into a stable carbon store such as a disused oilfield.
Carbon dioxide (CO2)
A colourless, odourless, non-poisonous gas consisting of one carbon and two 
oxygen atoms. A by-product of fossil fuel combustion and other industrial 
processes, it is a greenhouse gas because it traps infrared energy radiated from 
Earth within the atmosphere. CO2 is the largest contributor to human-induced 
climate change.
Carbon tax
An approach to limiting emissions by establishing a tax on goods and services 
based on the amount of carbon released in their creation and delivery.
Climate change
The process of shifting from one prevailing state in regional or global climate 
to another. Climate change is a less narrow term than global warming because 
it encompasses changes other than rising temperature.
Electric vehicle (EV)
A vehicle powered entirely by electricity stored in on-board batteries. Batteries 
are recharged by plugging them into an electricity source while the vehicle is 
parked.
Energy
The capacity for doing work; usable power (as heat or electricity); the resources 
for producing such power.
127

---

Energy content
Grid
The total amount of energy stored within a given quantity of fuel.
The network connecting electricity producers to consumers. The boundaries 
of the grid can be drawn differently but may include electricity generators, 
Energy conversion
high power transmission wires, lower power distribution wires, and end users 
The transformation of energy from one form to another. For example, when 
such as homes and businesses as well as the regulatory and market structures 
coal (chemical energy) is burned, it produces heat (thermal energy) that is then 
that affect electricity transactions. The grid is a physical infrastructure 
captured and used to turn a generator (mechanical energy), which produces 
transmitting electricity and is also an economic entity that responds to supply 
electricity (electrical energy).
and demand communicated through prices.
Energy efficiency
Hydrogen fuel cell
A measure of how much energy is needed to provide by an end use. Higher 
An emerging technology that uses hydrogen and oxygen to generate electrical 
energy efficiency is exemplified in a wide variety of applications—from 
current, giving off only water vapour as a by-product.
improved lighting and refrigeration to less energy-intensive industrial and 
manufacturing processes.
Intermittent energy source
An energy source characterized by output that is dependent on the natural 
Fossil fuels
variability of the source rather than the requirements of consumers. Solar 
Fuels formed in the Earth’s crust over millions of years from decomposed 
energy is an example of an intermittent energy source since it is only available 
organic matter. The most widely known fossil fuels are petroleum (oil), coal, 
when the sun is shining. Wind is also an intermittent energy source.
and natural gas.
Kilowatt
Gigawatt
One thousand watts, a watt being a unit of measure of power, or how fast energy 
One billion watts, a watt being a unit of measure of power, or how fast energy 
is used. Kilowatts are typically used to describe intermediate quantities of 
is used. Gigawatts are typically used to describe very large quantities of power, 
power, such as power usage in a home.
such as the power carried by a major section of a national electrical grid.
Kilowatt hour (kWh)
Global warming
A unit of measure for energy, typically applied to electricity usage. It is equal to 
Earth’s rising average near-surface temperature. Although such fluctuations 
the amount of energy used at a rate of 1000 watts over the course of one hour. 
have occurred in the past due to natural causes, the term is most often used 
One kWh is roughly equal to 3,412 British thermal units (Btu).
today to refer to recent rapid warming. Scientists have concluded that this 
is almost certainly due to the increase in human-generated greenhouse gas 
Megawatt
concentrations in the atmosphere.
One million watts, a watt being a unit of measure of power, or how fast energy 
is used. Megawatts are typically used to describe large quantities of power, 
Greenhouse gas
such as the power output of an electrical generating plant.
A gas which, like a greenhouse window, allows sunlight to enter and then 
prevents heat from escaping – in this case, from Earth’s atmosphere. The most 
common greenhouse gases are water vapour, carbon dioxide (CO
Mtoe 
2), methane 
(CH
Million tonnes of oil equivalent.
4), nitrous oxide (N2O), halocarbons, and ozone (O3).
128
129

---

Natural gas
Smart grid
A gas mixture that occurs naturally in underground deposits. It is composed 
An electric grid that is able to use two-way communication and computer 
mainly of methane and may contain other hydrocarbons, carbon dioxide and 
processing to provide increased reliability and efficiency. Smart grids may be 
hydrogen sulfide. Commonly employed as a fuel for electricity generation, it is 
able to automate and control more functions than the current electric grid.
also used for space heating, industrial processes, and as a starting material for 
the manufacture of chemicals and other products.
Smog
A photochemical haze that is produced when sunlight reacts with hydrocarbons 
Particulate matter
and nitrogen oxides in the atmosphere. Mainly caused by excess automobile 
Extremely small particles of solid or liquid droplets suspended in either a 
exhaust, it is a form of air pollution that can be threatening to human health.
liquid or gas. Particulate matter is a common emission from the combustion 
of fossil fuels and can increase the risk of health problems. Examples include 
Solar energy
dust, smoke, aerosols, and other fine particles.
Radiant energy from the Sun.
Photovoltaic (PV) cell
Sustainability
Sometimes referred to as a solar cell, a device that utilises the photoelectric 
Sustaining the supply of energy and materials needed to support current levels 
effect to convert incident sunlight directly into electricity. This can be 
of consumption, making them available where most needed, and addressing 
distinguished from solar thermal energy, which is sometimes used to create 
the environmental problems resulting from their extraction, consumption, 
electricity indirectly.
and disposal.
Plug-in hybrid electric vehicle (PHEV)
Syngas
A mixture of carbon monoxide, hydrogen, and sometimes other gases that can 
A vehicle that contains a gasoline powered engine as well as batteries that can 
react to form higher hydrocarbons, natural gas, or methanol. Syngas is short 
be charged when plugged into an electric power source. The vehicle typically 
for synthesis gas.
runs on battery power until the charge has been depleted and then uses the 
gasoline engine for extended range.
Watt (W)
A unit of measure for power, or how fast energy is used. One watt of power is 
Primary energy
equal to one ampere (a measure of electric current) moving across one volt  
Energy that has not undergone transformation to another form. This may 
(a measure of electrical potential).
include fuels such as natural gas or oil, or other forms such as solar or wind 
energy.
Wind farm 
A collection of wind turbines used to generate electricity. 
Renewable energy resource
An energy source that is naturally replenished. Examples include biomass, 
wind, geothermal, hydro and solar energy.
Secondary energy resource (or source)
A source of energy that is dependent on a primary source of energy for its power. 
As the production of electricity depends on the use of fossil fuels, nuclear 
power or renewable sources, it is referred to as a secondary energy source. 
 
130
131

---

Appendix 1. Bite-size climate science
Global average temperatures are now about 1 °C higher than they were 
a century ago. That figure comes from thousands of local temperature 
records, and in recent decades from satellite data (checked against 
ground-based weather stations).
This is a very sudden change. Scientists can trace past temperature 
by analysing the chemistry of tree rings, ice cores, corals and ocean 
sediments. The recent rise is bigger than any changes over the past 
10,000 years, and seems to be faster than anything for millions of years.
Natural climate variations – for example from changes in solar 
activity and the Earth’s orbit, volcanic eruptions and ocean circulation 
– are all too small to explain this jump in temperature. It is almost 
certainly due to human activity38.
Since the industrial revolution, we have been injecting extra CO2 
into the air, mainly by burning fossil fuels and cutting down forests. 
Along with other greenhouse gases including water vapour, CO2 helps 
to keep the Earth warm by trapping solar heat. Without it, we would 
freeze. But with too much, we will boil. The concentration of CO2 has 
now built up to about 410 parts per million, far higher than at any time 
in the last 800,000 years at least, and it is still rising rapidly.
More bad news is that the Earth has inertia. The oceans have been 
acting as a sponge, absorbing both CO2 and heat. This has kept the 
atmosphere cooler that it would otherwise have been; but it will catch 
up with us. Even if emissions stopped tomorrow, temperatures would 
keep rising, by about another 0.5 degrees. 
So you don’t need a sophisticated climate model to work out 
that the future is likely to be warmer still. Of course we do have 
sophisticated climate models, based on the known physics of the 
atmosphere and oceans. There are gaps in our knowledge, but models 
are constantly being tested against observations, and according to 
the Intergovernmental Panel on Climate Change, there is very high 
confidence that models reproduce long-term trends in temperature. 
Models confirm the picture, predicting warming by roughly 
 
4 degrees in 2100 if emissions are unrestrained. That would probably 
be catastrophic, making large areas of the planet uninhabitable, with 
133

---

far more extreme droughts, heatwaves, rainstorms and hurricanes, 
Appendix 2. How hydrogen works
and sea levels inexorably rising. Four degrees would probably take us 
past climate tipping points; irreversible changes such as the Amazon 
Hydrogen, the element, was created during the Big Bang. The 
rainforest drying out and dying off, the Greenland and the West 
first, simplest and lightest element in the periodic table accounts 
Antarctic ice sheets collapsing (bringing a total sea level rise of more 
than 10 metres, albeit over a few centuries), and perhaps worst of all, 
for 75% of all the conventional matter in the universe. Chemically 
tundra and marine sediments releasing huge amounts of the potent 
combined with oxygen, it is the main component of water (H2O), 
greenhouse gas methane, heating the planet further.
which covers three quarters of Earth’s surface and makes up 
So four degrees would be very bad. What would be good, or at least 
around 60% of our bodies. Hydrogen, which means water-forming 
acceptable? There is no exact answer, but the consensus is that we 
in Greek, is colourless, odourless and so light that it can escape 
should try to stay below two degrees (ideally, well below), to avoid highly 
the world’s gravitational pull and shoot off into space, which is 
dangerous warming. That means a tight budget on further emissions, 
why on our planet you usually find it bound with other elements 
allowing us only about another 700 billion tonnes of CO2, which is  
in bigger molecules. When we refer to hydrogen in the context of 
17 years worth at the current rate. 
the energy transition, we mean a molecule made of two atoms of 
hydrogen (H2), usually in gaseous form. 
Production
Electrolysis of water
In this process, which was invented by two British chemists in 
1800, electricity is used to split water into hydrogen and oxygen. 
This reaction takes place in a unit called an electrolyser, with 
two noble-metal-coated electrodes, separated by a conductive 
substance called electrolyte or a membrane.
There are 3 types of electrolyser, differentiated by the electro-
lyte type with different maturity levels. Alkaline electrolysers are 
the most common and robust, with well-developed cost models 
as they have existed for several decades. The production of 
hydrogen occurs in a strongly basic aqueous electrolyte, allowing 
the use of low-cost catalysts coating the electrodes (nickel, zinc) 
and electrode material (steel).
Electrolysers with proton exchange membrane (PEM) have 
been known for several years. They have technical advantages 
38 https://iopscience.iop.org/article/10.1088/1748-9326/11/4/048002
such as a higher achievable current density and a low electrical 
134
135

---

resistance. A PEM electrolyser uses an ionically conductive solid 
The reaction can be achieved by heating methane to 1200 °C (or 
polymer membrane. However, they require more expensive 
700 °C using specific materials), but this process is very sensitive 
catalysts such as iridium and platinum.
to sulphur contamination. To avoid that problem, decomposition 
Solid oxide electrolysis cells (SOECs) work at a high 
by plasma is being investigated. This could make the reaction 
temperature (800 °C) and have the best efficiency of electric-
happen at ambient temperature, but the energy required for 
hydrogen conversion with a ceramic electrolyte. However, this 
the high energy electrons gives an efficiency of only about 50 to 
is still a young technology, with only some prototypes and 
60%. Moreover, the hardware is sophisticated, requiring vacuum 
demonstrators operating.
technologies and plasma generators.
The economics of the process depend on generating high-value 
Reforming
solid carbon such as graphene or nanotubes, and the technology 
This is the most widely used technology for making large 
still needs a lot of investment in R&D.
volumes of hydrogen, by extracting it from natural gas or other 
fossil fuels. Steam methane reforming (SMR) and autothermal 
Extraction from oil fields
reforming (ATR) exploit reactions between hydrocarbons (mainly 
In August 2019, Canadian engineers announced a method of 
methane) and water vapour at high temperatures, generating 
extracting hydrogen from oil sands and oil fields, which they say 
hydrogen and CO
will be cheap and environmentally friendly. They inject oxygen, 
2.
In a typical SMR reactor, the reaction heat is supplied 
which raises the temperature and releases hydrogen. It could be 
externally by the additional combustion of additional fuel gas 
used on the remnants of oil in abandoned fields, or on working 
(methane); in an ATR reactor, combustion takes place inside the 
fields to extract hydrogen instead of oil, leaving the carbon 
reactor. SMR requires conversion temperatures between 500 °C 
underground. This could produce hydrogen for between $0.10 
and 900 °C; ATR requires 900-1150 °C. Between 10 and 15 kg of 
and 0.50, according to Grant Strem, CEO of Proton Technologies, 
CO
which is commercialising the process. Field testing is still needed.
2 is emitted per kg of H2 produced (for comparison, the coal 
gasification process produces between 18 and 25 kg of CO2 for 
each kg of H
Power-to-Liquids
2).
If carbon capture is used, the quantity of CO2 that can be 
Power-to-Liquids (PtL) is a production pathway for liquid 
captured varies between 60% to 90%. ATR has the potential for  
hydrocarbons based on hydrogen and CO2 as resources.
> 90% capture, because its exhaust gases have a high concentration 
There are two principle pathways to produce renewable PtL 
of CO
jet fuel:
2.
 
■ Fischer-Tropsch (FT) synthesis and upgrading.
Methane cracking
 
■ Methanol (MeOH) synthesis and conversion.
A less developed technology, methane cracking can produce 
PtL production comprises three main steps: 
low-carbon hydrogen without the problem of gaseous CO2 
 
■ Hydrogen production from renewable electricity using the 
capture and storage. It is based on the decomposition of methane 
electrolysis of water.
into gaseous H2 and solid carbon. 
 
■ Provision of renewable CO2 and conversion.
136
137

---

 
■ Synthesis to liquid hydrocarbons with subsequent 
majority managed by hydrogen producers. The longest hydrogen 
upgrading/conversion to refined fuels.
pipelines are located in the USA, in particular Texas and Louisiana.
For long distances, over 4000 km, carrying liquid hydrogen in 
tankers remains one of the most promising options. In a tanker 
Transportation
carrying 9000 m3 this would cost about $1.8 to 2/kg for 100 km. 
Ships could use fuel cells for propulsion.
There are various ways to transport hydrogen:
For long-distance transport and storage, ammonia and 
 
■ Blend with natural gas so it can be carried in the existing 
LOHC are candidates. The hydrogen is transformed into another 
natural gas grid. This has the advantage of being based on 
substance (eg. ammonia) before shipping and is then regenerated 
existing infrastructure, limiting the investment needed 
close to the delivery point. This reduces yield but transportation 
– although some sensitive grid auxiliaries or final uses 
would be cheaper and is known to be reliable – the global 
cannot accept a hydrogen blend above a threshold. It also 
ammonia supply chain handles hundreds of thousands of tons 
faces standards and regulation issues. Gas transmission 
of NH3 per day.
system operators are working on solutions to overcome 
these limitations.
Storage
■  Pump pure hydrogen gas. This would require new 
infrastructure or investments to adapt the existing 
infrastructure.
This falls into two categories: centralised storage for seasonal 
timescales, and distributed short-term storage.
 
■ Move compressed or liquefied hydrogen in tanks.
Seasonal storage involves huge amounts of hydrogen, and 
 
■ Use hydrogen carriers such as ammonia or liquid organic 
the only solution is centralised, underground reservoirs. Former 
hydrogen carrier (LOHC).
salt mines could provide the volume required. Depleted gas or 
To move pure hydrogen in small and medium quantities, 
oil fields are not as suitable due to contamination from residues, 
the best solution is cylinders or tanks. For short distances 
including sulphur-based compounds and hydrocarbons, although 
compressed hydrogen is suitable, with transport costs about 
they could be used if extracted gas is then purified. Underground 
$0.5 to 2/kg for 100 km. For longer distances liquid hydrogen in 
storage should have quite low costs, depending on the specifics of 
cryogenic tanks is more economical, costing about $0.3 to 0.5/
the site, roughly between $10 and 15 per MWh capacity.
kg for 100 km.
For intra-day timescales, distributed storage could be placed 
For large quantities, the distance is again critical. Under 4000 
close to locations with high hydrogen consumption to absorb 
km, building a dedicated hydrogen transport network would be 
peak demand. This could be done within gas transmission and 
the best option (about $0.1 to 1/kg for 100 km) despite the high 
distribution lines, or using silos or tanks at nodes of the gas network. 
initial investments ($0.2-1 million/km). It is possible to create local 
Large vertical cylinders at 50-80 bar would mean compression is 
transport networks (micro-networks) or regional ones. Globally 
not necessary for introducing gas to the transmission network. A 
in 2016 there were more than 4500 km of hydrogen pipelines, the 
400 kg cylinder costs about $210,000, which means an investment 
138
139

---

of $13/kWh. Alternatively, tanks in steel or composite materials, 
There are a lot more electrode combinations than for 
with H2 at pressures up to 430-500 bar, would be more capital 
electrolysers, allowing fuel cells to work with other fuels, but for 
intensive, between $63/kWh and $85/kWh.
hydrogen the main technologies are proton exchange membrane, 
solid oxide, and alkaline.
A proton exchange membrane fuel cell (PEMFC) is based on the 
Uses
exchange of protons (positive hydrogen ions). Hydrogen injected on 
one side (anode) is oxidised, producing protons and electrons (2H2 → 
Combustion 
4H+ + 4e–). Protons pass through the membrane to the other side of the 
Hydrogen can be burned directly in boilers or to drive 
cell while electrons move from the anode to the cathode generating 
turbines. The first commercial gas turbines have been developed 
the current. On the other side (cathode) oxygen is injected. It combines 
for producing electrical power directly from pure hydrogen or 
with protons arriving through the membrane, and the electrons that 
from mixtures. Some turbine systems on the market, such as 
have provided current, to form water (O2 + 4H+ + 4e- → 2H2O).
the Enel plant near Venice, can use natural gas mixed with up 
In a solid oxide fuel cell, the principle is the same but the 
to 50% hydrogen. Several companies are also developing burners 
electrolyte is a ceramic, and instead of protons it lets negative 
compatible with pure or mixed hydrogen, to provide boilers for 
oxygen ions through. On the anode side, hydrogen is still 
domestic use.
injected and oxidised to produce protons and electrons; the 
The combustion of hydrogen, when compared with that 
electrons move to the cathode side and react with the oxygen 
of fossil fuels, also presents problems, such as the difficulty of 
to produce oxygen ions that pass through the solid oxide to 
detecting the flame and the high speed of flame propagation. 
combine with hydrogen on the other side. Solid oxide cells 
operate at very high temperature to increase the conductivity of 
Fuel cells
the electrolyte. Due to this high temperature, start-up and shut-
Fuel cells are the opposite of electrolysers: recombining 
down procedures are very time-consuming, so these devices 
hydrogen and oxygen to generate power. 
are not as flexible as PEMFC, making them unsuitable for 
The principal applications are for vehicles – powering cars, 
vehicles, where demand can change rapidly. But solid oxide cells 
buses, trucks, trains, ships and maybe planes and whatever the 
are extremely interesting for stationary uses because they have 
exciting future brings – and for small-scale electricity generation.
higher efficiencies than PEMFC. The development of low-cost 
They are based on two bipolar plates, one distributing oxygen 
materials (especially interconnections) with high durability at 
and the other evacuating water. Two electrodes allow the electric 
high temperatures is the key technological challenge.
current to circulate, and a membrane serves as an electrolyte 
Alkaline fuel cells (AFCs) use a liquid electrolyte (generally 
allowing ion exchange. The reactions take place in what is 
potassium hydroxide or KOH). At the anode hydrogen combines 
commonly called a stack that can produce only a low voltage 
with hydroxyl ions, while at the cathode oxygen reacts with 
(linked to the potential of the electrochemical reaction exploited). 
water producing hydroxyl ions. The biggest disadvantage of this 
The challenge is to put many stacks together to generate a high 
technology is that it needs pure oxygen (while others can use 
enough voltage. 
air) to avoid contamination of the electrolyte solution with CO2.
140
141

---

Other comparatively minor applications take the overall sector 
Industry
demand to 46 million tonnes, or 40% of total hydrogen demand.
Ammonia (NH3) is obtained on a large scale by the Haber-
Industrial applications account for about 98% of global 
Bosch process, which combines hydrogen and nitrogen together 
hydrogen consumption, about 115 million tonnes per year. Around 
directly. Nitrogen is obtained by low-temperature separation 
70 million is in pure form, mostly for oil refining and ammonia 
of air, while hydrogen originates today from natural gas steam 
manufacture for fertilisers. It is almost entirely supplied from 
reforming. Around 80% of ammonia is used to make fertilisers, 
natural gas, coal and oil, generating considerable greenhouse gas 
such as urea and ammonium nitrate. 
emissions. The remaining 45 million is used in industry without 
Methanol (CH3OH) is produced by catalytic hydrogenation 
prior separation from other gases. 
of carbon monoxide. Methanol is used to produce several other 
The top three uses are oil refining (33% of total consumption), 
industrial chemicals, and to produce gasoline from both natural 
chemicals (40%), and steel production via the direct reduction of 
gas and coal. 
iron ore (3%), with many more uses including food processing.
The chemicals industry also generates by-product hydrogen, 
but the vast majority of hydrogen that the sector consumes is 
Oil refining
produced from fossil fuels.
Turning crude oil into various end-user products such as 
 
transport fuels and petrochemical feedstock uses 38 million 
Metals
tonnes of hydrogen per year, or 33% of the total global demand. It 
About 4 million tonnes of hydrogen is used as a reducing agent 
is consumed as feedstock, reagent and energy source. 
in the metals industry, in particular for iron and steel production. 
Hydrogen is mainly used to remove sulphur and other 
The blast furnace-basic oxygen furnace method accounts for 
impurities from crude oil, and to upgrade to refined fuels, including 
about 90% of primary steel production globally. Blast furnaces 
gasoline and diesel, through the processes of hydrotreatment and 
produce hydrogen as a by-product of coal use in a mixture known as 
hydrocracking. 
works-arising gases (WAG), which includes carbon monoxide. WAG 
Today refineries remove around 70% of the naturally occurring 
is used for various purposes on site, and also transferred for use in 
sulphur from crude oils. With concerns about air quality 
other sectors including power generation and methanol production. 
increasing, there is growing regulatory pressure to further lower 
The direct reduction-electric arc furnace method accounts for 
the sulphur content in final products. And refineries’ existing 
7% of primary steel production. It uses a mixture of hydrogen and 
large-scale demand for hydrogen is set to grow. 
carbon monoxide as a reducing agent. Here, hydrogen is produced 
in dedicated facilities, around 75% by natural gas reforming and 
Chemicals
the rest by coal gasification. 
Hydrogen is part of the molecular structure of almost all 
industrial chemicals, but only a few primary chemicals require 
large quantities of hydrogen feedstock. Ammonia production uses 
31 million tonnes of hydrogen per year; methanol 12 million tonnes. 
142
143

---

Appendix 3. The world of green gas
Natural gas with CCS counts as almost carbon neutral, given 
high post-combustion capture rates.
The good thing about a clean gas that is chemically identical 
Hydrogen, whether from renewable power or fossil fuels with 
to natural gas is that it allows you to decarbonise sectors that 
some sort of carbon capture, is just one of the renewable and low-
currently run on natural gas without changing anything at all 
carbon gases available.
except for the source of the gas itself. The downside is that to be 
Others include biogas and biomethane, which are renewable 
gases made from agricultural or urban organic waste, through 
sustainable – not without competing with food – production of 
either anaerobic digestion or gasification; biosyngas, which is 
biogas, biomethane and biosyngas is constrained by how much 
synthetic gas made from renewable hydrogen and CO
agricultural and urban waste there is.
2 released 
from natural processes (a process called methanation) and low-
Meanwhile, while swapping existing fuels with hydrogen will 
carbon natural gas, which is made by capturing the CO
require investments over and above the production of hydrogen, 
2 from 
natural gas after it has been combusted.
the advantage is that it is theoretically infinite and also hugely 
Biomethane and biosyngas are chemically identical to natural 
scalable, so production costs will likely come down to a level 
gas (CH
which makes it competitive even accounting for the additional 
4); while biogas needs additional upgrading to be injected 
into the gas grid.
investments it requires.
The bio contingent (biomethane and biogas) count as carbon 
The precise combination of low-carbon gases in final 
neutral because burning them emits carbon that the plants 
consumption will differ region by region.
would have emitted anyway as they rotted. 
Areas of the world with lots of wind and sun (or cheap fossil 
fuels and room to store CO2) will probably turn up the dial on 
hydrogen, while agricultural areas will have a greater availability 
of biomethane.
In addition, areas of the world with plastic pipes in their 
gas networks, like the UK, may see hydrogen as a good option 
for heating homes, while in other areas biomethane may be the 
preferred clean gas.
The choice of fuels will also depend on what else is being done 
in the vicinity, in terms of consumption and production.
For example, retail consumption that is close to an industrial 
“hydrogen cluster” will probably use existing infrastructure 
for hydrogen. Where they would need to provide the aggregate 
demand to justify new infrastructure, it may be more of 
a biomethane market. The synergies in the production of 
biomethane and biosyngas may also support the methanation of 
hydrogen in areas where biomethane is produced.
144
145

---

Hydrogen-assisted biomass-to-methane processes. Biomass-
Appendix 4. Electrolyser maths
based technologies can be coupled with hydrogen-based 
conversion technologies to achieve higher biomass energy 
conversion efficiencies and a more sustainable land use at a lower 
overall costs.
H2-enriched biomethane plant. Biogas (a mix of CO2 and CH4) 
from anaerobic digestion can be enriched with electrolytic H2 and 
fed into a methanator to produce a bio – synthetic natural gas 
(Bio-SNG). With respect to a non-hydrogen coupled production 
process, this has the advantage of achieving at the same time a 
higher CH4 yield, a higher energy efficiency as the waste heat from 
the electrolyser can be recycled into the digestor, and substantial 
capital cost saving.
H2-enriched biomass gasification plant. Biomass gasification 
plants can produce almost any type of synthetic fuel through 
the intermediary production of syngas, which can be enriched 
with electrolytic H2 and fed into a methanator to produce Bio-
SNG. Both the oxygen co-produced and the waste heat from 
the electrolyser can be recycled into the gasification process to 
enhance its efficiency.
H2-enriched sewage fermentation plant. Sewage plants and 
landfill sites emit large amount of CO2 during fermentation, 
which can be fed together with H2 into a methanator. Oxygen 
from the electrolyser and the waste heat from the methanator 
and/or electrolyser can be recycled to enhance the fermentation 
process performance. 
146
147

---

Appendix 5. A Nobel approach
Bibliography
 
Leonardo Maugeri, Con tutta l’energia possibile, Sperling & Kupfer, 2011
Jeremy Rifkin, The Hydrogen Economy, Polity Press, 2004
Daniel Yergin, The Prize, the Epic Quest for Oil, Money and Power, Simon 
& Schuster, 2008
Agence Internationale de l’énergie, World Energy Outlook 2017, 2017
Malcolm Gladwell, The Tipping Point, How Little Things Can Make a Big 
Difference, Black Bay Books, 2013
Dieter Helm, Burn Out: The Endgame for Fossil Fuels, Yale University 
Press, 2017
Gabrielle Walker, Antarctica: An Intimate Portrait of the World’s Most 
Mysterious Continent, Bloomsbury Paperbacks, 2013
Gabrielle Walker, The Hot Topic: What We Can Do About Global Warming, 
Bloomsbury Publishing LPC, 2008
Gabrielle Walker, An Ocean of Air: A Natural History of the Atmosphere, 
Mariner Books, 2008
Gabrielle Walker, Snowball Earth, Bloomsbury Publishing LPC, 2004
Peter Hoffmann, Tomorrow’s Energy: Hydrogen, Fuel Cells, and the 
Prospects for a Cleaner Planet, MIT Press, 2012
IRENA, Global Energy Transformation: A roadmap to 2050, International 
Renewable Energy Agency, 2019
Hydrogen: The Economics of Production From Renewables, Bloomberg 
New Energy Finance, 2019
IEA,  The Future of Hydrogen: Seizing Today’s Opportunities, report 
prepared by the IEA for the G20 Japan, 2019
Mission Possible: Reaching Net-Zero Carbon Emissions from Harder-to-
Abate Sectors by Mid-Century, Energy Transitions Commission, 2018
Gas for Climate: The Optimal Role for Gas in a Net-Zero Emissions Energy 
System, Navigant, 2019
Thierry Lepercq, Hydrogen is the New Oil, Le Cherche Midi, 2019
148
149

---

Acknowledgements 
I would like to thank Fatih, Gabrielle, Bryony, Adair, Luigi and 
the McKinsey team for their timely insights, encouragement and 
contributions.
Special thanks go to Camilla, Salvatore and to the whole of the Snam team, 
who have helped to shape the thinking and the analysis in this book. 
Tom, Stephen, Carolina and the other members of the Hydrogen Book 
Club – thank you for your hard work this summer and for helping to 
meet what looked like an impossible deadline.
A very special thank you also to Selvaggia, Lipsi and Greta who accepted 
more than their fair share of hydrogen during our summer and who 
inspire and support my work on the energy transition.
 

---

This volume is a Snam editorial project
Editing and layout Studio Queens s.r.l.
Graphs by Matteo Riva
© 2019 Mondadori Electa S.p.A., Milano
All rights reserved
www.electa.it
No part of this publication may be reproduced,
stored in a retrieval system, or transmitted
in any form or by any means, including
electronic, mechanical, photocopying, recording,
or otherwise, without the prior consent of the publishers.
ISO 9001
Mondadori Electa S.p.A. is certified for the Quality
Management System by Bureau Veritas Italia S.p.A.,
in compliance with UNI EN ISO 9001.
This book respects the environment
The paper used was produced using wood from forests managed
to strict environmental standards; the companies involved
guarantee sustainable production certified environmentally.
This volume was printed at
Elcograf S.p.A., Cles (Trento)
Printed in Italy

---