Hydrogen, an enabler for deeper decarbonation of the energy mix?


Hydrogen, an enabler for deeper decarbonation of the energy mix?

04 Apr, 2019

The growing importance of hydrogen for the smart city of tomorrow.

To remain within the global warming limit of two degrees Celsius set at the COP21 in Paris, the world needs to decrease energy-related CO2 emissions by 60 % by 2050 from 34 GT in 2015 to 13 GT in 2050, and the share of renewable energy sources must triple from 23 % today to roughly two thirds of power generation. Such a level of renewable energy in the systems will create major challenges in matching power supply and demand.

An energy carrier to match supply and demand

Transferring green electrons produced from renewable energy sources to final uses will require a flexible energy carrier to address challenges associated to an energy system dominated by renewables:
  • an energy carrier that acts as a buffer and bridges the gap between intermittent power supplies and demand (power storage). Short term electricity storage in batteries for small plants is developing dynamically, however longer term storage of larger surplus amounts of electricity requires new types of storage, such as chemical storage in the form of hydrogen
  • an energy carrier that enables large-scale renewable energy integration in the transportation, buildings and industrial sectors
  • an energy carrier that permits efficient distribution of renewable energy across production and consumption regions
  • an energy carrier than can be used to decarbonize natural gas grids, which hydrogen can do in three ways: it can be blended with natural gas, methanized, or used in its pure form.

Hydrogen as an energy carrier

Hydrogen obtained by electrolysis using electricity produced from renewable sources of energies is CO2 free and is one key solution to these challenges. If there is a corresponding energy demand, hydrogen can fulfill it directly but it can also be transported and stored. In terms of applications, hydrogen can be used as an energy carrier in different sectors, including transportation and buildings/stationary applications as well as in the industry (refining industry, steel production, fertilizer production). When converted back to power through fuel cell technologies, emissions are limited to water molecules only. Generally speaking, technologies for decarbonized hydrogen production and conversion to power are mature and already used, albeit still at low scale, in the transportation and buildings sectors. Pilot projects are being developed in the industry.

What now?

Hydrogen can play – and has already started to play – an increasing role in the energy transition. It will certainly end up representing a significant share of the energy mix in the decades to come. The industry has now to bring costs down across the value chain through scale in order to accelerate the momentum and consumer acceptance. In other words break the classic chicken-and-egg, which will be achieved by an increasingly favourable policy framework, growing investments flows, and decreasing costs of renewable power – which in many cases is already competitive with electricity generated from traditional fossil fuels.

As a financial actor actively engaged in the energy transition, BNP Paribas is committed to the development of decarbonized hydrogen solutions across the value chain – a must for the integration of renewable energies up to a level sufficient to achieve deep decarbonation and approach climate objectives.

This article was first published by BNP Paribas Switzerland. 

Head of Energy sector, BNP Paribas Specialized Trade Solutions
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