Not all hydrogen is created equal. To the end user, hydrogen produced by any method is functionally the same. The difference is that different production methods result in different levels of CO2 emissions, and low or zero emission hydrogen is necessary to meet climate targets. Different methods of hydrogen production are labelled with colours. These colours are:
The ‘market leading’ production methodology by volume of hydrogen produced is grey hydrogen. Grey hydrogen is produced by steam methane reformation of natural gas and is most commonly used as an industrial feedstock. There are significant CO2 emissions associated with this method of production.
Brown hydrogen is produced by gasification of coal. Here hydrogen is produced as part of, and separated from, a mixture known as syngas. Significant carbon waste is also associated with this process.
Blue hydrogen refers to the production of hydrogen by steam reformation of natural gas (like grey hydrogen), albeit with carbon capture and storage (CCS). Many grey hydrogen facilities can be retrofitted with carbon capture technology and existing CCS projects near oil and gas fields can accommodate additional captured carbon (though CCS capacity would have to scale drastically for blue hydrogen production to grow rapidly in volume). It is likely that blue hydrogen production will become economically prudent versus that of grey hydrogen as the cost of emitting carbon under exchange traded and taxation schemes increases in the future.
Green hydrogen refers to hydrogen produced via electrolysis where the input energy is sourced from renewable generation. Hydrogen for industrial decarbonisation and transport applications is likely to be green in future. Green hydrogen production is a fast growing sector, promoted aggressively by both public and private investment. The EU has set targets for 6 GW of electrolyser capacity by 2024 and 40 GW of electrolyser capacity by 2030. Green hydrogen is the only production mechanism for hydrogen where it is possible to completely eliminate CO2 emissions.
Pink hydrogen is arguably a subset of green hydrogen (depending on whether you believe nuclear is a form of sustainable/renewable generation). Here hydrogen is electrolysed using energy sourced from nuclear generation.
Yellow hydrogen is a subset of green hydrogen where hydrogen is electrolysed using energy sourced from solar generation.
Going forward, the provenance of hydrogen will be important to users and off takers and certification will likely be required to prove that hydrogen is low or zero carbon.
The cost of hydrogen is sensitive to both the production technology used and the geography that hydrogen is produced in. Producers/developers and off-takers/users all need visibility of the cost drivers affecting price of hydrogen as it becomes commoditised.
Altroleum provides daily hydrogen production cost assessments with the highest temporal and spatial granularity on the market. Altroleum covers all of the well established production technologies (SMR, SMR w/ CCS, AEM, PEM) and covers geographies across Europe and North America.
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