Opinion: Hydrogen blues

Hydrogen is once again the fuel of the future, but whether this is its last chance may depend on the oil industry

Everybody agrees that hydrogen has a role to play if the world is to achieve the ambitious goals of the Paris climate deal. Yet nobody is sure what that role might be. The oil and gas industry hopes to prolong the economic life of stranded assets by converting gas into so-called "blue" hydrogen on an industrial scale, where the CO2 by-product is captured and stored. But critics argue that only "green" hydrogen, produced from electrolysis using renewable power, should be allowed.

Hydrogen's advantages and disadvantages as a fuel are well understood. It has long been touted as a potential solution to the world's energy problems, either as a combustion fuel or as a source of power in a fuel cell. It was used for street lighting before electricity, and hydrogen fuel cells helped put the first man on the moon. But it is a difficult and dangerous commodity to handle and expensive to make, so never realised its potential. Now hydrogen is finally gaining traction as a potential low-carbon substitute — especially for energy-intensive processes, long-haul shipping and even aviation, which are difficult to decarbonise by other means — and as a storage complement to unpredictable renewable energy supply.

With many countries announcing more ambitious greenhouse gas emissions targets ahead of next year's UN climate summit in the UK, hydrogen is garnering wider support from governments, policy makers and the energy industry. It could supply almost a fifth of global energy demand by 2050 if there is supportive regulation and larger-scale investment to cut costs, industry body the Hydrogen Council says. The EU's Hydrogen Strategy calls for a rapid scale-up of supply and demand by 2030, and "will look at using existing assets" such as natural gas pipelines and storage to reduce costs. And China is boosting hydrogen development as it targets 1mn hydrogen fuel cell electric vehicles on the road by 2030.

European energy firms are keen to test the water, with pioneering partnership projects already under way, including plans to replace "grey" hydrogen — that produced using fossil fuels — with green hydrogen. But the pace and scale of hydrogen development will be constrained if supply is limited to the green variety. "How big the role of hydrogen is going to be… depends very much on whether the world is prepared to be colour blind," Shell chief executive Ben van Beurden says. The cost of green hydrogen is falling, but it is currently more expensive than blue hydrogen, even after carbon capture and storage (CCS) costs, and its growth is limited by the availability of renewable power.

Hydrogen — of whatever colour — is a natural fit for oil and gas firms seeking a more secure role in the accelerating transition to a low-carbon energy future. It plays to industry strengths in managing big engineering and processing projects, and provides value-enhancing opportunities to repurpose existing assets, including using oil and gas fields for CCS. And with the role of gas as the sector's "bridge to the future" looking more precarious, hydrogen offers it a longer life.

This most plentiful of elements has many applications in a low-carbon economy, but its future is not guaranteed. The UK's Climate Change Committee sees hugely different outcomes for hydrogen supply and demand, depending on competing investment in renewables. But blue hydrogen plays an important role in the energy transition in all of its scenarios, as it is independent from renewables. If the oil and gas industry passes up this opportunity, hydrogen may miss out again.