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16 GREEN HYDROGEN COST REDUCTION As the deployment of renewable energy sources increases all over the globe in the power sector, solutions that leverage renewable electricity to decarbonise end-use sectors using power-to-gas strategies, or to convert electricity into high-value chemicals or fuels, need to be quickly introduced (IRENA, 2020c). In addition, as electricity needs to increase from around 20% of final energy consumption to around 50% by 2050 (IRENA, 2020b), there is still a need to decarbonise applications for which direct electrification is more challenging (the so called “hard-to-abate” sectors). Hydrogen is only one option in decarbonising hard-to-abate sectors. Energy efficiency is key to reducing the energy supply and renewable capacity upstream, while bioenergy might be suitable, not only in the form of biofuels for those transport sectors that have limited fuel alternatives (especially aviation), but also as a source of carbon for synthetic fuels. Direct electrification is more efficient from a systems perspective, leading to lower cost, with this already commercially deployed in many areas (e.g. heating or passenger vehicles). Carbon capture and storage (CCS) might be attractive for existing assets that are still in early stages of their lifetime (the case for many assets in Asia) and process emissions (e.g. from cement production). Even for the most ambitious scenarios, these technological choices might not be enough, however, and behavioural changes might be needed to push energy demand even lower. Thus, for energy transition, hydrogen is one solution amongst others and should be tackled in parallel. Hydrogen is part of a wider technology portfolio to be adapted to domestic conditions in each country, with this report further exploring this pathway. Green hydrogen (i.e. hydrogen produced from renewable electricity) links renewable electricity with a range of end-use applications acting as a complement of electrification, bioenergy and direct renewable energy use (IRENA, 2018). The potential for green hydrogen is much higher than fossil fuels, since it is linked to solar and wind potential, which far exceeds global energy demand today and in any future scenario. Most importantly, in the context of decarbonisation, green hydrogen is the only zero-carbon option for hydrogen production, as carbon capture in CCS is 85%-95% at best and significantly lower to date. Once produced at scale and competitive cost, green hydrogen can also be further converted into other energy carriers, such as ammonia, methanol, methane and liquid hydrocarbons. As a fuel, hydrogen can be used in fuel cells (i.e. an electrochemical device that combines hydrogen with oxygen from the air and produces electricity), but also combusted in engines and turbines. Fuel cells can be used for stationary applications in large-scale power plants, microgrid or backup generation (e.g. in data centres), or for a wide range of transport applications – as is already done in fuel cell electric vehicles (FCEV), trucks, light-duty vehicles, forklifts, buses, ferries and ships. As a chemical, green hydrogen can reduce greenhouse gas (GHG) emissions from sectors where hydrogen from fossil fuel is widely used today, including oil refining, methanol and ammonia production. Green hydrogen is only one of the production pathways. Hydrogen can also be produced from bioenergy, methane, coal or even directly from solar energy. Most of the production today is based on methane and coal (about 95%) (IRENA, 2019a) and could be made low carbon with the use of CCS. CCS might be suitable for regions with low-cost natural gas and suitable underground reservoirs. In the short term, CCS might also be a good fit for large-scale applications in industry, given the relatively small scale of deployment for electrolysis. Low-carbon hydrogen can also be produced from methane pyrolysis, where the carbon ends up as solid rather than as CO2, with 4-5 times lower electricity consumption than electrolysis and potentially lower hydrogen production cost. Each pathway has its own limitations. Bioenergy might be best suited for other applications, considering its limited nature and the low inherent hydrogen yield. CCS does not lead to zero emissions, requires significant infrastructure for the CO2, does not enable sector coupling, is still exposed to the price fluctuations characteristic of fossil fuels, andPDF Image | GREEN HYDROGEN SCALING UP ELECTROLYSERS
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