Clean electrification and hydrogen will play an essential role in delivering net-zero emissions by 2050, says a global coalition.
The Energy Transitions Commission (ETC), which comprises more than 45 leaders from global energy producers, energy industries, financial institutions and environmental advocates, has released two new reports analysing the feasibility of achieving a net-zero economy by the mid-century and the actions required in the next decade to put this target within reach.
The ETC claims clean electrification will be at the heart of the transformation enabled by the rapidly falling costs of renewable energy, with a complementary role for clean hydrogen technology in sectors that are difficult to electrify.
“We now have the technologies to completely decarbonise electricity generation at low cost and electrification is the key to zero-carbon production in most of the economy,” said Lord Adair Turner, chair of the ETC.
“By mid-century even rich developed countries will need 2-3 times as much electricity as today, and developing economies 5-10 times as much. Governments, businesses and investors need to recognise the scale of the new industrial revolution required and the huge opportunities it creates.”
Wind and solar installations must grow by 5 to 7 times by 2030
By 2050, electricity could represent up to 70% of final energy demand, compared to 20% today, with total electricity use expected to grow as much as five times in the coming decades.
The ETC believes transitioning to clean electricity as the main source of final energy represents the cheapest and most efficient way to decarbonise the economy, with the rapidly falling costs of renewables and storage solutions making it possible to achieve the required expansion of clean power systems at low cost.
But it warns that wind and solar must increase from today’s 10% of total electricity generation to about 40% by 2030, and to more than 75% by 2050. Annual wind and solar installations must therefore grow by 5-7 times by 2030, and more than 10 times by 2050.
The analysis notes the clean energy sources must also be accompanied by the parallel deployment of other zero-carbon generation technologies such as hydropower and nuclear, flexibility solutions, storage and power networks to deliver zero-carbon power systems at scale.
The ETC said this is “undoubtedly within reach” if clear national strategies for decarbonisation are put in place and appropriate power market design unlocks private financial flows.
Investments in renewable power, primarily wind and solar, will represent about 80% of total funding required to achieve a net-zero economy, with more than $80tn of investment required globally over the next 30 years.
While recognising this is a large figure, the coalition said it represents less than 1.5% of global GDP and is “manageable in the current macroeconomic environment”.
Green hydrogen and electrification likely to be most cost-competitive option to reach net zero
Clean hydrogen has long been touted as a viable option to decarbonise sectors where direct electrification is likely to be technologically very challenging or prohibitively expensive, such as in steel production and long-distance shipping.
The ETC believes a net-zero emissions economy by mid-century will likely need to use about 500 to 800 million tonnes of clean hydrogen per year, a 5-7-fold increase compared to hydrogen use today.
Green hydrogen, produced through the electrolysis of water, is likely to be the most cost-competitive and therefore the major production route in the long-term, due to falling renewable electricity and electrolyser equipment costs.
It could account for about 85% of total production by 2050, according to the analysis. But it added that blue hydrogen, produced from natural gas with carbon capture (with 90%+ capture rates) and low methane leakage (<0.05%), will play an “important role” in the transition and in some specific very low-cost gas locations.
The ETC highlights how critical the rapid ramp-up of production and use in the 2020s is to unlock cost reductions to bring clean hydrogen costs to below $2 per kg and to make mid-century growth targets achievable.
But, even once clean hydrogen becomes cheaper than grey hydrogen, using hydrogen in different industry and transport sectors will often still impose a “green cost premium” compared to current high-carbon technologies.
“Public policy is therefore essential to drive uptake of clean hydrogen at pace,” said the report. “Policymakers will also need to anticipate growing hydrogen transport and storage needs.
“In total, 85% of investments required to ramp-up hydrogen production is for renewable electricity provision. Additionally, $2.4tn will be required between now and 2050 for hydrogen production facilities and transportation and storage.”
Critical actions to tackle grid emissions
In terms of power, the ETC recommends that developed countries should achieve grid emissions intensity below 30g of CO2 per kilowatt-hour (kWh) by the mid-2030s and developing countries by the mid-2040s.
To achieve those medium-term objectives, the group has laid out six critical actions that must take place in the 2020s.
Clear national medium-term targets for power decarbonisation and for the electrification of the economy.
Appropriate incentives for renewables deployment at scale, including power market design encouraging private investment, with a continued role for long-term contracts.
Unlocking financial flows for investment in developing countries, including through blended finance vehicles.
Anticipating the build-up of network infrastructure and capabilities required for simultaneous mass electrification and power system decarbonisation.
Planning and permitting processes that accelerate implementation.
And developing the technologies and business models of the future, especially for long-term energy storage and flexibility provision.
Public policy needs to pull forward clean hydrogen demand during this decade
The ETC believes public policy needs to pull forward clean hydrogen demand in the 2020s to drive production volumes up to reach 50 million tonnes by 2030.
It said this will require a rapid decarbonisation of hydrogen production for already existing uses and accelerated technology development, piloting and early adoption of hydrogen in other key sectors with lower levels of technology readiness but large potential demand, like steel, shipping and synthetic aviation fuels.
The analysis details six instruments to achieve that early demand growth, while supporting the scale-up of clean hydrogen supply.
Carbon pricing to create broad incentives for decarbonisation.
Sector-specific policies to create demand for low-carbon technologies, and a financial support mechanism for investment and to overcome the “green cost premium” challenge.
Targets for the development of large-scale electrolysis manufacturing and installation.
Public support and collaborative private-sector action to bring to market key technologies.
Developing hydrogen industrial clusters to enable the simultaneous development of hydrogen production, storage, transport and end-use, de-risking investments for all players involved.
And establishing rules and standards on safety, purity and the greenhouse gas-intensity of hydrogen.
“Green hydrogen made from renewable electricity will be the best complement to deep electrification to achieve a sustainable and decarbonised energy sector,” said Agustin Delgado, chief innovation and sustainability officer at Spanish utility company Iberdrola.
“It will bring investment opportunities and qualified jobs, while making our economy cleaner and more competitive. Policy commitments to scale up this new economy are necessary and will bring important economic and environmental benefits in the years to come.”
