Green hydrogen has long been heralded as the future of clean and sustainable fuel, but one report estimated that it may be years before it becomes economically competitive.
What's happening?
Bloomberg reported that its research division, BloombergNEF, forecasted the price of green hydrogen to range between $1.60 and $5.09 per kilogram in 2050, more than triple what it previously estimated.
BNEF increased its projections after taking into consideration the rising cost of electrolyzers, which separate hydrogen atoms from water molecules using electricity powered by renewable energy.
Green hydrogen sits at $3.74 to $11.70 per kilogram, while traditional forms of hydrogen fuel derived from natural gas cost from $1.11 to $2.35 per kilogram — a price BNEF expects to remain steady through 2050.
The only projected markets where green hydrogen would become cost-competitive with "gray" hydrogen were China and India. However, the research service didn't expect those countries to offer the cleaner alternative at less than $2 per kilogram until after 2040.
"The higher costs for producing green hydrogen without any subsidies or incentives means it will continue to be challenging to decarbonize hard-to-abate sectors, such as chemicals and oil refining, with hydrogen produced via electrolysis powered by renewables," BNEF analyst Payal Kaur said.
Why are the projections for green hydrogen concerning?
Based on the BNEF report, the prognostications for green hydrogen to become financially feasible seem bleak.
It's a disappointing outlook, considering it only generates water vapor when burned and could help revolutionize several industries that typically rely on dirty energy sources. Until prices drop, though, most companies will continue to use fuels that emit planet-warming gases.
According to Bloomberg, Equinor ASA, Shell PLC, and Origin Energy Ltd. already canceled projects to produce green hydrogen in 2024 after attracting few buyers. Others had stalled, waiting for former President Joe Biden's administration to finalize a hydrogen tax credit program.
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Lower energy bills 💸 The U.S. Department of the Treasury and the Internal Revenue Service eventually established the Credit for Production of Clean Hydrogen and Energy Credit on Jan. 10 in an effort to kickstart the demand for the sustainable energy source.
It's unclear whether President Donald Trump will seek to invalidate this new rule, as he has suggested undoing some of Biden's clean initiatives, like the Inflation Reduction Act.
What's being done to circumvent the cost of green hydrogen?
This new regulation implemented by the Biden administration offers $3 per kilogram of hydrogen. Should the Trump administration preserve the tax credit, the BNEF report expects the green hydrogen projection in Texas in 2040 to drop from over $3 per kilogram to less than $1.
Even if the Trump administration cuts the program, experts are working independently to make green hydrogen widely available.
For example, scientists at the University of Illinois Chicago have created hydrogen fuel using just sunlight and biowaste, like manure and husks. Meanwhile, MIT researchers made hydrogen fuel using soda cans, seawater, and caffeine.
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