20 The Economist October 9th 2021
BriefingThe hydrogen economy
T
oday’s hydrogenbusiness is, in global
terms, reasonably small, very dirty and
completely vital. Some 90m tonnes of the
stuff are produced each year, providing
revenues of over $150bn—approaching
those of ExxonMobil, an oil and gas com
pany. This is done almost entirely by burn
ing fossil fuels with air and steam—a pro
cess which uses up 6% of the world’s natu
ral gas and 2% of its coal and emits more
than 800m tonnes of carbon dioxide, put
ting the industry’s emissions on the same
level as those of Germany.
The vital nature of this comes from one
of the subsequent uses of the gas. As well
as being used to process oil in refineries
and to produce methanol for use in plas
tics, hydrogen is also, crucially, used for
the production of almost all the world’s in
dustrial ammonia. Ammonia is the main
ingredient in the artificial fertilisers which
account for a significant part of the world’s
crop yields. Without it, agricultural pro
ductivity would plummet and hundreds of
millions would face starvation.
Tomorrow’s hydrogen business, ac
cording to greenpolicy planners aroundthe world, will be vital in a different way: as
a means of decarbonising the parts of the
economy that other industrial transforma
tions cannot reach, and thus allowing
countries to achieve their stated goal of
stabilising the climate. But for that vital
goal to be met everything else about the in
dustry has to change. It can no longer stay
small. Morgan Stanley, an investment
bank, reckons that, if governments take
their green commitments seriously, to
day’s market could increase more than
fivefold to over 500m tonnes by 2050 as
these new applications grow (see chart 1 on
next page). And it has to become clean, cut
ting its carbondioxide emissions to zero.
Clean hydrogen is quite plausible. The
current method of making it from fossil fu
els could be combined with technology
which separates out the carbon dioxide
given off and stores it away underground,
an option known as carbon capture and
storage (ccs). Alternatively, fossil fuels
could be taken out of the process altogeth
er. Electricity generated from renewables
or some other clean source could be used
to tear water molecules apart, thus liberating their constituent hydrogen and oxy
gen, a process called electrolysis.
One way to make these technologies
cheap quickly would be with a carbon price
high enough to make the current industry
adopt them. That looks highly unlikely. In
its absence governments are trying to spur
demand for cleanhydrogen capacity
through industrial policy and subsidy,
rather as they spurred the growth of renew
ables. As the European Union’s hydrogen
strategy puts it, “From 2030 onwards and
towards 2050, renewable hydrogen tech
nologies should reach maturity and be de
ployed at large scale to reach all hardto
decarbonise sectors.” Forcing the industry
to the level of maturity which will allow
that deployment is set to soak up
$100bn150bn in public money around the
world in the decade to 2030. Some $11bn of
that will be spent this year, according to
Bloombergnef, a data company.
The problem with all this is that hydro
gen is not like renewable electricity, the
green transformation it seeks to build on.
Green electricity helps the climate simply
by replacing dirty electricity. For the most
part hydrogen helps the climate only when
used for new purposes and in new kit. For
companies to build or purchase that kit,
they need to be sure there will be plentiful
and affordable clean hydrogen. For compa
nies to produce clean hydrogen in bulk,
they need to know that there will be users
to sell it to. That is the rationale for public
money being pumped in to prime both
supply and demand. N EW YORK
Creating the new hydrogen economy is both a massive undertaking
and a delicate oneA very big balancing act