Green vs Blue Hydrogen: Who's the Winner?
green hydrogen vs blue hydrogen demand | RationalStat

Green vs Blue Hydrogen: Production Process

By electrolyzing water and separating it into hydrogen and oxygen using an electrolyzer, hydrogen can be created. The term "green" hydrogen is used to describe the zero-carbon hydrogen produced by electrolysis, which has no related greenhouse gas emissions in the generation process (for example, from solar, wind, hydroelectric, or nuclear power).

Alternately, blue hydrogen can be produced from conventional or fossil fuels with carbon capture, utilization, and storage (CCUS). Today, the cost of CCUS-based hydrogen production is half that of producing hydrogen through electrolysis powered by renewables-based electricity.

Green vs Blue Hydrogen: Production Cost

On one side, where Green Hydrogen takes about US$ 3 to US$ 7.50/kg in production, on the other hand, blue hydrogen requires the use of CCUS technology which can raise the cost of producing hydrogen by 20% to 80%. However, blue hydrogen is currently the cheapest “clean” alternative available in the market. Also, as more and more countries have started adopting the technology of producing green hydrogen, the cost of the same will become more competitive than blue hydrogen, especially the green hydrogen produced by solar-powered electrolyzers. Electrolysis is very electricity-intensive (whereas blue hydrogen is energy-intensive) and more expensive than the equivalent blue hydrogen (which is produced via natural gas).

The average Levelized cost of green hydrogen (LCOH) of US$ 3-7.50/kg is significantly more expensive than any blue hydrogen alternative. Indeed, even assuming a return of gas prices in line with long-term historical levels and including CCUS, blue hydrogen would still cost about US$ 1-1.5/kg.

  • Moreover, an analysis by the International Energy Agency (IEA) estimates a 30% percent reduction in the prices of green hydrogen by 2030 owing to the factors like declining cost of reliable renewable electricity, scaled hydrogen production, and increased use of green hydrogen.
  • By 2050, it is expected that the Levelized cost of green hydrogen produced 100% from solar to be competitive vs blue hydrogen. Blended costs would still be more expensive than normalized gas prices + CCUS.

It is imperative to understand that the cost of producing hydrogen varies in different geographies because of gas, electricity costs, renewable resources, and infrastructure.

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Green vs Blue Hydrogen: Plants across the Globe

Various huge economies of the world like China, Canada, the US, Australia, Oman, Germany, India, etc. are planning to construct huge green hydrogen plants and the governments of the respective countries are supporting private companies by introducing new policies and regulations and also by providing financial support.

Growth in the infrastructure will allow producers to expand their reach and capacity, enabling them to lower the price of green hydrogen. Repurposing oil and gas assets, such as platforms for electrolyzer installation or oil and gas pipelines for hydrogen transportation, presents opportunities to further cut costs.

Importantly, seven production plants for blue hydrogen are currently operational, with four in the US and three in Canada, and together produce over 350,000 tons of “low-carbon” hydrogen, with more than 20 planned developments in the next decade.

Only two commercial plants in the world are producing hydrogen from natural gas with CCS, and capturing more than 1 million metric tons per annum (mtpa) of CO₂ (carbon dioxide). Many developers of blue hydrogen plants promise to have at least 90-95% of the capture rate of carbon dioxide. Nevertheless, such rates are also assumed in many national policies and strategies but have not yet been achieved in large-scale commercial plants.

However, no matter how high the capture rate is given by blue hydrogen developers, the following are some criticisms about the use of Blue Hydrogen in the factories:

  • Does not catch any emissions from the power generated on-site to power the hydrogen production units
  • The CCUS system only captures less than 50% of the CO2 created by the hydrogen production units.
  • When the two are combined, the effective onsite CO2 capture rate is less than 40%.
  • Does not take into consideration CO2 leakage downstream prior to injection or upstream methane leaks during extraction, processing, and shipping.

However, at last, blue hydrogen is the only cheap kind of hydrogen that most countries have access to. Green hydrogen might be the cleanest type of hydrogen but it would take a few years for the market to adopt this technology. Assuming there is an increase in the use of renewable energy sources across the globe, the green hydrogen industry will grow significantly.

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Divyanshu Sharma | RationalStat Director and co-founder

Divyanshu Sharma

Co-founder and Director at RationalStat

Divyanshu is an experienced market research consultant. He helps growth-driven organizations and entrepreneurs understand market entry prospects, industry assessment, and grow their revenue strategically. 

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