Green hydrogen already cheaper than blue hydrogen from 2024

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Imported green hydrogen could already be cheaper than locally produced blue and gray hydrogen by 2024.

That is the opinion of the American Rocky Mountains Institute (RMI). According to the NGO, green hydrogen could also be the key for Europe to say goodbye to Russian gas.

The RMI projects that imported green hydrogen will cost about $3.75 per kilo in 2024. By 2030, the price will have dropped to $2 per kilogram. The production costs of blue hydrogen are much higher, according to the research firm: $4.60 per kilo in 2024 and $2.50 per kilo in 2030. The most expensive variant will be the production of gray hydrogen: it costs $6.50 per kilo now and $5 per kilo in 2024.

Grey, blue and green

Hydrogen can be produced in different ways. For example, using natural gas, a process called Steam Methane Reforming. During this process, steam reacts with natural gas at high pressure, producing hydrogen and CO2. The end product: gray hydrogen. However, you can also capture and store the CO2 released during that process. This is called blue hydrogen.

The most sustainable form is green hydrogen. It is produced using sustainably generated electricity, such as wind and solar power. In a nutshell: by applying electric tension to water, it is split into hydrogen and oxygen.

High natural gas prices

Whether the RMI’s predictions will come true is difficult to determine. This is because the research firm is basing its predictions on current natural gas prices (the fuel from which blue hydrogen is made) and they are currently sky-high. To illustrate: shortly before the war in Ukraine broke out, the International Energy Agency (IEA) calculated the prices for grey and blue hydrogen. At the time, these came to $1.7 per kilo and $2 per kilo, respectively. It is uncertain how natural gas prices will develop in the future.

However, according to the RMI, it will take years for natural gas prices to adjust to the new reality created by the war in Ukraine. As a result, the cost of gray and blue hydrogen is likely to remain high.

Hydrogen plays an important role in the EU’s recently published plans to move away from Russian energy. Read more about those plans here.

Nedim Husomanovic

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