RENEWABLE

POWER-TO-X:
BASIC TRAINING
HANDBOOK
BASED ON VERSION BASIC TRAINING 4.0 (JANUARY 2023)
Prof. Dr. Christoph Menke. Elmar Schuppe. Elisabeth Kriegsmann. Iris Geler.
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Disclaimer

The contents of the handbook – in particular the graphics and images used therein –
are not free of third-party rights and can therefore only be used for academic pur-
poses. They shall not be duplicated, distributed or used commerciallly.

Note

Training specific slide sets may contain updates and adoptions.

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Table of Contents
List of Abbreviations ............................................................................................................ 6

Key Conversion Data ............................................................................................................ 6

I) Introduction to Renewable PtX........................................................................................... 7

1. Energy Recycling: Energy Storage vs. Source ................................................................ 8

1.1 Mankind’s Tragical Misconception of Energy Sources ...............................................................8
1.2 Recycling Energy Commodities ..................................................................................................9

2. PtX and Carbon Neutrality ......................................................................................... 10

2.1 The Concept beyond Hydrogen ................................................................................................10
2.2 Renewable Carbon Flows Today and in 2050 ...........................................................................10
2.3 How to Close the Paris Delta .....................................................................................................11
2.4 Share of GHG Abatement in the EU by Mitigation Measures ....................................................11

3. Opportunities and Challenges for PtX ......................................................................... 12

3.1 Green Molecules as Supporting Pillar of the Energy Transition ..............................................12
3.2 Energy Efficiency before Electrification of Demand .................................................................13

4. PtX Demand Globally and in Germany ........................................................................ 14

4.1 Global Demand for Renewable Electricity to Produce Green Hydrogen by 2050....................14
4.2 PtX Demand in Germany in 2050 Depends on Consumption Behaviour .................................15
4.3 Additional Renewable Energy Capacity to Cover Oil Demand in Germany .............................16

5. Power-to-X Value Chain and Sector Coupling .............................................................. 17

5.1 Steps from Renewable Energy to Feedstock/Fuel Supply .......................................................17
5.2 Power-to-X Value Chain.............................................................................................................18
5.3 Global Current Hydrogen Projects in 2021 ...............................................................................20
5.4 Announced Pipeline of Industrial Hydrogen Projects ..............................................................20

6. Summary of Introduction .......................................................................................... 21

II) Production of Renewable PtX .......................................................................................... 22

1. Hydrogen Production................................................................................................ 23
1.1 Options for Hydrogen Production ............................................................................................23
1.2 The Colours of Hydrogen Production .......................................................................................24
1.3 How Green Is Blue Hydrogen? ...................................................................................................24

2. Focus on Production of Green Hydrogen ..................................................................... 27

2.1 Production Step 1: Electrolysis .................................................................................................27
2.2 Prodcution Step2: Carbon Capture through Direct Air Capture ..............................................32
2.3 Production Step 3: PtX Production ...........................................................................................33
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III) Renewable PtX Economics ............................................................................................. 42

1. Production Costs of Green Hydrogen .......................................................................... 43

1.1 Cost Factors ...............................................................................................................................43
1.2 Hydrogen Production Costs Now and in 2050 in Germany ......................................................43
1.3 Green vs. Blue Hydrogen ...........................................................................................................44
1.4 How to Reduce Production Costs of Green H2? .......................................................................45
1.5 Impact of CAPEX, FLH and Electricty Costs...............................................................................46
1.6 Renewable Hydrogen Production Costs Depending on Operating Hours...............................47
1.7 Worldwide Expectations: Hydrogen Cost Development by Production Type .........................47
1.8 What Makes Up Costs of Green Hydrogen?...............................................................................48

2. Renewable Energy Generation Cost Development ....................................................... 50

2.1 Cheapest Source of New Bulk Electricity Generation by Country ...........................................50
2.2 Cost Development of Solar and Wind .......................................................................................51
2.3 Role of Full Load Hours .............................................................................................................54
2.4 Need for Massive Deployment of Renewables .........................................................................55
2.5 Cost Development of Power Sources in Germany ....................................................................56
2.6 Importance of the “Additionality” Criteria When Introducing PtX Production .......................57

3. Hydrogen Electrolyser Cost Development ................................................................... 58

3.1 Cost Breakdown for Alkaline Electrolysers ...............................................................................58
3.2 Cost Development of Electrolysers over Last Years .................................................................59
3.3 Benchmark Electrolysis System CapEx .....................................................................................60
3.4 Future Cost Development of Electrolysers as Function of Installed Capacity ........................60
3.5 Estimate and Forecast of Annual Electrolyser Shipment .........................................................61
3.5 Announced Electrolyser Pipeline ..............................................................................................61

4. Scale-Up and Outlook for Hydrogen Production .......................................................... 62

4.1 Hydrogen Production Costs from Hybrid Solar PV and Wind Systems in 2030 .......................62
4.2 Levelised Cost of Green Hydrogen Production.........................................................................62
4.3 Levelized Cost of Hydrogen from Cheapest Available Renewable Power in 30 Coutries........65
4.4 Reduction of Green Hydrogen Production Costs in the Long-Term ........................................65
4.5 Competitiveness of Future Costs for PtX Products ..................................................................69
4.6 Cost Development of Green Ammonia Production ..................................................................71
4.7 CO2 Price Needed to Make Syn. Shipping Fuel and Syn. Gas Competitive .............................72
4.8 Synthetic Jet Fuel Costs Are Driven by H Costs .......................................................................73
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IV) Renewable PtX Infrastructure ........................................................................................ 74

1. Transport Options for H2 (+Derivates and Products).................................................... 75

1.1 Challenges for Transport Routes ..............................................................................................75
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1.2 C-H2 Supply Chain vs. Liquification vs. Ammonia (Western Australia)....................................75
1.3 Transport Distance and Costs ...................................................................................................76
1.4 Comparison of Transport Options ............................................................................................77
1.5 H2 Transport Costs Based on Distance and Volume (2019) ......................................................78
1.6 Transport of Electricity vs. Hydrogen .......................................................................................79
1.7 Economics of Delivered Hydrogen for 2030 and 2050 ..............................................................81
1.8 Import vs. Production from a European perspective for 2030 .................................................82
1.9 Announced Pipeline of Hydrogen Shipping Projects ...............................................................83

2. Storage Options for H2 (+ Derivates and Products) ...................................................... 84

2.1 Physical and Material Storage...................................................................................................84
2.2 Levelised Cost of Hydrogen Storage .........................................................................................86
2.3 Comparison of Hydrogen Storage Options ..............................................................................87
2.4 Announced Pipeline of Underground Hydrogen Storage Projects ..........................................89

V) Markets for Renewable PtX ............................................................................................. 90

1. H2 Value Chain and Demand for Chemical Products ..................................................... 91

1.1 Hydrogen – Sources and Demand ............................................................................................91
1.2 Hydrogen Pathways and Use Cases According to EU 2030 Targets .........................................91
1.3 Hydrogen as Key to Industrial Decarbonisation .......................................................................92
1.4 Estimates of Global Hydrogen Demand for 2050 .....................................................................93

2. Drivers for the Current Hype on H2 and PtX................................................................. 94

2.1 Main Industrial Sectors as Driving Forces .................................................................................94
2.2 Example: Decarbonising Steel with Hydrogen .........................................................................96

3. Steps to Find and Evaluate Your PtX Potential............................................................. 97

3.1 Step 1: Create a Country-Specific Marginal Abatement Cost Curve ........................................97
3.2 Step 2: Check the Clean Hydrogen Ladder ...............................................................................99
3.3 Step 3: Start with No Regret Options ........................................................................................99
3.4 Step 4: Consider Readiness Levels of Key PtX Production, Storage and Distribution
Technologies ................................................................................................................................. 100
3.5 Step 5: Analyse Market in Own Country .................................................................................. 101

4. Sector Applications – Case Studies ............................................................................ 102

4.1 Green Steel .............................................................................................................................. 102
4.2 PtL Aviation Brazil ................................................................................................................... 108
4.3 Hydrogen Energy Storage French Guiana .............................................................................. 110

VI) Sustainability Criteria for Renewable PtX ....................................................................... 111

1. PtX Sustainability Criteria ........................................................................................ 112

1.1 Context: The Paris Agreement ................................................................................................ 112
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1.2 The EESG Framework .............................................................................................................. 113

1.3 Sustainability at Different Assessment Levels ........................................................................ 114
1.4 Application of Sustainability Standards ................................................................................. 114
1.5 Embedding PtX Strategy in SDGs and NDCs ........................................................................... 115

2. Four PtX Sustainability Dimensions of the EESG ......................................................... 119

2.1 Environmental Dimensions ..................................................................................................... 119
2.2 Social Dimensions ................................................................................................................... 132
2.3 Economic Dimensions ............................................................................................................. 137
2.4 Governance Dimensions ......................................................................................................... 140
2.5 Overview: Sustainability Indicators According to Fraunhofer’s PtX Atlas ............................ 148

VII) Support Policies and Regulations for Renewable PtX...................................................... 149

1. The Start: Setting Up a Green Hydrogen Project ......................................................... 150

1.1 Holistic Project Approach........................................................................................................ 150
1.2 Steps of Scaling Up a Market................................................................................................... 150

2. Policy Recommendations and Regulatory Architecture............................................... 152

2.1 2030 Climate Targets ............................................................................................................... 152
2.2 Regulatory Architecture as a Policy Framework for the H Economy .................................... 153
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2.3 Policy Recommendations – Connection of Supply and Demand Side .................................. 156
2.4 Roadmap of Policy Recommendation Integration ................................................................. 157
2.5 Important Policy Instruments ................................................................................................. 157
2.6 Focus on the Policy Instrument: Finance and Investment ..................................................... 158

3. Strategies of Policy Making ...................................................................................... 159

3.1 Setting Up a National Strategy ............................................................................................... 159
3.2 Establishing Policy Priorities ................................................................................................... 160
3.3 Country Examples ................................................................................................................... 161

4. Summary and Outlook on a Renewable PtX Economy ................................................. 166

Selection of Resources ...................................................................................................... 167

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List of Abbreviations
CAPEX: Capital cost expenditures
CCfD: Carbon contracts for difference
CCS: Carbon Capture and Storage
DAC: Direct Air Capture
FLH: Full-load hours
GW: Gigawatt
HVDC: High voltage, direct current
LCOE: Levelised cost of electricity
LOHC: Liquid organic hydrogen carrier
LHV: Lower heat value
OPEX: Operating cost expenditures
PEM: Proton Exchange Membrane
PtX / PtL / PtG: Power-to-X / -Liquid / -Gas
PV: Photovoltaic
RE: Renewable Energy/ies
RES: Renewable Energy System(s)
SMR: Steam methane reforming
SOEC: Solid Oxide Electrolyser Cell
TWh: Terawatt hours
WACC: Weighted average cost of capital

Key Conversion Data

1 kWh H2= 3.6 MJ H2
1 MWh H2 = 3.4 MMBTU H2
1 MJ H2 = 0.277 kWh H2

Conversion kWh and kg H2:

1 kg H2 = 33.3 kWh (heat unit Hu /calorific value)
1 MWh H2 = 30 t H2
1 Mio t H2 = 33 TWh H2

Monetary value per weight or calorific value

4.5 ct/kWh H2 = 45 €/MWh H2 = 1.5 €/kg H2
or: 1€/kg H2 = 3 ct/kWh H2 (Hu)
100 €/MWh H2 = 3.33 €/kg H2
or: 1€/kg H2 = 30 €/MWh H2
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Introduction to Renewable PtX

1. Energy Recycling: Energy Storage vs. Source ................................................................. 8
1.1 Mankind’s Tragical Misconception of Energy Sources ................................................................ 8
1.2 Recycling Energy Commodities ................................................................................................... 9

2. PtX and Carbon Neutrality........................................................................................... 10

2.1 The Concept beyond Hydrogen ................................................................................................. 10
2.2 Renewable Carbon Flows Today and in 2050 ............................................................................ 10
2.3 How to Close the Paris Delta ...................................................................................................... 11
2.4 Share of GHG Abatement in the EU by Mitigation Measures ..................................................... 11

3. Opportunities and Challenges for PtX........................................................................... 12

3.1 Green Molecules as Supporting Pillar of the Energy Transition................................................ 12
3.2 Energy Efficiency before Electrification of Demand .................................................................. 13

4. PtX Demand Globally and in Germany .......................................................................... 14

4.1 Global Demand for Renewable Electricity to Produce Green Hydrogen by 2050..................... 14
4.2 PtX Demand in Germany in 2050 Depends on Consumption Behaviour .................................. 15
4.3 Additional Renewable Energy Capacity to Cover Oil Demand in Germany .............................. 16

5. Power-to-X Value Chain and Sector Coupling ................................................................ 17

5.1 Steps from Renewable Energy to Feedstock/Fuel Supply ........................................................ 17
5.2 Power-to-X Value Chain .............................................................................................................. 18
5.3 Global Current Hydrogen Projects in 2021 ................................................................................ 20
5.4 Announced Pipeline of Industrial Hydrogen Projects ............................................................... 20

6. Summary of Introduction ............................................................................................ 21

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1. Energy Recycling: Energy Storage vs. Source

1.1 Mankind’s Tragical Misconception of Energy Sources

Fossil Renewable There is a fundamental differ-

Energy Sources Energy Sources ence between an energy
source (a steady or varying
Oil flow of energy equivalent to
Gas
Lignite Sun water from a spring or foun-
Coal Wind tain) and an energy stor-
Water
Biomass age(energy stored in a specific
limited amount of material
that will be depleted when
used). In case of planet Earth
Who finds the the primary energy source
big mistake? available is the sun. Second-
ary sources that are derived
from the sun are wind, hydro and bio energy. Fossil fuels are (solar) energy stored in the
ground → energy storage. This storage has been slowly filled up in millions of years, but is
emptied by humans at a very fast rate.

Now, who finds the big mistake within this slide? This picture contains a fundamental miscon-
ception that has led to the present critical situation regarding energy and climate stability. A
first hint shows the same picture after about 500 years of using fossil energy.

Deposits will be empty and

Fossil Renewable
Energy Sources Energy Sources residues will be dissipated in
Storage the environment. The worst
Oil of all is the fact that filling
Gas those deposits and cleaning
Lignite Sun
Coal Wind the atmosphere from its resi-
Water dues took about 500 million
Biomass
years. Now, we are releasing
those residues (CO2, CH4 and
water vapor) one million
Who finds the times faster into the atmos-
500 years later
big mistake? phere than they were depos-
ited in the ground in form of
mineral oil, coal and natural gas!

The solution of the riddle:

Fossil fuels are not a source, but a storage of energy. In fact, the best storage of energy
we have. Sources of energy are renewables, of which solar energy is the primary source
feeding all others. Recognising this fundamental difference between Fossil Energy Storage
and Renewable Energy Sources helps to understand our present energy situation and find-
ing sustainable solutions.
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1.2 Recycling Energy Commodities

One-Way-Process

Residues to
Environment

Burning fossil fuels for winning energy is a

one-way process depleting fossil fuel
Fossil Fuel to Power deposits in the ground and accumulating
its residues, like CO2, in the living envi-
ronment (atmosphere and seawater).

Fossil Fuel

Re(sidue)cycle

Residues Residues and Recycling CO2 with solar energy avoids

XtP
Solar Energy further resource depletion and residue
Synthetic Fuel
to Synthetic Fuel accumulation and creates a carbon sink
to Power
PtX in form of stored synthetic hydrocar-
bon fuels.

Synthetic Fuel
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2. PtX and Carbon Neutrality

2.1 The Concept beyond Hydrogen

Based on nova-Institut 2020 (nova-Paper #12 on renewable carbon 2020-09).

“Renewable carbon entails all carbon sources that avoid or substitute the use of any addi-
tional fossil carbon from the geosphere. Renewable carbon can come from the biosphere, at-
mosphere or technosphere – but not from the geosphere. Renewable carbon circulates be-
tween biosphere, atmosphere or technosphere, creating a carbon circular economy.”

Key message: The concept is about renewable electricity and renewable carbon. Hydrogen is
mainly an energy carrier in this concept.

2.2 Renewable Carbon Flows Today and in 2050

Based on nova-Institut 2020 (nova-Paper #12 on renewable carbon 2020-09).

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2.3 How to Close the Paris Delta

The Paris agreement:

Limit global warming to well below 2°C
(1.5°C).
→ Need for decarbonization of energy
systems & economies

Source: International Renewable Energy Agency Hydrogen From Re-

newable.

To achieve the Paris Agreement, we need massive increases in:

2.4 Share of GHG Abatement in the EU by Mitigation Measures

“According to the many re-
cent studies analysing
pathways to net-zero and
interim milestones, elec-
trification coupled with
carbon-neutral power and
energy efficiency will be
able to deliver the bulk of
energy system decarbon-
isation over the next dec-
ade to 2030. This consen-
sus is well visualised in
this figure. Carbon-neu-
tral power and energy effi-
ciency account for nearly
two-thirds of total abate-
1Source: Agora Energiewende, Agora Industry (2021): 12 Insights on Hydrogen p.8/ fig.1.
ment between 2017 and
2030.”
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3. Opportunities and Challenges for PtX

3.1 Green Molecules as Supporting Pillar of the Energy Tran-
sition

Green Molecules (PtX)

Renewable Energy
Energy Sufficiency
Energy Efficiency

Electrification

The figure shows five main pillars of the energy transition. Energy sufficiency and energy
efficiency form a mandatory start considering the total demand. For the rest of the energy
demand: Renewable energy and its use in further electrification of demand. For hard to
abate sectors: PtX (incl. green H2).
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3.2 Energy Efficiency before Electrification of Demand

Source: (illustration adapted) Agora Verkehrswende, Agora Energiewende and Frontier Economics, The Future Cost of Electricity-Based
Synthetic Fuels, 2018, p.12/fig.2.

“Individual and overall efficiencies for cars with different vehicle drive technologies, starting
from renewable electricity. Individual efficiencies are indicated in parentheses. Multiplied to-
gether, the individual efficiencies yield the overall cumulative efficiencies in the boxes”.

• In the transport sector, electric motors are the best solution in terms of efficiency and
cost for powering trains, cars, light utility vehicles, municipal buses, and trucks operat-
ing over short distances and with good charging options.
• With respect to heavy trucks operating over extended distances, the situation is differ-
ent:
o Vehicle batteries in mass production are not sufficiently strong as a single source
of power, nor are they expected to become strong enough in the coming years.
o As a result, heavy trucks operating over long distances will need to be operated
with overhead power lines or alternatively with combustion engines or fuel
cells.
o A combination of various propulsion technologies might make sense to handle ge-
ographic areas in which overhead wires have not yet been installed. In the ab-
sence of a comprehensive overhead wire network, the decarbonised transport
system of the future will necessarily contain long-distance trucks that are re-
liant on synthetic fuels.
• According to current expert opinion, direct electricity use is also not an option for air
or maritime transport, except on an extremely limited basis.
• These two subsectors will thus require climate-neutral synthetic fuels, namely H2 to
power fuel cells as well as CO2-based synthetic methane or liquid fuel to power com-
bustion engines.
• Synthetic fuels will also be required to operate construction equipment and heavy ag-
ricultural vehicles, as it will only be possible to directly power these vehicle types with
electricity in select cases.

Key message: If you want to continue to use liquid fuels (synthetic fuels) for mobility services,
you will need 5 x more renewable energy than providing same mobility service by using elec-
tricity directly.
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4. PtX Demand Globally and in Germany

4.1 Global Demand for Renewable Electricity to Produce
Green Hydrogen by 2050

Source: IRENA Coalition for Action, Decarbonising end-use sectors: Practical insights on green hydrogen, 2021, p.11/fig.2.
Note: The ETC supply-side decarbonisation only scenario is an illustrative scenario considering 2050 final energy demand with-
out application of energy productivity levers. This scenario assumes green hydrogen will make up 85% of total hydrogen pro-
duction in 2050.

1. “The information in this figure was compiled by IRENA with the support of Coalition for
Action members with a focus on the renewable electricity needed for green hydrogen pro-
duction by 2050. The role given to green hydrogen in existing regional and global energy
transition scenarios can differ greatly due to a number of factors, which include GHG re-
duction targets, assumed set of enabling policies, assumed technology options available
between scenarios, end-uses considered and cost assumptions (IRENA, 2020b). For all
these reasons, the role of green hydrogen varies widely among scenarios. However, as
more scenarios are developed to reach zero or net-zero emissions, green hydrogen’s pres-
ence will be more prominent in scenarios and public discourse.”
2. “The ETC supply-side decarbonisation only scenario is an illustrative scenario considering
2050 final energy demand without application of energy productivity levers. This scenario
assumes green hydrogen will make up 85% of total hydrogen production in 2050.”
3. “Numbers for BNEF’s New Energy Outlook Climate Scenario denote a well below 2°C path-
way based on clean electricity and green hydrogen.”
4. “Numbers for Hydrogen Council’s 2°C Scenario denote the case where green hydrogen
meets all projected hydrogen demand.”

Key message: Demand for RE power for hydrogen is very high, compared to RE power cur-
rently produced. In any case, we need a lot more RE! And: H2 comes on top.
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4.2 PtX Demand in Germany in 2050 Depends on Consump-

tion Behaviour

Source: Öko-Institut e.V., Wasserstoff und wasserstoffbasierte Energieträger bzw. Rohstoffe, 2020, p.80/3-1.
Note: The scenarios of the EU long-term strategy were converted with a 20% share of Germany in the values for the EU-28

“This figure shows a wide range of the demand for hydrogen-based secondary energy carriers
and feedstocks in the analyzed scenarios and ranges from 200 to 900 TWh for Germany. The
range in particular is due to a number of specific assumptions:
1. the allocation of available biomass
2. the use of carbon capture and storage (CCS)
3. the assumed development of energy efficiency”

Key message: Future H2 demand is determined by the way we shape our future industry and
value chains. Consumption behaviour of people will have major impact on future hydrogen
demand, e.g. Germany.
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4.3 Additional Renewable Energy Capacity to Cover Oil De-

mand in Germany

Source: Öko-Institut e.V., Wasserstoff und wasserstoffbasierte Energieträger bzw. Rohstoffe, 2020, p.64/abb.2-6.

“As with the other electricity-based processes, the land use requirements and the raw material
requirements are essentially due to the renewable electricity generation required and the CO2
feedstock plants used. For the potential production of electricity-based synthetic liquid hy-
drocarbons in Germany, the required additional capacity addition of renewable electricity
generation plants is shown in these tables”

Key messages:
• Very high demand of additional RE power if we want to change from conventional oil and
gas consumption to synthetic fuels → Behavioural changes and modal shifts are required
and shifting demand to electrification of energy services. No 1:1 shifting is possible!
• We don't want to simply replace oil; we want to bring its use down or find an alternative.
Only if we maintain our current industrial landscape and do nothing but substitute oil by
H2 then we need too much H2. But if we transform our value chains, industry, set-up,
thinking, then it becomes tangible.
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5. Power-to-X Value Chain and Sector Coupling

5.1 Steps from Renewable Energy to Feedstock/Fuel Supply

Source: Own illustration based on: Frontier Economics/Word Energy Council, International aspects of a Power-to-X Roadmap, 2018,
p.15/4.

• PtX means using additional renewable electricity (solar, wind, hydro, geothermal, etc.)
to split water (H2O) into its components oxygen (O2) and (emission-free) H2.
• Power-to-X refers to the conversion of electric power to other forms of energy carriers
for use in different sectors (such as transport or chemicals).
• H2 is the core of Power-to-X, serving as input for the production of the other e-fuels
• H2 can be further synthesised and refined by adding either CO2 (Fischer-Tropsch Syn-
thesis) or nitrogen (N2) (Haber-Bosch Synthesis) to produce S4F (Sustainable Fossil-Free
Fuels and Feedstocks), the ‚-X‘.
• H2 can further be refined to produce:
o PtL (Kerosine, Gasoline, Diesel, Methanol),
o PtG (Methane) or
o Power-to-Chemicals (e.g. ammonia = NH3)
• This refinement needs Carbon (CO2) and Nitrogen (N2) inputs → these inputs should
also be sourced climate neutral.
• The resulting products should then be used mainly for ”hard-to-abate” sectors of in-
dustry and transport, which cannot easily be defossilised by directly using renewable
electricity and batteries.
• Biomass: carbon chain: CnHmOy
18

5.2 Power-to-X Value Chain

Key message: Value chain shows how complex it is for Power to X much more than for classi-
cal power generation and distribution. It requires knowledge from up- and downstream mar-
kets, like in oil and gas business.

Sector coupling in the project Westküste 100 in Schleswig Holstein: Green H2 and decarboni-
sation on an industrial scale.
19

• The north coast of Germany exhibits excellent conditions: strong wind energy region as
well as excellent geological storage conditions called Westküste100
• 100% electricity sourced by renewable energies (RE) → region has ‚too much‘ RE → grids
regularily have to be shut down when strong winds occur, otherwise grids collapse → this
project can benefit of this excess RE.
→ The shutdown of green power generation plants cost €710 million nationwide in 2019.
The costs are borne by the consumers via grid fees.
→ excess electricity needs to be converted into H2 to make it accessible for industrial
complexes in the project
• Cross-industry partnership: EDF Deutschland, Holcim Deutschland, OGE, Ørsted,
Raffinerie Heide, Stadtwerke Heide, thyssenkrupp Industrial Solutions and Thüga
- formed together with the Entwicklungsagentur Region Heide and the Westküste
University of Applied Sciences.
• August 2020: Commissioning of an electrolyser with a capacity of 30 megawatts
for the production of H2 targeted for 2023.
• Planned: storing H2 in underground caverns → enable a continuous production process
independent of fluctuating amounts of wind power.
• Parts of the H2 produced will also be fed into the natural gas grid of a local energy provider
(Stadtwerke Heide) via a new pipeline.
• H2 filling station will be supplied.
• Vision: Construction of a 700-megawatt electrolysis plant from 2025 onwards, based on
electricity from offshore wind farms.
→ waste heat and oxygen produced during electrolysis will then also be used.
→ Furthermore: Production of climate-friendly fuels for aircraft = milestone on the way
to complete sector coupling.
20

5.3 Global Current Hydrogen Projects in 2021

Source: IRENA, Geopolitics of the Energy Transformation The Hydrogen Factor, p.42/fig.3.3.

“The figure describes large-scale projects only, including commissioning after 2030. It does
not include more than 1 000 small-scale projects and project proposals. GW = gigawatt; H2 =
hydrogen; ktpa = kilotonnes per annum. Disclaimer: This map is provided for illustration pur-
poses only. Boundaries shown on this map do not imply any endorsement or acceptance by
IRENA.”

5.4 Announced Pipeline of Industrial Hydrogen Projects

Source: BloombergNEF, 2022

Note: includes only officially announced projects that have disclosed electrolyser capacity. N/A means the developer has not
disclosed the project’s commissioning year.

Key message: We are still at the very beginning of our PtX journey; even though many projects
have been announced, we need a lot more.
21

6. Summary of Introduction
Why do we need PtX?
• Allows to go the last mile for defossilisation and get rid of fossil fuels completely.
• complementary energy carrier to limit global warming < 2°C.
• Absolutely necessary energy carrier to achieve climate neutrality by 2050, especially for
indirect electrification of hard to abate sectors.
• Enables conversion of renewable electricity.
into materials and energy carriers (H2, platform chemicals, synthetic fuels etc.)
• Energy carrier vs. molecule → energy content vs. characteristics of the molecule
Goal of both: replace fossil input!
• Use global RE potential: PtX can be transported and traded globally.

Further notes:
• Not all fossil fuels can be replaced by direct use of electricity or sustainable produced
biofuels → synthetic fuels and feedstock could serve as supplementary alternative to
achieve complete decarbonisation by 2050.
• Non-RE sources represent more than 70% in the energy, transport and heat sector as of
2015.
• Out of the total emissions of 2015, power accounted for 38%, transport for 22%, industry
for 19% and heating and cooling for 12% (IRENA, 2017).
• Around 1/3 of energy related emissions currently have no economically viable options
for deep decarbonisation.

Key question: Allocation

Where to start and on which sectors to focus?
2
22

Production of Renewable PtX

1. Hydrogen Production ................................................................................................. 23
1.1 Options for Hydrogen Production.............................................................................................. 23
1.2 The Colours of Hydrogen Production ........................................................................................ 24
1.3 How Green Is Blue Hydrogen? .................................................................................................... 24

2. Focus on Production of Green Hydrogen ....................................................................... 27

2.1 Production Step 1: Electrolysis .................................................................................................. 27
2.2 Prodcution Step2: Carbon Capture through Direct Air Capture ............................................... 32
2.3 Production Step 3: PtX Production ............................................................................................ 33
23

1. Hydrogen Production
1.1 Options for Hydrogen Production

Feedstock Process By-product Designation

and energy source of hydrogen production of the process of the hydrogen
+E Electrolysis with nuclear power Oxygen + Pink hydrogen

+E Electrolysis with electricity mix Oxygen + Yellow hydrogen

Electrolysis Oxygen + Green hydrogen

Water +Solar/
Wind
Thermolysis Oxygen + Green hydrogen

Photolysis
Oxygen + Green hydrogen

Solid Gasification CO2 + Green hydrogen**

Bio-
mass Bio-
gas
Reforming* CO2 + Green hydrogen**

Pyrolysis/
Plasmalysis + E
Solid Carbon + Turquoise hydrogen

Natural gas/ me-

thane Reforming*
CO2 (with CCS)
+ Blue hydrogen

CO2 + Grey hydrogen

Coal Gasification CO2 + Black hydrogen

Source: Sachverständigenrat für Umweltfragen, Wasserstoff im Klimaschutz: Klasse statt Masse, June 2021. Graphic: ibid., p.16/fig.4.
Note: E: energy; RE: renewable energy; * Steam reforming / autothermal reforming; ** With restrictions, see notes.

“Since biomass is a renewable resource, the hydrogen produced from it is often referred to as
green. This assumes that biomass use is basically CO2-neutral because the same amount of
CO2 is emitted when it is used to produce energy as the plants previously absorbed (SRU 2020,
para. 76 ff.). However, the balance, especially of cultivated biomass, is generally not green-
house gas neutral, as greenhouse gas emissions are produced during cultivation and harvest-
ing, for example through soil cultivation and fertilisation. Provision, processing and transport
also cause greenhouse gases (ARNOLD 2015; HORNG and KALIS 2020). For the fractions resid-
ual and waste wood, there are already established utilisation paths in material and energy
recovery (MANTAU et al. 2018; UBA 2021c). In the use of wood biomass, the loss of the CO2
storage function must also be considered (IBISCH et al. 2020). The additional demand for
wood biomass at the international level entails the risk of further overexploitation of areas
whose stability is crucial for limiting climate change (SRU 2020, Section 2.3.4). In addition,
other environmental impacts must be taken into account (ibid.).”
24

1.2 The Colours of Hydrogen Production

1.3 How Green Is Blue Hydrogen?

Lifecycle GHG emission analysis of blue H2 compared to natural gas, diesel and coal

Source: Howarth/Jacobson, How green is blue hydrogen?, 2021, p.8/fih.1.

“For our default assumptions (3.5% emission rate of methane from natural gas and a 20-year
global warming potential), total carbon dioxide equivalent emissions for blue hydrogen are
only 9%-12% less than for grey hydrogen. While carbon dioxide emissions are lower, fugitive
methane emissions for blue hydrogen are higher than for grey hydrogen because of an in-
creased use of natural gas to power the carbon capture. Perhaps surprisingly, the greenhouse
gas footprint of blue hydrogen is more than 20% greater than burning natural gas or coal for
25

heat and some 60% greater than burning diesel oil for heat, again with our default assump-
tions. In a sensitivity analysis in which the methane emission rate from natural gas is reduced
to a low value of 1.54%, greenhouse gas emissions from blue hydrogen are still greater than
from simply burning natural gas, and are only 18%-25% less than for grey hydrogen. Our anal-
ysis assumes that captured carbon dioxide can be stored indefinitely, an optimistic and un-
proven assumption.”

Lifecycle GHG emissions of hydrogen production pathways

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 43f.

Note: NG = Fossil gas; ATR = Autothermal reforming; SMR = Steam methane reforming; PEM = Polymer electrolyte mem-
brane electrolysis.

“The energy production includes upstream methane emissions and has leakage rates of 0.15–
1.2% based on fossil gas source and transport distance. H₂ production refers to process emis-
sions from SMR/ATR. GHG emissions for capex are due to carbon emissions associated with
grid electricity used to manufacture equipment. Embedded emissions in renewables are as-
sumed to be zero due to the complete decarbonisation of production process, including elec-
tricity, steel and concrete. A GHG emissions factor of 84 is used to reflect the global warming
potential of methane over 20 years.”
26

Total GHG emissions on a GWP 20 basis from fossil-based hydrogen with CCS

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 43f.

“This figure assumes a GHG emissions factor of 82.5 used to reflect the global warming poten-
tial of methane over 20 years based on IPCC AR6. Note that the most commonly used GWP is
GWP100. With GWP100, the GHG eect of fugitive emissions would be considerably smaller.
OGCI = Oil and Gas Climate Initiative; DA = Delegated Act. “

Key message: It depends on length of NG pipeline due to leakage in pipelines.To achieve 70%
reduction methane leakage must be below 1% to achieve substantial reduction of GHG emis-
sions; 3,5% is world average according to Howard & Jacobsen. Main point: GWP of methane is
assumed for 20 years based on IPCC (and not for 100 years). Reason: Methane stays shorter in
the atmosphere.
27

2. Focus on Production of Green Hydrogen

Source: S. Shiva Kumar, V. Himabindu (Materials Science for Energy Technologies), Hydrogen production by PEM water electrolysis –
A review, 2019, p.443/fig.1.

In the following, the focus lies on the production of green hydrogen through electrolysis.

2.1 Production Step 1: Electrolysis

2.1.1 How Does an Electrolyser Work?

Electrolysers consist of an anode and a

cathode separated by an electrolyte/
membrane.

Due to different types of electrolyte mate-

rial used and the ionic species it conducts,
different electrolysers function differ-
ently:
• Alkaline and Alkaline-Exchange-Mem-
brane (AEM)
• Proton-Exchange-Membrane (PEM)
• Solid-Oxide-Electrolyser-Cell (SOEC)

Source: Thomas Schmidt, Wasserstofftechnik, 2020, p.257f.

28

2.1.2 Key Parameters of Different Electrolyser Technologies

Sources: IRENA, Green Hydrogen Cost Reduction, 2020, p.31/figure 6.

Alkaline PEM SOEC

Operating Temper. 60-80°C 50-80°C 650-1.000°C

Voltage Efficiency 62-82% 67-82% < 110%

Stack Lifetime 20.000-90.000 h 60.000-90.000 h < 10.000 h
Operating Pressure approx. 30 bar < 50 bar approx. 1 bar
Demonstra-
Maturity Mature Commercial
tion

Source: Frontier Economics/Word Energy Council, International Aspects of a Power-to-X Roadmap, 2018, p.6/1.

Electrolyser technology characterisation:

• The electrolyser is composed of the stack (where actual splitting of water into H2 and O2
takes place) and the balance of plant which comprises power supply, water supply and
purification, compression, possibly electricity and H2 buffers and H2 processing.
• Both components are important for the cost, since they have similar cost shares.
• The largest potential for near term cost reduction is in this balance of plant, while R&D
is required to reduce stack cost and increase its performance and durability. Trade offs
among these are significant.
• The flexibility of alkaline and Polymer Electrolyte Membrane (PEM) stacks is enough to
follow fluctuations in wind and solar.
• Flexibility of the system is limited by the balance of plant (e.g. the compressors) rather
than the stack.
• Furthermore, flexibility in the very short-term time scales involved (i.e. sub-second) is not
the key value proposition for electrolysers; their key system value lies in bulk energy
storage.
29

• This effectively decouples variability of generation from stability of H2 and power to X

(PtX) demand through H2 storage in gas infrastructure (e.g. salt caverns, pipelines)
and liquid e-fuels storage.
• There is no single electrolyser technology that performs better across all dimensions.
• The future technology mix will depend on innovation and competition among key tech-
nologies and manufacturers, leading to technological improvements and a better fit for
different technologies and system designs in each specific application.

Electrolyser requirement characterisation:

• Water and land use do not represent barriers to scaling up → In places with water
stress, the source of water for H2 production should be explicitly considered in strate-
gies and further elaborated in project planning.
• Where access to sea water is available, desalination can be used with limited impact on
cost and efficiency, potentially deploying multi-purpose desalination facilities to provide
local benefits.
2
o A 1 GW plant could occupy about 0.17 km of land, which means 1000 GW of elec-
trolysis would occupy an area equivalent to Manhattan (New York).

Electrolyser performance characterisation:

• Improving the performance of the electrolyser stack in one dimension usually goes
along with reduced performance in other parameters (efficiency, cost, lifetime, me-
chanical strength and manufacturing).
• This leads to trade offs to be tackled through innovation in materials and manufac-
turing, leading to a set off specific system designs tailored to different applications in
the future.
• Potential breakthroughs in technology development can be disruptive in terms of accel-
erating cost reductions for the stack, while for the balance of plant, it is more about
economies of scale, standardisation of design and supply chains, and learning by do-
ing.
30

2.1.3 Alkaline Electrolysis

The reaction occurs between two electrodes in a solution composed of water and liquid
electrolyte.
1. Water electrolysis deals with de-
composition of water into hydrogen
and oxygen by passing an electric cur-
rent (DC) between two electrodes sep-
arated by an aqueous electrolyte with
high ionic conductivity:
-
2. Transport of hydroxide ions (OH )
through the electrolyte from cathode
to anode → H2 generated on cathode
side.
1
3. H2O → H2 + O2
2

It is a type of electrolyser that is char-

acterized by having two elec-
Sources: Advances In Hydrogen Generation Technologies, Hydrogen Pro- trodes operating in a liquid alkaline
duction by Membrane Water Splitting Technologies, 08/2018, p.30. MDPI, electrolyte solution of potassium hy-
CFD Modeling and Experimental Validation of an Alkaline Water Electrolysis
Cell for Hydrogen Production, 12/2020, p. droxide (KOH) or sodium hydrox-
ide (NaOH). These electrodes are sep-
arated by a diaphragm, separating the product gases and transporting the hydroxide ions
−
(OH ) from one electrode to the other. A recent comparison showed that state-of-the-art
nickel based water electrolyzers with alkaline electrolytes lead to competitive or even better
efficiencies than acidic polymer electrolyte membrane water electrolysis platinum group
metal based electrocatalysts.

2.1.4 PEM Electrolysis (Polymer Electrolyte Membrane)

The solid polymer electrolyte that conducts proton ion is sandwiched between two elec-
trodes to construct a membrane electrode assembly (MEA).

1. H2O reacts at anode to form O2 and pos-

itively charged hydrogen ions (protons):

+ -
2H2O → O2 + 4H + 4e

2. Electrons flow through an external cir-

cuit and hydrogen ions selectively
move across the PEM to the cathode

3. At the cathode, hydrogen ions com-

bine with electrons from external circuit
to form hydrogen gas:
Source: International PtX Hub, Water electrolysis explained – the basis
+ -
for most Power-to-X processes, 2021.
4H + 4e → 2H2
31

• The PEM electrolysis works in an acidic environment. Precious metals such as iridium or
platinum must therefore be used to protect the electrodes from corrosion. Furthermore,
a gas-proof, proton-conducting plastic membrane is used, enabling a higher purity to be
achieved than with the other technologies.
• One of the largest advantages to PEM electrolysis is its ability to operate at high current
densities. This can result in reduced operational costs, especially for systems coupled with
very dynamic energy sources such as wind and solar, where sudden spikes in energy input
would otherwise result in uncaptured energy. The polymer electrolyte allows the PEM
electrolyzer to operate with a very thin membrane (~100-200 μm) while still allowing high
pressures, resulting in low ohmic losses, primarily caused by the conduction of protons
across the membrane (0.1 S/cm) and a compressed hydrogen output.
• The PEM, due to its solid structure, exhibits a low gas crossover rate resulting in very high
product gas purity. Maintaining a high gas purity is important for storage safety and for
the direct usage in a fuel cell. The safety limits for H2 in O2 are at standard conditions 4 mol-
% H2 in O2.
• The efficiency of a PEM cell is dependent on the current density during operation. While a
higher current density is crucial to cut down the start-up cost, a lower current density is
needed to cut down the cost of operation.

2.1.5 SOEC: Solid Oxide Elecrolysis: High Temperature Co-electrolysis

of CO2 and steam
1. The triple phase bound-
ary (TPB) is the region
where the gas, electrode
and electrolyte meet. It
consists of active and in-
active sites with the elec-
trochemical reactions oc-
curring at the active TPB.
2.The feed gasses flow
through the porous cath-
ode and to the TPB of the
cathode electrolyte re-
Source: Journal of Energy Chemistry, 2017.
gion. The cold inlet gas
compositions differ from
the hot inlet equilibrium
gas compositions at the fuel electrode in the presence of a metal catalyst as a result of the
rWGSR/WGSR equilibrium.
3. Thermal energy, in addition to the electrical energy supplied is then used to split the gasses
at the active TPB sites. The electrolysis products and the unreacted feed gasses then flow out-
wards through the cathode.
4. Oxide ions produced from the dissociation process are transported through the electrolyte
to the TPB of the anode/electrolyte layer. At the anode TPB, oxide ions recombine, forming
oxygen gas which flows outwards through the anode.
→ The main advantage of Co-SOEC is that it generates H2+CO in one process step, so the syn
gas can be directly used in the FT process to produce liquid syn fuels later or in the
methanation reaction to produce syn methane. It avoids the need for a RWGF step to pro-
duce CO.
32

2.2 Prodcution Step2: Carbon Capture through Direct Air

Capture
Direct Air Capture (DAC) is the one always available and sustainable CO2 source. In some
places biomass can be an option.

Cost challenges:
• Biomass (90€/tCO2)
• Industrial emissions
(30-50€/tCO2)
• Direct Air Capture
(150-180€/tCO2)
• Currently around
400 €/tCO2

Source: Climeworks.com

• “Direct air capture technologies extract CO2 directly from the atmosphere. The CO2 can
be permanently stored in deep geological formations, thereby achieving carbon dioxide
removal (CDR). Benefits of DAC as a CDR option include high storage permanence when
associated with geological storage and a limited land and water footprint. The captured
CO2 can also be used, for example in food processing or combined with hydrogen to pro-
duce synthetic fuels. In a transition to net zero emissions, the CO2 used to produce syn-
thetic fuels would increasingly need to be captured from sustainable bioenergy sources
or from the atmosphere to avoid delayed emissions from fossil-based CO2 when the fuel
is combusted. DAC is therefore one option to achieve this. ” Source: IEA, Direct Air Caputre
– deep dive, 09/2022.

• “Two technological approaches are currently being used to capture CO2 from the air: solid
and liquid DAC. Solid DAC (S-DAC) is based on solid adsorbents operating at ambient to
low pressure (i.e. under a vacuum) and medium temperature (80-120°C). Liquid DAC (L-
DAC) relies on an aqueous basic solution (such as potassium hydroxide), which releases
the captured CO2 through a series of units operating at high temperature (between 300°C
and 900°C).” Source: ibid.
 To obtain more H2 apply

Key message: The figure

Syngas is the mother of

shows the central role of

Water-Gas-Shift-Reac-

Syn Gas for further pro-

CO + H2O → CO2 + H2
C + H2O → CO + H2
all molecular Lego
C + ½ O2 → CO

cessing.
tion:
Gasoline/ Waxes Naphtha
Diesel Alcohols/
Olefines
2.3 Production Step 3: PtX Production

Aldehydes
Iron Alkanes
Ethanol Isobutane
reduction
2.3.1 Syngas for the PtX Production

Chemicals Polyolefins
Syngas Ethylene- Oxy-Chemicals
Hydrogen Propylene
CO + H2 Syn. fuels Polymers
Acrilc acid

Reforming
Power Pigments
Generation Gasoline/ Adhesives
Ammonia Methanol Olefines VAM
Acetic Acid Ketene
M100/M85 Acetic Ester
Fertilisers Formaldehyde MTO/MTB
Plastics MTBE
DME Gasoline
33
34

2.3.2 Different Processes to Produce Different PtX Products

I)Methanation Process
a. Production of synthetic “natural gas” – CH4
b. Process: Sabatier Process, mature, commercially available, complex
c. Other process in lab scale/pilot stage
d. Overall efficiency around 50%
e. Currently very high costs for synthetic CH4 when using H2
II) Fischer-Tropsch Synthesis
f. Production of synthetic crude (CXHY) that is then refined to different synthetic fuels
g. Gasoline, diesel, kerosene through hydro cracking, isomerisation and distillation
h. Fischer-Tropsch Synthesis process is mature, commercially available for large
volumes
i. Overall efficiency is low (below 50%)
j. Requires CO and H2 => requires additional process RWGS
k. Smaller processes with DAC in development/pilot stage
l. Very high costs for synthetic fuels when using hydrogen
III) Methanol Process
m. Process to produce olefins for plastics, OME (oxymethylene ether), DME (dimethyl
ether)
n. Can use CO2 and H2 directly to produce Methanol
IV) Green Ammonia

I) Methanation: Production of syn. gas via Sabatier Process

4H2 + CO2 → CH4 + 2H20 (+heat)

Source: Terega, Synthetic Methane: Teréga working today for the future of gas, 2022
35

Producing green methane (CH4)

with Sabatier Process at 300–400
°C and 30 bar in the presence of a
nickel catalyst. Conversion effi-
ciency approx. 50%

Key message:
There are two routes to produce
syn gas:
1. via biogas plus H2 in a biologi-
cal reactor
2. via CO2 separation from biogas
and hydrogen in a catalytic reac-
tor.
In both terms additional synthetic
Source: Technische Universität Berlin, Technischer Stand und Flexibilität des
Power-to-Gas-Verfahrens, 2018, p.4.
methane is produced.

Methanisation (or Biomethanisation) is a process based on the natural fermentation of or-

ganic matter to produce biogas. The raw materials used (or “inputs”) are organic waste from
farming (manure, slurry, crop residues etc.), from agribusiness, or from local authorities (sew-
age sludge, household biowaste, cuttings from roadside verges etc.). This process takes place
within a methanisation unit. In the large tank, called a “digester”, the organic waste becomes
part of an anaerobic digestion process: it is heated and broken down by bacteria and micro-
organisms in the absence of oxygen. This natural activity produces methane. The biogas ob-
tained from methanisation can be used directly to produce heat and electricity. It can also be
injected into the natural gas grid to encourage the consumption of renewable gas at a regional
and national level. In this case, the biogas needs to be purified so that its characteristics are
similar to those of natural gas. This is where we talk of “biomethane.

Sabatier Process:The oxygen is put into a store while the hydrogen is immediately employed
to make methane. CO2 is also in store ready to be streamed with the hydrogen through a Sa-
batier reactor. The methane that is generated is then stored. The Sabatier reaction gives off
heat. This is used for hot water and heating.
4H2 + CO2 => CH4 + 2H20 (+heat)
The Sabatier process produces methane and water from a reaction of hydrogen with carbon
dioxide at elevated temperatures (optimally 300–400 °C) with a nickel catalyst.
Exothermic reactions:
CO2 + 4H2 → CH4 + 2H2O
CO + 3 H2 → CH4 + H20
Methanation reaction over different carried metal catalysts including Ni, Ru and Rh has been
widely investigated for the production of CH4 from syngas and other power to gas initiatives.
Nickel is the most widely used catalyst due to its high selectivity and low cost.
36

II) Fischer-Tropsch Synthesis: Production of synthetic liquid (1)

Overall efficiency
below 50 % with
green H2.

Source: Adaption: Öko-Institut e.V.: Wasserstoff und wasserstoffbasierte Energieträger bzw. Rohstoffe, 2020, p.63/Abb.2-16.

• The output of the Fischer Tropsch Synthesis depends on the final product; (conversion
efficiency from CO + H2 to final product).
• FTS to produce syn. fuels exists on large scale and is mature.
• Further cost reductions are not expected but commercial RWGS is still a techno-
logical challenge!
• The FTS reaction is one of the reactions for growing carbon chains (–CH2–) to pro-
duce hydrocarbons of various lengths (paraffins or olefins).

When coupled with CoSOEC,

this process can be scaled to
commercial level.

Source: Adaption: Öko-Institut e.V.: Wasserstoff und wasserstoffbasierte Energieträger bzw. Rohstoffe, 2020, p.63/Abb.2-16.
37

II) Fischer-Tropsch Synthesis : Decentralised (2)

PtX production with DAC (pilot stage)

Source: KIT, Kohlendioxidneutrale Kraftstoffe aus Luft und Strom (2019), Zenid, Jet Fuel from Air, 2020; Climeworks, 2020.

Kopernikus-Project P2X
Phases in the scale-up of DAC technology

Pilot plant currently produces 10l fuel per day

200l/d plant in planning within the Kopernikus project

Demonstration plant in megawatt range with 1500-2000l/d

production capacity

YouTube video: Projektträger Jülich (2017): Kopernikus Project P2X

38

III) Methanol (CH3OH) synthesis: Liquid fuel production

Complex processes.
DME/OME synthesis,
olefin syn., oligomeri-
sation, hydrotrating

Source: Adapted from: Agora Verkehrswende, Agora Energiewende and Frontier Economics (2018): The Future Cost of Electricity-
Based Synthetic Fuels, p.69/figure 14.

• Synthetic liquid fuels are produced from H2 and CO2 or carbon monoxide using methanol
synthesis or Fischer-Tropsch synthesis.
• In the case of methanol synthesis, methanol is produced from H2 and CO2 or carbon
monoxide.
• Methanol can either be used directly or converted further to synthetic petrol, diesel
or monomolecular fuels such as OME (oxymethylene ether) and DME (dimethyl ether).
• The largest methanol synthesis plant is currently in operation in Iceland and generates
more than 5 million liters of methanol per year.

Further notes:
• Methanol process at 250°C, 75 bar, efficiency 80%. If one uses DAC and RE power costs are
5-times higher than from fossil fuel 100$/t to 200$/t.
• Methanol synthesis is a mature process. Further cost reductions are not expected in large
scale.
• Future cost reductions are linked to electrolysis development and not to the synthesis
process itself.
39

IV) Green Ammonia

• Extraction of nitrogen from air

with a cryogenic air separation
unit (ASU) and electric power
• Green ammonia is produced
from green hydrogen and nitrogen
via the industrial Haber-Bosch
process (high technology ma-
turity).

How can green NH be used?

3

• As an energy carrier of hydro-

gen to enable transportation
(higher energy density compared
to hydrogen)
• As fuel in fuel cells or directly in
combustion engines.
• To decarbonise the fertiliser
production

Big advantage:
Green ammonia (NH3) provides a
pathway to fully CO2 neutral elec-
tricity generation and storage on a
scale that is not limited by scarcity
of materials or storage space.
40

Source: The Royal Society (2020), Ammonia: zero-carbon fertiliser, fuel and energy
store.

Source: Campfire, NH3 (teil 2): Grüner Ammoniak – Energieträger der Zukunft (mehr), n.d

The Haber-Bosch process is most frequently used for ammonia synthesis, whereby several
process steps are carried out. Molecular nitrogen has to be extracted from the air and in the
high-pressure reactor (Haber-Bosch reactor) the two nitrogen atoms are broken up by means
of a catalyst under high pressure and high temperatures. Hydrogen is produced from water
vapour, which is then reacted with nitrogen in the Haber-Bosch reactor to form ammonia. The
process step for hydrogen production is largely realised from fossil energy sources, e.g. ob-
tained from natural gas by means of steam reforming, which makes the process harmful to
the climate and is the cause of about 3 per cent of global CO2 emissions from fertiliser produc-
tion. A green alternative is to obtain the hydrogen from electrolysis of water vapour. If the en-
ergy required for this is renewable, this process is climate-neutral. However, current Haber-
Bosch processes must be operated continuously with a base load of at least 50% in order to
be economically viable.
41

2.4 Technology readiness levels of key PtX production, storage and

distribution technologies

• AEM = anion exchange membrane.

• ALK = alkaline.
• ATR = autothermal reformer.
• CCUS = carbon capture, utilisation and
storage. → For technologies in the CCUS
category, the technology readiness level
(TRL) refers to the overall concept of
coupling these technologies with CCUS.
TRL classification based on Clean Energy
Innovation (2020), p. 67.
• GHR = gas-heated reformer.
• LOHC = liquid organic hydrogen carrier.
• PEM = polymer electrolyte membrane.
• SOEC = solid oxide electrolyser cell.
• Biomass refers to both biomass and
waste.

Source: IEA, Global Hydrogen Review 2021, 2021, p.170.

3
42

Renewable PtX Economics

1. Production Costs of Green Hydrogen............................................................................ 43
1.1 Cost Factors ................................................................................................................................ 43
1.2 Hydrogen Production Costs Now and in 2050 in Germany ....................................................... 43
1.3 Green vs. Blue Hydrogen ............................................................................................................ 44
1.4 How to Reduce Production Costs of Green H2? ........................................................................ 45
1.5 Impact of CAPEX, FLH and Electricty Costs................................................................................ 46
1.6 Renewable Hydrogen Production Costs Depending on Operating Hours ................................ 47
1.7 Worldwide Expectations: Hydrogen Cost Development by Production Type .......................... 47
1.8 What Makes Up Costs of Green Hydrogen? ................................................................................ 48

2. Renewable Energy Generation Cost Development ......................................................... 50

2.1 Cheapest Source of New Bulk Electricity Generation by Country ............................................ 50
2.2 Cost Development of Solar and Wind ........................................................................................ 51
2.3 Role of Full Load Hours .............................................................................................................. 54
2.4 Need for Massive Deployment of Renewables .......................................................................... 55
2.5 Cost Development of Power Sources in Germany ..................................................................... 56
2.6 Importance of the “Additionality” Criteria When Introducing PtX Production ........................ 57

3. Hydrogen Electrolyser Cost Development..................................................................... 58

3.1 Cost Breakdown for Alkaline Electrolysers ................................................................................ 58
3.2 Cost Development of Electrolysers over Last Years .................................................................. 59
3.3 Benchmark Electrolysis System CapEx ...................................................................................... 60
3.4 Future Cost Development of Electrolysers as Function of Installed Capacity.......................... 60
3.5 Estimate and Forecast of Annual Electrolyser Shipment .......................................................... 61
3.5 Announced Electrolyser Pipeline ............................................................................................... 61

4. Scale-Up and Outlook for Hydrogen Production ............................................................ 62

4.1 Hydrogen Production Costs from Hybrid Solar PV and Wind Systems in 2030 ........................ 62
4.2 Levelised Cost of Green Hydrogen Production.......................................................................... 62
4.3 Levelized Cost of Hydrogen from Cheapest Available Renewable Power in 30 Coutries......... 65
4.4 Reduction of Green Hydrogen Production Costs in the Long-Term ......................................... 65
4.5 Competitiveness of Future Costs for PtX Products ................................................................... 69
4.6 Cost Development of Green Ammonia Production ................................................................... 71
4.7 CO2 Price Needed to Make Syn. Shipping Fuel and Syn. Gas Competitive .............................. 72
4.8 Synthetic Jet Fuel Costs Are Driven by H Costs ........................................................................ 73
2

IV) Renewable PtX Infrastructure .................................................................................... 74

43

1. Production Costs of Green Hydrogen

1.1 Cost Factors
• The major cost component for green H2 is the electricity supply.
• Cost decline in this is already underway through the competitive deployment of re-
newables.
• There is a need to focus on reducing the procurement and construction cost and in-
creasing the performance and durability of electrolysers, to achieve further cost reduc-
tions in green H2 production.
• Today green H2 (in ideal locations with the lowest renewable electricity costs) can achieve
cost-competitiveness with fossil-based H2.
• Cost reductions in renewable electricity and electrolysers will continue to a rising number
of sites where green H2 can be produced competitively.
• Policy support in recently unveiled H2 strategies in many countries is mostly in the form of
explicit electrolyser capacity targets and, to a more limited extent, cost targets. These
have yet to translated into specific regulatory instruments. So far, these explicit targets
are not enough to be in line with 1.5°C decarbonisation pathways.

1.2 Hydrogen Production Costs Now and in 2050 in Germany

Source: Dr. Steffen Bukold (Greenpeace Energy) (2020), Blauer Wasserstoff, p.8.

“The following chart shows the price trends expected in the current literature for locations in
Germany. Gray and blue hydrogen will on average remain more cost-effective than green hy-
drogen into the next decade. “

Key message: By 2050 latest, green H2 is competitive (based on data before 2020 situation).
44

1.3 Green vs. Blue Hydrogen

Production costs for green and blue hydrogen (in € /kWH2)

Source: Sachverständigenrat für Umweltfragen (June 2021), Wasserstoff im Klimaschutz: Klasse statt Masse, p.22/fig.5.

„The production of green hydrogen is currently more expensive than that of blue hydrogen.
However, the potential for cost reductions is higher for green hydrogen. Under favorable con-
ditions, green hydrogen can become more cost-effective than blue hydrogen from 2030 (Fig-
ure). These conditions include, for example, falling electricity prices, development of green
hydrogen infrastructure, and decreasing transport costs. Also of importance, however, are
high CO2 prices, which increase the production costs for blue hydrogen. In addition, further
improvements in electrolysis processes need to be made in terms of efficiency and flexibility
must be developed” (Source: International Energy Agency (2021), Global Hydrogen Review)
45

1.4 How to Reduce Production Costs of Green H2?

Source: Roland Berger & FCH, Development of Business Cases for Fuel Cells and Hydrogen Applications for Regions and Cities, 2017.

• Operation and Maintenance to keep system running in good condition.

• Maintenance costs are significant and differ across AEM, PEM and Alkaline technologies.
• However, the key component to consider here are terms of Service-Level Agreement (SLA)
or extended warranties. These include costs that some have described as being practically
deferred CapEx costs for replacements of stacks or other parts. Therefore, these OpEx
items can quickly amount to annual payments well beyond the often assumed 1-3% to
become a significant percentage of total CapEx cost.
46

1.5 Impact of CAPEX, FLH and Electricty Costs

Source: IEA (2019), The Future of Hydrogen – Seizing today‘s opportunities, p.47/fig.12.
Note: Numbers based on an electrolyser efficiency of 69% (LHV), discount rate of 8% and stack lifetime of 95.000 hours.

The numbers in this figure are based on an electrolyser efficiency of 69% (LHV) and a discount
rate of 8% and following stack lifetimes:
Stack lifetime:
• 2020 & 2030: 95,000 hours
• 2050: 100,000 hours

Further notes:
• As electrolyser operating hours increase, the impact of CapEx costs on the levelised
cost of H2 declines and the impact of electricity costs rises.
• Low-cost electricity available at a level to ensure the electrolyser can operate at relatively
high FLH is therefore essential for the production of low-cost H2.
• In electricity systems with increasing shares of variable renewables, surplus electricity
may be available at low cost.
• Producing H2 through electrolysis and storing the H2 for later use could be one way to take
advantage of this surplus electricity, but if surplus electricity is only available on an occa-
sional basis it is unlikely to make sense to rely on it to keep costs down.
• Running the electrolyser at high FLH and paying for the additional electricity can ac-
tually be cheaper than just relying on surplus electricity with low FLH.
47

1.6 Renewable Hydrogen Production Costs Depending on Op-

erating Hours

Source: Agora Energiewende (2021) Making renewable hydrogen cost-competitive, p.12/fig.2.

“The figure estimates for illustrative purposes and is based on full-load hours that can be
reached with renewable energy sources across Europe. The transparent boxes show the full-
load hours of corresponding renewable energy sources.”

Key message: You require a minimum of operating hours per year to make hydrogen produc-
tion economical. In most cases you need a combination of different renewable powers, like PV
and wind to achieve the required minimum number of hours per year.

1.7 Worldwide Expectations: Hydrogen Cost Development by

Production Type
„Green hydro-
gen will become
cost competi-
tive compared
to gray and blue
hydrogen. Cost
assumptions
based on green-
field projects,
excluding cost
for buildings
and cost for
building cooling
Source: adapted: Dr. Raed Kombargi, Dr. Shihab Elborai, Dr. Yahya Anouti, and Ramzi Hage,“The dawn of requirements.“
green hydrogen: Maintaining the GCC’s edge in a decarbonized world", Strategy&, 2020, p.5/ exhib.3.
Notes:. ALK=alkaline water, LCOE = levelized cost of energy, MWh = megaweatt hours, PEM = polymer
electrolyte membrane.

Key message: Low costs for green H2 is achievable, but it requires low power costs. The
achievable LCOE will determine the final costs of green hydrogen.
48

1.8 What Makes Up Costs of Green Hydrogen?

Electricity costs dependent on full load hours (FLH) as CapEx & OpEx/kWh are divided by FLH;
need for dedicated RE, not „excess“ RE power.

CapEx:
Capital expenditures are major purchases a company makes that are designed to be used over
the long-term, typically for fixed assets like property, plant and equipment.
One of the defining features of CapEx is longevity, meaning purchases benefit the company
for longer than one tax year. Fixed assets are depreciated over time to spread out the cost of
the asset over its useful life.
Depreciation is helpful for CapEx because it allows the company to avoid a significant dip in
its bottom line in the year the asset was purchased. CapEx can be externally financed, which
is usually done through collateral or debt financing.

OpEx:
Operating expense are the day-to-day expenses a company incurs to keep their business op-
erational.
Reported on income statements and companies can deduct OpEx from their taxes of the year
in which the expenses were incurred (e.g. rent & utilities, wages and salaries, interest paid on
debt etc.).
OpEx also consist of R&D expenses and the cost of goods sold. The goal of any company is to
maximise output relative to OpEx. In this way, OpEx represents a core measurement of a com-
pany’s efficiency over time.

WACC: weighted average cost of capital.

Cost of capital:
fixed, one-time expenses incurred on the purchase of land, buildings, construction, and
equipment used in the production of goods or in the rendering of services. In other words, it
is the total cost needed to bring a project to a commercially operable status.

Electrolyser efficiency:
Conversion costs: The conversion costs of H2 refer to the operating cost, including water and
other consumable inputs, multiplied by the conversion rate of the electrolyser.
Desalination cost negligible
49

Further comments:
• Need for cheap financing --> low interest-rates through risk reduction FLH is critical and
needs:
o Dedicated RE infrastructure, both wind and PV, good wind/solar resources
o Best technology: tracking PV, high hub height wind

• For CapEx & OpEx to decrease & efficency to increase, we need deployment at scale
(scale by number rather than scale by size)
• Definition Production Capacity: volume of products or services that can be produced by
an enterprise using current resources.
• Definition Energy efficiency: refers to the amount of output that can be produced with a
given input of energy. Energy efficiency is normally measured as the amount of energy
output for a given energy input and listed as a percentage between 0-100%.
• Energy efficiency is closely linked to cost and production capacity. For electrolysis, stack
and system energy efficiencies are often reported interchangeably. Similarly, efficiencies
are being reported both on lower (LHV) and higher (HHV) heating values, leading to fur-
ther comparison mismatches.

Sources: Agora, The Future costs of electricty based synthetic fuels. CSIR, The Cost of produc-
tion and Transport of Green H2 from Africa and unexpected Water Benefits by Thomas Roos.
EPRS (2015) Understanding Energy Efficiency. Picture: Windpark Energie Grün - Pixabay.
50

2. Renewable Energy Generation Cost Development

2.1 Cheapest Source of New Bulk Electricity Generation by
Country

Source: BloombergNEF, Scale-up of Solar and Wind Puts Existing Coal, Gas at Risk, 2020.

“LCOE calculations exclude subsidies or tax-credits. Graph shows benchmark LCOE for each
country in $ per megawatt-hour. CCGT: Combined-cycle gas turbine.”
51

2.2 Cost Development of Solar and Wind

“Power Genera-
tion Costs Decline
2010 – 2020. The
cost of electricity
from solar and
wind power has
fallen, to very low
levels. Since 2010,
globally, a cumu-
lative total of 644
GW of renewable
power generation
capacity has been
added with esti-
mated costs that
have been lower
Source: Renewable Market Watch (2020) Renewable Power Generation Costs Reduction - 2020 Over- than the cheapest
view in the Recent Study of IRENA Released in 2021 with LCOE of Renewable Energy Technologies.
fossil fuel-fired op-
tion in each re-
spective year.”

“The global benchmark is a country

weighted-average using the latest an-
nual capacity additions. Rge storage
LCOE is reflective of utility-scale pro-
jects with four-hour duration, it in-
cludes charging costs.”

Key message: LCOE of PV, wind etc.

has come down by 80-90% in last dec-
ade. It is expected that this trend will
continue in future especially for PV.
LCOE of 10 US$/MWh for PV and 30
US$/MWh for wind can be expected in
the near future.

Source: BloombergNEF (2020) Scale-up of Solar and Wind Puts Existing

Coal, Gas at Risk.
52

2.2.1 Solar Power Generation in 2020

Source: Hannah Richie/Max Roser (Our World in Data) (2020), Renewable Energy - Solar energy generation.

“This chart shows the amount of energy generated from solar power each year. Solar genera-
tion at scale – compared to hydropower, for example – is a relatively modern renewable en-
ergy source but is growing quickly in many countries across the world.“

Further comments:
• Photovoltaic power plants in North Africa (2,100 to 2,500 FLH): relatively low electricity
generation costs when constructed in locations with ample solar resources, such as North
Africa. The investment costs for PV plants are also expected to fall further until 2050, thus
contributing to lower electricity generation costs over the long-term. We assume that
ground-mounted PV power plants with single-axis tracking systems will be constructed.
• We also assume that the water required for H2 electrolysis will be produced in sea-
water desalination plants.
• PV power plants in the Middle East (2,200 to 2,600 FLH): The Middle East, like North Af-
rica, has favourable local conditions for renewable energy from PV. As is the case for North
Africa, we assume that the necessary water is produced using seawater desalination
plants.

Key message: But until now far too little renewable power is installed, e.g .in PV to produce
any green hydrogen anywhere. Only three countries produce more than 60 TWh/a: China, US
and Germany
53

2.2.2 Wind Energy Generation in 2020

Source: Hannah Richie/Max Roser (Our World in Data) (2020), Renewable Energy - Wind energy generation

“This chart shows the amount of energy generated from wind each year. This includes both
onshore and offshore wind farms. Wind generation at scale – compared to hydropower, for
example – is a relatively modern renewable energy source but is growing quickly in many
countries across the world.“

Further comments:
• This wind resource map provides an estimate of mean wind power density at 100m
above surface level.
• Power density indicates wind power potential, part of which can be extracted by wind tur-
bines.
• The map is derived from high-resolution wind speed distributions based on a chain of
models, which downscale winds from global models (~30 km), to mesoscale (3 km) to mi-
croscale (250 m).
• The Weather Research & Forecasting (WRF) mesoscale model uses ECMWF ERA-5 reanaly-
sis data for atmospheric forcing, sampling from the period 1998-2017.
• The WRF output at 3 km resolution is generalised and downscaled further using the
WAsP software, plus terrain elevation data at 150 m resolution, and roughness data at
300 m resolution. The microscale wind climate is sampled on calculation nodes every 250
m. For the microscale modeling, the terrain data is derived from the digital elevation mod-
els from Viewfinder Panoramas.
• The WAsP microscale modeling uses a linear flow model. For steep terrain, this modeling
becomes more uncertain, most likely leading to an overestimation of mean wind speeds
on ridges and hilltops. Users are recommended to inspect the terrain complexity of their
region of interest.

Key message: But until now far too little renewable power is installed, e.g . in wind to produce
any green hydrogen anywhere. Only two countries produce more than 225 TWh/a: China and
US, Germany has only 150 TWh/a.
54

2.3 Role of Full Load Hours

Source: Fasihi Mahdi & Breyer Christian Journal of Cleaner Production (2020), Baseload electricity and H2 supply based on hybrid PV-
wind power plants, Volume 243, 10 January 2020. Agora: Future Cost of Electricity-Based Synthetic Fuels.

• Patagonia, the Atacama Desert, the Horn of Africa and Tibet, have extremely good wind
conditions during the daytime.
• In addition to these regions, the cumulative hybrid PV-wind FLH at the joint border be-
tween Libya, Niger and Chad exceeds 6,000 h, representing high levels of solar and
wind compatibility at very low critical overlaps.
• Yet: nowhere in the world does the cumulative hybrid PV-wind FLH exceed 6,500 and
is thus unable to provide baseload electricity.
• Combining equal actual output capacities of single-axis tracking PV and wind power
plants (132.5% PV and 107.5% wind nominal capacities) would lead to higher cumula-
tive FLH.
• Yet: nowhere can it reach 8,760 FLH from an electricity uptake perspective.
• In addition, this cumulative FLH only indicates a physical feasibility of increasing elec-
tricity availability by installing equal capacities of PV and wind energy, while a cost-
optimised solutions would be based on different shares of PV and wind energy and
electricity storage options depending on the electricity generation profiles of each re-
gion and the respective cost assumptions of the technologies.

Key message: Many countries and regions in the world have good wind and good solar con-
ditions to achieve around 4000 FLH or more.
55

2.4 Need for Massive Deployment of Renewables

„ The underlying box
plots represent key sta-
tistics of average full-
load hours, multiplied
by 1 GW at the level of
hexagons in Europe
with an approximate
size of 50,000km2. They
do not represent the to-
tal potential volume of
renewable electricity
that can be generated.
The figure shows that,
2Source: Agora Energiewende, Agora Industry (2021): 12 Insights on Hydrogen.
at good sites, higher
full-load hours could
be achieved for each technology, decreasing the renewables capacity that would need to be
deployed.“

Key message: Due to technology specific output per year you need e.g. 4 x times more PV
capacity installed (in Germany) compared to off-shore wind to achieve same amount of en-
ergy.
56

2.5 Cost Development of Power Sources in Germany

LCOE
Sum of costs over lifetime ሺCAPEX + OPEXሻ
=
sum of electricity produced over lifetime

Source: Fraunhofer ISE (2021) Levelized Cost of Electricity Renewable Energy Technologies, p.5.

„Comparison of LCOE of renewables with operating costs of existing conventional fossil-fuel

power plants in 2021, 2030, and 2040”

Key message: Even in Germany we expect around 20 US$/MWh for utility scale PV power in
2040, while wind will only reduce to around 35 US$/MWh. Countries with more sunshine, like
Spain may achieve much lower PV power costs.
57

2.6 Importance of the “Additionality” Criteria When Intro-

ducing PtX Production

Base Year Target Year

without PtX with renewables based PtX

plus further increase in

PtX renewables

increase
in fossils

Targeted
increase in
renewables

without
additionality

• The Introdutcion of PtX production should not lead to an increase in fossil use but be
based on additional renewables.
• The PtX demand for additional renwebale electricity should be integrated in energy and
climate strategies (NDCs).

Share of renewables in to-

tal power generation

Access to power
58

3. Hydrogen Electrolyser Cost Development

3.1 Cost Breakdown for Alkaline Electrolysers

Cell stack is a
major cost
component:
1MW = 1000
$/kW
100 MW = 450
Source: IRENA (2020) Green Hydrogen Cost Reduction, p.71/fig.25. $/kW

“The balance of plant can have strong economies of scale. For instance, a compressor that is
ten times larger (e.g. going from 1 MW to 10 MW) is not ten times more expensive, but only
about four times. This would reduce the cost that such a compressor has on the overall cost,
since the stack would be 9-10 times more expensive for the same capacity increase. This leads
to the stack having a larger contribution to the total cost, as module size increases (see Fig-
ure)”

Key message: Specific costs depend on size of electrolyser, cost reduction due to scaling ef-
fects.
59

3.2 Cost Development of Electrolysers over Last Years

Source: Based on: BloomberNEF, Hydrogen Economy Outlook, 2020.

Further notes:
• China: Cheaper raw materials and labour, higher factory utilisation rates, lower spending
on R&D and marketing
• But: Problem with bankability outside of China. Challenge: Chinese equipment not seen
as bankable in the West (e.g. wind turbines) before they have a track-record they are very
hard to bank. Further demonstration projects financed by Chinese investors need to be
implemented first.

Key message: Costs have come down by expected learning curve due to number and size of
projects, like for PV modules. Chinese cost figures need to be confirmed outside China and
track record confirmed.
 60

3.3 Benchmark Electrolysis System CapEx

$/W (real 2020)
1.6

1.4 Forecast
PEM capex
1.2 expectation in 1H 2021
Western alkaline capex
1.0 expectation in 1H 2021

PEM
0.8

0.6

0.4
Chinese alkaline
Western alkaline
0.2
Chinese alkaline capex expectation in 1H 2021
0.0
2019 2025 2030 2035 2040 2045 2050
Source: BloombergNEF, 2022.
Note: assumes a single sale in 2021 of several tens of megawatts and several hundreds of megawatts in 2025.

This graph shows the price of an electrolyzer at the time of acquisition.

3.4 Future Cost Development of Electrolysers as Function of

Installed Capacity

Source: IRENA, Green Hydrogen Cost Reduction, 2020, p.79/fig.29.

Notes: 1 TW of installed capacity by 2050 is about 1.2 TW of cumulative capacity due to lifetime and replacement. Simi-
larly, 5 TW by 2050 is equivalent to 5.48 TW of cumulative capacity deployed. (Based on IRENA analysis).

“Electrolysers have similar learning rates to solar PV and could experience similar cost de-
creases with large-scale deployment. This learning opportunity might decrease over time as
deployment takes place. Considering the mid-estimate of 18% and the 20GW of existing ca-
pacity, the potential cost decrease from deployment is shown in Figure.”

Key message: Future learning curve is driven by expected output of electrolysers.

61

3.5 Estimate and Forecast of Annual Electrolyser Shipment

MW By market By type

Conservative Optimistic Conservative Optimistic

2,464

354 15% 19%

26% 25% 22%
1,839 31%
301
AMER SOE
277
EMEA PEM
270
APAC ALK
85% 81%
1,809 74% 75% 78%
69%
458 1,292
36
200 116
135 155
306
86 101 119
2018 2019 2020 2021 2022 2022 2018 2019 2020 2021 2022 2022

Source: IRENA, Hydrogen – A Renewable Energy Perspective, 2019, p.13/fig.2.

“Efforts to ramp up green hydrogen and hydrogen use for the energy transition are increasing
in many countries, with an emphasis on larger-scale, more power system-friendly electroly-
sis.2 Projects have moved into the megawatt-scale; however, further R&D, mass production
and learning-by-doing is needed to achieve significant cost reductions. The trend in recent
years indicates exponential growth in project scale, albeit from a low starting point, as illus-
trated in figure.”

Key message: The number of projects increased sharply in last years and the size of projects
jumped to 100 MW and more.

3.5 Announced Electrolyser Pipeline

Annual (GW) By electrolyzer technology Cumulative
50 Unknown 46.4 150
Thousands

Solid oxide
40 PEM 120
Alkaline By electrolyser technology
30 90
19.6 46
20 16.9 60
11.5
10 5.4 6.9 4.6 4.5 19 16 30
0.3 1.5 1.9 11 2.5
4 5 2 2
0 1 1 1 1 1 2 3 3 1 0
2021 '22 '23 '24 '25 '26 '27 '28 '29 '30 >'30 N/A Annual (GW) By region Cumulative
50 46.4 150
AMER
Thousands

APAC
40 EMEA 120

30 31 90
By region
19.6
20 16.9 60
11.5 5
3 4
10 5.4 6.9 4.6 4.5 9 30
0.3 1.5 1.9 2
8 2.5 12 16
4 4 4 2
2 2 5 4
0 1 1 0
2021 '22 '23 '24 '25 '26 '27 '28 '29 '30 >'30 N/A
62

4. Scale-Up and Outlook for Hydrogen Production

4.1 Hydrogen Production Costs from Hybrid Solar PV and
Wind Systems in 2030

Source: Sachverständigenrat für Umweltfragen, Wasserstoff im Klimaschutz: Klasse statt Masse, June 2021, p.48/fig.8.
Notes: This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international fron-
tiers and boundaries and to the name of any territory, city or area. For each location, production were derived by optimizing.

Key message: Due to available wind and solar resources H2 costs vary between 1.5 $/kg and
more than 4 $/kg with current CAPEX costs.

4.2 Levelised Cost of Green Hydrogen Production

Source: BloombergNEF, Hydrogen Economy Outlook, 2020, p.28.

Further notes:
• Renewable H2 could be produced for $0.8 - 1.6/kg in most parts of the world before
2050.
• Mosts of the world have the ability to produce low cost H2.
63

• Light green such as Scandinavia and India will be at the bottom of the cost curves.
• Japan and Korea will be at the top of the cot curve.
• LCOH assuming the optimistic projection for alkaline electrolyser costs.
• Costs would be 6% higher in 2030 and 18% higher in 2050 if the conservative assump-
tions are used.

Key message: For latest 2050 BNEF expects that many countries are able to produce green
hydrogen for around 1 $/kg or lower. The Question is how much they can prodcue due to space
constrains.

$/kg (real 2020) $/MMBtu

12 89.3
Japan
10 South Korea 74.4

8 Germany 59.5
China
6 44.6
U.S.

4 Brazil 29.8

2 14.9

0 0.0
2021 2025 2030 2035 2040 2045 2050

Source: BloombergNEF.
Note: assumes our optimistic alkaline electrolyzer costs (Chinese in China, western elsewhere). See rest of report for data on all 30
markets.

Key message: The levelized cost of green hydrogen production is going to fall drastically from
now on. All around the globe we will reach production costs of under 3$/kg of H2 or under
14.9$/MMBtu. Most countries will have reached these costs already in 2030.
64

4.2.1 Year When Green Hydrogen Outcompetes Blue H2

​ ​ ​ ​ ​ ​ ​ ​
Country in:
Americas
​ ​ ​ ​ ​ Vietnam ​ ​
Asia-Pacific
Europe,
​ Middle ​ East & Africa​ ​ ​ U.S. ​ ​

​ ​ ​ ​ ​ U.K. ​ ​

​ ​ ​ ​ ​ Thailand ​ ​

​ ​ ​ ​ ​ Netherlands ​ ​

​ ​ ​ Sweden ​ Mexico U.A.E. ​

​ ​ ​ Spain ​ Italy Poland ​

​ ​ ​ Jordan ​ Germany Philippines ​

​ ​ ​ Chile Turkey France Malaysia South Korea

China Brazil India Argentina Australia Canada Indonesia Japan

2023 2024 2025 2026 2027 2028 2029 2030

Source: BloombergNEF, 2022.

4.2.2 Year When New Green Hydrogen Outcompetes New Grey H2

Country in:
Americas
U.S.
Asia-Pacific
Europe, Middle East & Africa
Turkey Netherlands

Sweden Thailand Mexico

Jordan Philippines Germany

Argentina Italy U.K.

India Vietnam Malaysia

China Spain Indonesia U.A.E.

Brazil Chile Australia France Poland South Korea Canada Japan

2025-26
2025 2027-28
2027 2029-30
2029 2031-32
2031 2033-34
2033 2035-36
2035 2037-38
2037 2039
Source: BloombergNEF, 2022.

4.2.3 Year When New Green Hydrogen Outcompetes Natural Gas

Country in:
Americas
Asia-Pacific
Europe, Middle East & Africa

Jordan Spain Turkey

India China Philippines

Chile Australia Thailand U.S.

Brazil Argentina Vietnam Sweden Indonesia Italy

2030-32
2030 2033-35
2033 2036-38
2036 2039-41
2039 2042-44
2042 2045-47
2045 2048-50
2048

Source: BloombergNEF, 2022.

65

4.3 Levelized Cost of Hydrogen from Cheapest Available Re-

newable Power in 30 Coutries
$/kg (real 2020) $/MMBtu
14 104.2

12 89.3
Renewable H2
10 74.4
Convergence of Chinese and
western electrolyzer costs,
8 reduction in renewable
59.5
electricity cost
6 44.6
Further decline in electrolyzer
and renewable electricity costs
4 29.8

2 14.9
Low-cost H2 from fossil fuels without CCS
0 0.0
2021 2025 2030 2035 2040 2045 2050

Source: Bloomberg NEF, 2022.

The figure assumes 2021 Chinese alkaline electrolyzer costs of $0.3/W, western alkaline elec-
trolyzer costs of $1.2/W and PEM electrolyzer costs of $1.4/W (see Appendix). By 2030, costs
are assumed to converge to those listed in Hydrogen: The Economics of Production From Re-
newables (web| terminal). Electricity costs derived from BNEF’s 1H 2021 LCOE Update (web |
terminal), mid scenario.

4.4 Reduction of Green Hydrogen Production Costs in the

Long-Term

Source: IRENA, Green Hydrogen Cost Reduction, 2020, p.10/ES1.

66

• The figure shows how up to 85% of green H2 production costs can be reduced in the
long-term by a combination of cheaper electricity and electrolyser CapEx investment,
in addition to increased efficiency and optimised operation of the electrolyser
• Low electricity cost is not enough for competitive green H2 production → reductions
in the cost of electrolysis facilities are also needed.
• This is the second largest cost component of green H2 production.
• In the context of decarbonisation, H2 produced from fossil fuels without capturing
most of the CO2 emissions does not fulfil the criteria of renewable energy, although it
represents the vast majority of H2 production today.
• The trend over the last decade of falling renewable electricity prices is expected to con-
tinue; 82%, 47% and 39% for PV, offshore and onshore wind respectively (IRENA, 2020a)
and is the focus of this report, which identifies key strategies to reduce investment costs
for electrolysis plants from 40% in the short-term to 80% in the long-term.
• These strategies range from the fundamental design of the electrolyser stack to
broader system-wide elements, including:
o Electrolyser design and construction: Increased module size and innovation
with increased stack manufacturing have significant impacts on cost. Increas-
ing the plant from 1 MW (typical today) to 20 MW could reduce costs by over
1/3.
o Cost is not the only factor influencing plant size, as each technology has its own
stack design, which also varies between manufacturers.
o The optimal system design also depends on the application that drives system
performance in aspects such as efficiency and flexibility.
o Economies of scale: Increasing stack production to automated production in
GW scale manufacturing facilities can achieve a step-change cost reduction. At
lower manufacture rates, the stack is about 45% of the total cost, yet at higher
production rates, it can go down to 30%.
o For Polymer Electrolyte Membrane (PEM) electrolysers, the tipping point seems to
be around 1,000 units (of 1 MW) per year, where this scale-up allows an almost
50% cost reduction in stack manufacturing.
o The cost of the surrounding plant is as important as the electrolyser stack and sav-
ings can be achieved via standardisation of system components and plant design.
o Procurement of materials: Scarce materials can represent a barrier to electro-
lyser cost and scale-up.
▪ Current production of iridium and platinum for PEM electrolysers will only
support an estimated 3 GW-7.5 GW annual manufacturing capacity, com-
pared to an estimated annual manufacturing requirement of around 100
GW by 2030.
▪ Solutions that avoid the use of such materials are already being imple-
mented by leading alkaline electrolyser manufacturers and technologies
exist to significantly reduce the requirements for such materials in PEM
electrolysers
• Efficiency and flexibility in operations: Power supply represents large efficiency losses
at low load, limiting system flexibility, from an economic perspective.
• Anion Exchange Membrane (AEM) electrolysers do not need scarce materials in the first
place.
• A modular plant design with multiple stacks and power supply units can address this
problem.
• Compression could also represent a bottleneck for flexibility, since it might not be able
to change its production rate as quickly as the stack.
67

• One alternative to deal with this is an integrated plant design with enough capacity to
deal with variability of production through optimised and integrated electricity and H 2
storage.
• Green H2 production can provide significant flexibility for the power system, if the value
of such services is recognised and remunerated adequately. Where H2 will play a key
role in terms of flexibility, as it does not have any significant alternative sources to com-
pete with, will be in the seasonal storage of renewables.
• Although this comes at significant efficiency losses, it is a necessary cornerstone for
achieving 100% renewable generation in power systems with heavy reliance on varia-
ble resources, such as solar and wind.
• Industrial applications: Electrolysis system design and operation can be optimised for
specific applications.
• These can range from: large industry users requiring a stable supply and with low lo-
gistics costs; large scale, off-grid facilities with access to low-cost renewables, but that
incur in significant costs to deliver H2 to the end-user; and decentralised production that
requires small modules for flexibility, which compensate for higher investment per unit of
electrolyser capacity with reduced (or near zero onsite) logistic costs.
• Learning rates: Several studies show that potential learning rates for fuel cells and
electrolysers are similar to solar PV and can reach values between 16% and 21%.
• This is significantly lower than the 36% learning rates experienced over the last 10
years for PV (IRENA, 2020). With such learning rates and a deployment pathway in line
with a 1.5°C climate target, a reduction in the cost of electrolysers of over 40% may be
achievable by 2030.

Further notes:
• ‘Today’ (2020) captures best and average conditions. ‘Average’ signifies an investment
of USD 770/kilowatt (kW), efficiency of 65% (lower heating value – LHV), an electricity
price of USD 53/MWh, FLH of 3200 (onshore wind), and a weighted average cost of capi-
tal (WACC) of 10% (relatively high risk).
• ‘Best’ signifies investment of USD 130/kW, efficiency of 76% (LHV), electricity price of
USD 20/MWh, FLH of 4200 (onshore wind), and a WACC of 6% (similar to renewable elec-
tricity today).

Additional Read:
https://irena.org/-/media/Files/IRENA/Agency/Publica-
tion/2020/Dec/IRENA_Green_H2_cost_2020.pdf

Key message: The shows how up to 85% of green H2 production costs can be reduced in the
long-term by a combination of cheaper electricity and electrolyser CapEx investment, in addi-
tion to increased efficiency and optimised operation of the electrolyser.
68

Source: IRENA, Green Hydrogen Cost Reduction, 2020, p.11/ES2.

Notes: Efficiency at nominal capacity is 65% with a LHV of 51.2 kWh/kg H2 in 2020 and 76% (at an LHV of 45.8 kWh/kg H2) in 2050. A discount
rate of 8% and a stack lifetime of 80 000 hours. The electrolyser investment cost for 2020 is USD 650-1000/kW. Electrolyser costs reach USD
130-307/kW as a result of 1-5 TW of capacity deployed by 2050.

“The figure illustrates the potential green hydrogen production cost reduction between 2020
and 2050 for a range of electrolysers cost and deployment levels. In the best-case scenario,
green hydrogen can already be produced at costs competitive with blue hydrogen today, us-
ing lowcost renewable electricity, i.e. around USD 20 per megawatt-hour (MWh). A low elec-
tricity price is essential for the production of competitive green hydrogen, and, as illustrated
in this Figure, cost reductions in electrolysers cannot compensate for high electricity prices.”
69

4.5 Competitiveness of Future Costs for PtX Products

Source: IEA, The Future of Hydrogen, 2019, p.60/fig.22.

• For syn. gas and syn. diesel a large price difference will remain. For ammonia the near fu-
ture looks brighter.
• Future cost reductions for H2-based products from electricity will depend on lowering
the cost of electricity, with cost reductions for CO2 feedstocks also being critical for
synthetic hydrocarbons.
• The main cost components for the production of NH3 and synthetic hydrocarbons are
the CapEx and the H2 costs, together with the electricity costs if the H2 is produced
through electrolysis and, for synthetic hydrocarbons, the CO2 feedstock costs.
• Capital costs constitute around 30–40% of the total production costs for NH3 and
synthetic hydrocarbons if the H2 is produced from electricity.
• CapEx costs are dominated by the costs of the electrolyser, while the synthesis pro-
cess and other equipment components have a smaller impact.
• Learning effects could roughly halve the CapEx costs of the different production
pathways in the long-term, thereby bringing down the cost of production.

Further comments:
• NH3.; renewable electricity price = USD 50/MWh at 3,000 FLH in near term and USD
25/MWh in long-term;
• CO2 feedstock costs lower range based on CO2 from bioethanol production at USD
30/tCO2 in the near and long-term;
• CO2 feedstock costs upper range based on DAC = USD 400/tCO2 in the near term and
USD 100/tCO2 in the long-term; discount rate = 8%.
• CO2 prices (USD/tCO2):
• Advanced economies:
o Today: 5-16
o 2030: 100
o Long term: 160
• Emerging economies:
70

o Today: 0-5
o 2030: 75
o 2050: 145
• Electricity prices, grid, 5,000 FLH (USD/MWh):
• Europe:
o Today: 98
o 2030: 114
o 2050: 123
• China:
o Today: 113
o 2030: 140
o 2050: 137
• USA:
o Today: 70
o 2030: 100
o 2050: 108
• Variable renewable electricity long-term (USD/MWh) with optimised FLH:
• Europe:
o 2050: 47
o FLH: 2,054
• China:
o 2050: 18
o FLH: 2,822
• USA:
o 2050: 31
o FLH: 2,425

More information on the underlying assumptions is available at www.iea.org/hydrogen2019.

Source: The Future of Hydrogen – Seizing today‘s opportunities, Report prepared by the IEA
for the G20, Japan.

Key message: With energy prices for fossil fuels before 2020 any green PtX needs substantial
policy support through CO2 pricing or taxes to be competitive. Due to Ukraine war and other
factors the new higher fossil energy prices especially for natural gas makes green PtX products
especially green ammonia already now economical.
71

4.6 Cost Development of Green Ammonia Production

Source: Richard Michael Nayak-Luke & René Bañares-Alcántara Royal society of chemistry, Techno-economic viability of islanded
green ammonia as a carbon-free energy vector and as a substitute for conventional production, 2020.

The operation and maintenance is considered here as a fraction of CapEx per annum in-
stead of being specific to a location. Costs are determined by costs of green hydrogen.

Source: Mahdi Fasihiet al., Global potential of green ammonia based on hybrid PV-wind power plants, Applied En-
ergy 294, 2021, p.13/fig.14.

„NG-based vs. green ammonia cost for varying natural gas prices.”

Key message: If natural gas costs more 7 – 10 $/MBtU then green ammonia becomes compet-
itive with little CO2 pricing even quicker.
72

4.7 CO2 Price Needed to Make Syn. Shipping Fuel and Syn.
Gas Competitive

Source: IEA, The Future of Hydrogen, 2019, p.62/fig.23.

• If syn. shipping fuel production costs are USD 150/bbl:

CO2 price of USD 180/tCO2 is needed for syn. shipping fuel to be competitive to fossil
fuel at USD 75/bbl
• High CO2 prices (or equivalent policies discouraging fossil fuel use) would be needed for
synthetic hydrocarbon fuels to become competitive with fossil fuel alternatives.
• If, for example, synthetic diesel can be produced at a cost of USD 150/bbl, a CO2 price of
USD 180/tCO2, or equivalent policy measure, would be needed for synthetic diesel to be-
come competitive with fossil diesel at USD 75/bbl.
• The high level of equivalent CO2 prices that would be needed for synthetic hydrocarbon
fuels from electricity to compete with fossil fuels suggests that the use of synthetic hy-
drocarbon fuels at a larger scale is unlikely to happen in the near term.
The economics of H2-based fuels and feedstocks does, however, depend on the specific
local conditions and the configuration of the different process components, for the case
of NH3 production at different locations in China.

Further notes: Left axes show the production cost for synthetic diesel and methane, while the
right axes show the CO2 price needed to reach competitiveness with fossil diesel at USD 75/bbl
and with natural gas at USD 10/MBtu. More information on the underlying assumptions is
available at www.iea.org/hydrogen2019.

Key message: If we assume natural gas and diesel prices before the Ukraine war, then gov-
ernments need to establish a CO2 price on fossil fuels to make green PtX product cost com-
petitve.
73

4.8 Synthetic Jet Fuel Costs Are Driven by H2 Costs

Source: World Economic Forum, Clean skies for tomorrow –sustainable aviation fuels as a pathway to net-zero
aviation, 2020, p.39/fig.20.

Water electrolysis + RWGS CO2 feedstock

H2 costs can vary greatly by power source and re- Industrial CO2 (shown in graph)
gion 81 USD/t in 2020
shown for solar power-based H2 at 66 USD/t by 2030
Direct air capture (not in graph)
7.3 USD/kg H2 in 2020 600-800 USD/t in 2020
3.2 USD/kg H2 in 2030 100 USD/t by 2030

1.7 USD/kg H2 in 2050

“In PtL pathways, operating and input factor costs represent 80%-90% of production costs
today, depending on the specific production process. While reverse-water-gas-shift has very
high hydrogen costs based on electricity and capex, co-electrolysis incurs comparable elec-
tricity costs directly. These costs vary greatly by power source and region but should fall sig-
nificantly. The cost of a megawatt hour of solar power is likely to decline from $59 today to
$33 in 2030 and $18 in 2050. Hydrogen created by solar power costs $7.30 per kilo today but
could fall to $3.20 by 2030 and $1.70 by 2050. Likewise, industrial CO2 feedstock needed for
all PtL routes now costs about $80 per metric ton but the price could drop to around $65 by
2030. Given these declines in processing and feedstock costs, SAF production expenses in
these pathways should fall from more than $3,800 per metric ton today to under $2,000 by
2030 and just $1,300 by 2050. “

Key message: Synthetic kerosene will be more costly even in the long run than fossil kero-
sene, which is around 450 $/ton. Synthetic kerosene even when industrial flue gases as source
for CO2 is taken will be around 1200 $/ton. So, it requires either a quota as policy or a Carbon
pricing to make it cost competitive.
4
74

Renewable PtX Infrastructure

1. Transport Options for H2 (+Derivates and Products) ..................................................... 75
1.1 Challenges for Transport Routes ............................................................................................... 75
1.2 C-H2 Supply Chain vs. Liquification vs. Ammonia (Western Australia)..................................... 75
1.3 Transport Distance and Costs .................................................................................................... 76
1.4 Comparison of Transport Options ............................................................................................. 77
1.5 H2 Transport Costs Based on Distance and Volume (2019) ....................................................... 78
1.6 Transport of Electricity vs. Hydrogen ........................................................................................ 79
1.7 Economics of Delivered Hydrogen for 2030 and 2050 ............................................................... 81
1.8 Import vs. Production from a European perspective for 2030 .................................................. 82
1.9 Announced Pipeline of Hydrogen Shipping Projects ................................................................ 83

2. Storage Options for H2 (+ Derivates and Products) ........................................................ 84

2.1 Physical and Material Storage.................................................................................................... 84
2.2 Levelised Cost of Hydrogen Storage .......................................................................................... 86
2.3 Comparison of Hydrogen Storage Options ............................................................................... 87
2.4 Announced Pipeline of Underground Hydrogen Storage Projects ........................................... 89
75

1. Transport Options for H2 (+Derivates and Products)

1.1 Challenges for Transport Routes

Source: Heinrich Böll, Grundkurs Wasserstoff Teil II, 10/2021.

This figure shows different methods of transporting PtX products in terms of product/ derivate
and vecihle used to transport.

1.2 C-H2 Supply Chain vs. Liquification vs. Ammonia (West-

ern Australia)

Source: Global Energy Ventures, GEV SCOPING STUDY DELIVERS ZERO EMISSION SUPPLY CHAIN FOR GREEN HYDROGEN, 03/2021.

The figure shows the main three options and their specific requirements especially concerning
energy demand for liquefaction (H2), shipping (H2 and NH3) and cracking (NH3). Please ob-
serve, for liquid H2 minus 253 Celsius degree is required, while for NH3 it is only minus 33 de-
gree Celsius.
76

1.3 Transport Distance and Costs

For a distance up to
~2,600 km H2 pipeline
and compressed H2
shipping are the
cheapest options.

Distances of 2,600-
16,000 km should be
covered with liquified
H2 transport

Source: European Union, Assessment of Hydrogen Delivery Options, 2021 – JRC124206, p.3.

“For LOHC and ammonia, packing and unpacking costs dominate, while transport costs rep-
resent a small fraction of the total. This indicates that they could be cost competitive for dis-
tances longer than the 2,500 km considered in case A. This is confirmed by Figure 2, where the
influence of transport distance between a single production and delivery point on the hydro-
gen delivery price is shown.”

Key message: Depending on assumptions pipeline transport is cheapest to up to 3000 km or

up to 10000 km.
77

1.4 Comparison of Transport Options

Source: Nationaler Wasserstoffrat, Wasserstofftransport, July 2021, p.4.

„ The transport costs for various hydrogen transport options shown in Fig. clearly show that
for distances up to 10,000 km, transport via appropriately dimensioned long-distance pipe-
lines ("pipeline: new construction") is cheaper than transport by ship. When taking into ac-
count existing natural gas pipelines and their conversion to hydrogen transport ("Pipeline:
75% conversion"), the specific transport costs are further reduced.”

The comparison of the transport options listed above must take into account not only the in-
vestment costs in the required infrastructure, such as long-distance pipelines or ships, but
also the investments in the equipment needed to operate the infrastructure, such as liquefac-
tion and vaporisation or compressor plants, and the associated operating costs. The transport
costs for different hydrogen transport options shown in Figure 1 clearly indicate that for dis-
tances of up to 10,000 km, transport via appropriately dimensioned long-distance pipelines
("pipeline: new construction") is cheaper than transport in ships. If existing natural gas pipe-
lines are taken into account and converted to transport hydrogen ("Pipeline: 75% conver-
sion"), the specific transport costs are further reduced. The figure also clearly shows that ship
transports basically have distance-independent cost components for the conversion and re-
conversion of hydrogen for the conversion and reconversion of the transport medium. As soon
as these conversions are taken into account, the distance-dependent costs are lower than for
long-distance pipelines. It can be seen that on the cost side - especially in the case of ship
transport - different data are to be found.
78

1.5 H2 Transport Costs Based on Distance and Volume (2019)

Source: BloombergNEF, Hydrogen Economy Outlook Key messages, 2020, p.4/fig.4.

Note:
In this figure: $/kg H2

• Low density also makes H2 expensive to transport via road or ship.

• H2 flows nearly 3 times faster through pipes than methane, making it a cost-effective op-
tion for large-scale transport.
• Need for a huge, coordinated program of infrastructure upgrades and construction, as H2
is often incompatible with existing pipes and systems.
• H2 is likely to be most competitive in large-scale local supply chains.
• Clusters of industrial customers could be supplied by dedicated pipeline networks con-
taining a portfolio of wind- and solar-powered electrolysers, and a large-scale geological
storage facility to smooth and buffer supply.

Further note: The figure includes the cost of movement, compression and associated storage
(20% assumed for pipelines in a salt cavern). NH3 assumed unsuitable at small scale due to its
toxicity. While LOHC is cheaper than liquid H2 (LH2) for long distance trucking, it is less likely
to be used than the more commercially developed LH2.

Key message: As friction losses of hydrogen flow are low compared to methane pipeline
transport is cost effective option for large quantities even over longer distances. For smaller
quantities compressed hydrogen for distances of up to 500 km seems cheaper than liquid
organic hydrogen carriers.
79

1.6 Transport of Electricity vs. Hydrogen

Source: Guidehouse, Electrons or molecules: Comparing electricity and hydrogen imports from the MENA region to Europe, 2020, p.7.

Scenario 1: End use ELECTRICITY (left figure):

• Indicative cost comparison of options A and B in the case that the end user in Europe
requires electricity.
• For electricity transmission, a newly constructed high-voltage direct current (HVDC)
line is assumed, for the transportation of H2 a newly constructed H2 pipeline.
• Green indicates a costs advantage of electricity transmission, yellow a parity between
costs of electricity or H2 transmission and grey a cost advantage of H2 transmission.
• The figure displays these cost differentials as functions of the main variable cost drivers:
o Distance of energy transmission: longer distances are cost advantage for H2 be-
cause one km pipeline is cheaper per unit of energy than one km HVDC
o Renewable electricity price: lower prices are a cost advantage for H2 because
conversion losses become less of an economic issue
• This means that for higher renewable generation prices (>1 Cent / kWh) and shorter
distances (<3000km), it is cheaper to import electricity directly.
• From a distance of around 3000 km, H2 becomes competitive, albeit only for electric-
ity prices between 0-4 cents/kWh.
• Starting from a distance of around 4000 km and electricity prices between 0-3
cents/kWh, the import of H2 and reconversion to electricity becomes cheaper than
importing electricity directly.
• Disclaimer: This comparison is only concerned with costs and makes no assumption on
the value of a kWh of electricity under either option A or B.
• As electricity production from H2 would be dispatchable, it could be the case that import-
ing H2 is economical even if importing electricity is cheaper, as H2-based electricity could
be sold in times of higher prices in European electricity markets.

Scenario 2: End use of HYDROGEN (right figure):

• Similar steps as in scenario 1, but for the end use of H2 and not electricity.
80

• Correspondingly, imported electricity needs to be converted to H2, and imported H2 does

not need to be reconverted to electricity.
• In this scenario, it is always cheaper to import H2 directly (option B), than electricity
and convert it to H2 in Europe.
• This is because the conversion losses of electrolysis are inevitable in both options and
the only differentiator that remains are the higher CapEx costs of a HVDC transmission line
compared to a pipeline.
• The comparison is for made for the year 2030, which means that a range of assump-
tions were made.

Assumptions:
• The basic assumption underlying this modelling is that a new renewable electricity gen-
eration asset in the MENA region is connected to an energy consumer in Europe with a
new-built HVDC line or H2 pipeline.
• Either transmission system is built without major geographical restrictions.
• The model makes assumptions about 4 different technologies:
• costs for H2 electrolysis,
• costs for the reconversion of H2 into electricity by fuel cell,
• transportation cost of electricity via a HVDC transmission line,
• transportation cost of H2 via a newly constructed H2 pipeline.
• The costs of H2 electrolysis are based on available technology in 2020 with an annual
cost reduction until 2030 derived from IEA.9
• Cost assumptions for the fuel cell are based on JRC estimates for 2030 directly.
• The costs for HVDC transmission line are based on estimates by Dii for 2050 and were
adapted for 2030.
• The model assumes an unweighted average of marine and land MENA and EU HVDC trans-
mission cost for the entire distance.
• Weighted average costs of capital were assumed to be 8% for all technologies.
• New assets – both pipelines and HVDC – could however be (co-)financed with conces-
sional loans e.g. by the European Investment Bank or the World Bank. That would lead
to a slight cost advantage of the more capital-intensive HVDC option but would probably
not fundamentally change the relative economics of the two options.
81

1.7 Economics of Delivered Hydrogen for 2030 and 2050

Source: Agora Energiewende/Agora Industry, 12 Insights on Hydrogen, p. 33/fig.20.

Notes: Green hydrogen production takes into account storage costs of 50 % annual demand. This is the lowest-cost ret-
rofitted gas pipeline according to the European Hydrogen backbone report.

„ Green hydrogen production takes into account storage costs of 50 % annual demand. This is
the lowest-cost retrofitted gas pipeline according to the European Hydrogen backbone report.
Consuming hydrogen close to production with favourable renewables will always be the
cheapest option since transport costs can be significant, as shown in figure.”

Key messages:
• Import is and will not be cheaper than hydrogen production in Europe, but Europe may be
not able to cover all is needs themselves, so further import will be needed.
• Retrofitted pipelines (if available) are cheapest.
• Ship-based trade lends itself better to hydrogen-based products or where pipelines are
not feasible
• Long distance transport can be more expansive than local production in Europe in the
long run, but Europe will most likely need to import in addition to own production!
82

1.8 Import vs. Production from a European perspective for

2030

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 41/fig.25.

„10% weighted average cost of capital. Importing sustainable methanol or synthetic fuels
from places with cheap renewables is more cost-effective than producing them in Germany,
as shown in Figure “

• Hydrogen pipelines will keep European industry in business and ensure a firm power
market.
• The EU should foster international power-to-X markets for sustainable chemicals and
for sustainable maritime and aviation fuels.
• Importing sustainable methanol or synthetic fuels from places with cheap renewables
is more cost-effective than producing them in Germany.

Key message: Import of ammonia, methanol or synthetic fuel will always be cheaper than
production in Germany and even in most other European countries.
83

1.9 Announced Pipeline of Hydrogen Shipping Projects

Source: BloombergNEF

In 2022 there have been a number of storage projects announced. Most projects plan to store
energy in form of ammonia, others plan on storing liquified H2 – which needs a significant
amount of pressure and another 6 projects look into storing via LOHC or compressed H2. Most
projects have been announced in the APAC countries, followed by EMEA and AMER.
84

2. Storage Options for H2 (+ Derivates and Products)

2.1 Physical and Material Storage

Source: Prof. Dr.-Ing. B. Epple Innovative Energieumwandlungsprozesse – Energy Systems and Technology TU Darmstadt,
Stoffliche Nutzung von Synthesegas.

Physical Storage:
• Pressure Storage:
H2 has a high diffusivity suitable dense material for storage and pipelines is correspond-
ingly expensive.
• Liquid storage:
Cooling from very low temperatures requires a lot of energy storage tanks are usually dou-
ble-walled for insulation (vacuum in the middle). The complex storage and distribution
(expensive, energy-intensive) of H2 is one of the biggest disadvantages of the technology
as direct energy storage.
• Cyro-compressed:
The term “cryo-compressed” was coined by Salvador Aceves and colleagues at Lawrence
Livermore National Laboratory (LLNL) and refers to their concept of storing H2 at cryo-
genic temperatures but within a pressure capable vessel – in contrast to current liquid
(or cryogenic) vessels which store H2 at low pressures.

Material Storage:
• Hydrogenation: Chemical reaction between molecular H2 and another compound or ele-
ment, usually in the presence of a catalyst such as nickel, palladium or platinum. The pro-
cess is commonly employed to reduce or saturate organic compounds. Hydrogenation
typically constitutes the addition of pairs of H2 atoms to a molecule, often an alkene. Cat-
alysts are required for the reaction to be usable; non-catalytic hydrogenation takes place
85

only at very high temperatures. Hydrogenation reduces double and triple bonds in hydro-
carbons.
• Dehydrogenation: During dehydrogenation synthesis, either the H2 of one monomer
combines with the hydroxyl group of another monomer releasing a molecule of water, or
two H2s from one monomer combine with one oxygen from the other monomer releasing
a molecule of water. The monomers that are joined via dehydrogenation synthesis reac-
tions share electrons and form covalent bonds with each other. As additional monomers
join via multiple dehydrogenation synthesis reactions, this chain of repeating monomers
begins to form a polymer. Complex carbohydrates, nucleic acids, and proteins are all ex-
amples of polymers that are formed by dehydration synthesis. Monomers like glucose can
join together in different ways and produce a variety of polymers. Monomers like mono-
nucleotides and amino acids join together in different sequences to produce a variety of
polymers.

Example of hydrogen storage:

Schematic illustration of an existing cavern in northern Ger-
many. Several caverns are brought together at a cavern
head from where the stored gas is distributed to the grid
and, if necessary, cleaned and dried beforehand.

Source: DLR, Wasserstoff als ein

Fundament der Energiewende Teil 1:
Technologien und Perspektiven für eine
nachhaltige und ökonomische
Wasserstoffversorgung, 09/2020,
p.27/fig.22.
86

2.2 Levelised Cost of Hydrogen Storage

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 18/fig.9.

“LOHC = Liquid organic hydrogen carrier. Instead of cracking shipped ammonia back to hy-
drogen, using ammonia directly as a fuel could be cheaper than the local production of hydro-
gen, even in 2050. This would require a new set of power plants instead of just a retrofit of
existing assets. Moreover, in places where salt strata are available for mass hydrogen storage
such as Europe or the US, the case for ammonia in electricity generation would become much
weaker, because salt caverns store hydrogen markedly cheaper than ammonia.”

• Geological storage is the cheapest form of large-scale hydrogen storage

• BUT: Low cost, large-scale options like salt caverns are geographically limited
• Cost of using alternative liquid storage technologies often greater than cost of producing
H2 in the first place

Key messages:
• Storage costs depend on kind of storage and number of cycles for its use.
• For long term storage, salt cavern, rock cavern and depleted field are best option.
• Further cots reduction is expected.
87

2.3 Comparison of Hydrogen Storage Options

Delivered cost of green H2 of around $2/kg ($15/MMBtu*) in 2030 and $1/kg ($7.4/MMBtu*) in 2050 in China, India and Western
Europe achievable.
*1 MWh H2 = 3.4 MMBtu H2

Costs could be 20-25% lower in countries with best renewable and hydrogen storage resources, i.e.
USA, Brazil, Australia, Scandinavia and Middle East.

Source: BloombergNEF, Hydrogen Economy Outlook, 2020, p.3/table1

• H2’s low density makes it considerably harder to store than fossil fuels.
• If H2 were to replace natural gas in the global economy today, 3-4 times more storage
infrastructure would have to be built at a cost of $637 billion by 2050 to provide the same
level of energy security.
• Storing H2 in large quantities will be one of the most significant challenges for a fu-
ture H2 economy.
• Low cost, large-scale options like salt caverns are geographically limited (if not availa-
ble more expensive rock caverns will have to be drilled), and the cost of using alterna-
tive liquid storage technologies is often greater than the cost of producing H2 in the first
place.
• If H2 needs to be shipped overseas, it generally has to be liquefied or transported as
NH3 or in liquid organic H2 carriers (LOHCs). For distances below 1,500 km, transporting
H2 as a gas by pipelines is likely to be the cheapest delivery option; above 1,500 km, ship-
ping H2 as NH3 or an LOHC is likely to be more cost-effective.
• These alternatives are cheaper to ship, but the costs of conversion before export and
reconversion back to H2 before consumption are significant.
• They may also sometimes give rise to safety and public acceptance issues.

Advantages and disadvantages of NH3 and liquid H2 carriers (LOHCs):

NH3:
• Converting H2 to NH3 requires energy equivalent to 7-18% of the energy contained in
the H2, depending on the size and location of the system (Aakko-Saksaa et al., 2018; Han-
sen, 2017; Bartels, 2008).
• A similar level of energy is lost if the NH3 needs to be reconverted back to high-purity H2
at its destination (Brown, 2017; Giddey, 2017).
88

• Nevertheless, NH3 liquefies at -33°C, a much higher temperature than is the case for H2,
and contains 1.7 times more H2 per m3 than liquefied H2 → NH3 much cheaper to
transport than H2.
• While NH3 already has a well-established international transmission and distribution net-
work, it is a toxic chemical and this may limit its use in some end-use sectors.
• There is also a risk that some not combusted NH3 could escape, which can lead to the
formation of particulate matter (an air pollutant) and acidification.
LOHCs:
• Making an LOHC involves “loading” a “carrier” molecule with H2, transporting it, and
then extracting pure H2 again at its destination.
• LOHCs have similar properties to crude oil and oil products, and their key advantage is
that they can be transported as liquids without the need for cooling.
• However, as with NH3, there are costs associated with the conversion and reconversion
processes involved.
• These processes would require energy equivalent to 35-40% of the H2 itself (Wulf and
Zapp, 2018; Reuß et al., 2017).
• In addition, the carrier molecules in an LOHC are often expensive and are not used up
when H2 is created again at the end of the process, so need to be shipped back to their
place of origin.
• Several different LOHC molecules are under consideration, each with various benefits and
drawbacks. In this chapter LOHCs refers to methylcyclohexane (MCH), a relatively low-
cost option with toluene as the carrier molecule. Around 22 Mt of toluene is currently
produced annually (for commercial products), a quantity that could carry 1.4 MtH2 if it
were to be used as an LOHC. It costs around USD 400–900 per ton. But: toluene is toxic
and would require careful handling.
• A non-toxic alternative LOHC is di-benzyltoluene. Although this is much more expen-
sive than toluene today, scaling up could make it a more attractive option in the long run,
especially given its nontoxic nature.
• Methanol and formic acid are other options, but they lead to greenhouse gas emissions if
used directly (unless produced with non-fossil sources of carbon).
• For both NH3 and LOHCs, effective utilisation of the heat released in the conversion pro-
cess could increase the efficiency of the value chain and reduce overall costs.
89

2.4 Announced Pipeline of Underground Hydrogen Storage

Projects

Source: BloombergNEF, 2022.

5
90

Markets for Renewable PtX

1. H2 Value Chain and Demand for Chemical Products ....................................................... 91
1.1 Hydrogen – Sources and Demand.............................................................................................. 91
1.2 Hydrogen Pathways and Use Cases According to EU 2030 Targets .......................................... 91
1.3 Hydrogen as Key to Industrial Decarbonisation ........................................................................ 92
1.4 Estimates of Global Hydrogen Demand for 2050 ...................................................................... 93

2. Drivers for the Current Hype on H2 and PtX .................................................................. 94

2.1 Main Industrial Sectors as Driving Forces .................................................................................. 94
2.2 Example: Decarbonising Steel with Hydrogen .......................................................................... 96

3. Steps to Find and Evaluate Your PtX Potential .............................................................. 97

3.1 Step 1: Create a Country-Specific Marginal Abatement Cost Curve ......................................... 97
3.2 Step 2: Check the Clean Hydrogen Ladder ................................................................................ 99
3.3 Step 3: Start with No Regret Options ......................................................................................... 99
3.4 Step 4: Consider Readiness Levels of Key PtX Production, Storage and Distribution
Technologies .................................................................................................................................. 100
3.5 Step 5: Analyse Market in Own Country ................................................................................... 101

4. Sector Applications – Case Studies ............................................................................. 102

4.1 Green Steel ............................................................................................................................... 102
4.2 PtL Aviation Brazil .................................................................................................................... 108
4.3 Hydrogen Energy Storage French Guiana................................................................................ 110
91

1. H2 Value Chain and Demand for Chemical Products

1.1 Hydrogen – Sources and Demand

Source: Financial Times, The race to scale up green hydrogen, 2021.

Notes: mtoe = million tonnes of oil equivalent. CCUS = carbon capture, utilisation and storage

Key message: Today there is a very limited demand and use of hydrogen. Hydrogen is mainly
used in oil refining and for production of ammonia.

1.2 Hydrogen Pathways and Use Cases According to EU 2030

Targets

Source: S&P Global, Feature: Hydrogen targets in EU 2030 climate package will need huge renewable power, 08/2021.

„The EU has set a 40-GW electrolyzer capacity target by 2030, producing 10 million mt/year of
renewable hydrogen. Such volumes would require additional renewable power generation
amounting to 477 TWh, Platts Analytics said in a report Aug. 13, over half of total EU renewable
92

generation in 2019."Achieving the 10 million mt target would require a higher ramp-up of re-
newable electricity for hydrogen to 2030 than that of the entire power sector in the 2010-2020
period (around 380 TWh)," it said.
Specific to hydrogen, the EU's Fit for 55 proposals include a 50% renewable share for hydrogen
used in industry and a 2.6% target for renewable fuels of non-biological origin (RFNBO) in
transport by 2030. Hydrogen and its derivatives are expected to make up most of the RFNBO.
Platts Analytics estimates that around 11 million mt/y of hydrogen would be needed to meet
the demand targets, with around 5.2 million mt going to industry and 5.8 million mt to
transport.“

1.3 Hydrogen as Key to Industrial Decarbonisation

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 14/fig.6.

Notes:
supply flow based on 10 million Mt/a production target.
EC MIX = European Commission, Impact Assessment SWD (2020);
Öko Vision = Öko-Institute; FCH Roadmap = Fuel Cell and Hydrogen Joint Undertaking 1.5C scenario;
ECF Technology = European Climate Foundation “Net Zero by 2050”;
Guidehouse EHB = Gas for Climate “European Hydrogen Backbone”;
LCEO Net Zero = Joint Research Centre “Low Carbon Energy Observatory

“In this figure: Final energy does not include feedstocks and other non-energy use. Final en-
ergy share is calculated by subtracting non-energy demand, adjusting transport to 75% of de-
mand and power to 40% of demand.”

Key message: Projections for future hydrogen demand differ a lot depending on source of
study. Mainly due to different expectation of future total energy demand as final share of hy-
drogen is in all studies between 15 and 20%. But all agree that industry will be main user of
hydrogen right graphic. Biggest difference in potential use in power sector.
93

1.4 Estimates of Global Hydrogen Demand for 2050

Source: IRENA, Geopolitics of the Energy Transformation The Hydrogen Factor, p.20/fig.1.1., 2022

“The International Energy Agency refers to “fossil-based with CCUS” (carbon capture, utilisa-
tion and storage) and “electrolysis-based” hydrogen. The Hydrogen Council projects that 60-
80% of hydrogen production will be renewables based, with the rest “low-carbon”, which it
defines as “hydrogen produced from energy sources of non-renewable origin with a carbon
footprint below a defined threshold”. Current hydrogen production includes hydrogen cre-
ated as byproduct from other processes.”

Key message:More recent hydrogen demand studies are getting closer to each other to
around 500 Mio t/a in 2050.
94

2. Drivers for the Current Hype on H2 and PtX

2.1 Main Industrial Sectors as Driving Forces

Source: own illustration based on: IEA, Iron & Steel, 2020; IEA, International Shipping, 2020; dena, Feedstocks for the chemical indus-
try, 2019.

1) Aviation:
• Efficiency is improving, but overall fleet size and flight volume is increasing.
• Aviation may be producing as much as 24% of global CO2 emissions by 2050, compared
to roughly 3% today.
• Even with a hypothetical acceleration of improvements in aircraft efficiency to around
2.5% per annum – over twice of today's pace – aviation could be producing 19% of
global emissions by 2050.
• H2 offers several benefits over SAFs and batteries as a power storage technology:
• Benefits over SAFs:
• Ability to reduce aviation’s GHG emissions
• Potential to leverage scale from other industries
• Benefits over batteries:
• High gravimetric density
• Relatively fast refueling capability
• Key challenges:
• Aircraft and engine redesign
• H2 storage
• Sustainable H2 production
• Infrastructure
• Cost

2) Steel:
• Direct CO2 intensity of crude steel has been relatively constant (within a 20% range)
during the past 2 decades.
• To align with SDS, the CO2 intensity of crude steel needs to fall an average of 2.5% an-
nually between 2018 and 2030.
• Driven by population and GDP growth, global steel demand will likely continue to in-
crease, especially because of economic expansion in India, the ASEAN countries and Af-
rica, even as demand in China gradually declines.
95

• Adopting material efficiency strategies to reduces losses and optimise steel use through-
out the value chain can curb demand growth and thus help the subsector get on track with
the SDS.
• Material efficiency strategies include increasing steel and product manufacturing
yields, light weighting vehicles, extending building lifetimes and directly reusing
steel (without melting).
• Short-term CO2 emission reductions could come largely from energy efficiency im-
provements and increased scrap collection to enable more scrap-based production.
• Longer-term reductions would require the adoption of new direct reduced iron (DRI)
and smelt reduction technologies that facilitate the integration of low-carbon elec-
tricity (directly or through electrolytic H2) and CCUS, as well as material efficiency
strategies to optimise steel use. The groundwork for commercialising these technolo-
gies needs to be laid in the next decade.

3) Chemical Feedstock:
• Currently, NH3 is mostly made from methane, water and air, using steam methane re-
forming (SMR) and the Haber-Bosch process.
• Approximately 90% of the CO2 produced is from the SMR process. This process con-
sumes a lot of energy and produces around 1.8% of global CO2 emissions.
• Reducing the amount of CO2 produced during the NH3 manufacturing process is criti-
cal to achieve net-zero targets by 2050.
• green NH3 (where the process is 100% renewable and carbon-free) is by using H2
from water electrolysis and nitrogen separated from the air.
• then fed into the Haber-Bosch process, all powered by sustainable electricity.
• In the Haber-Bosch process, H2 and nitrogen are reacted together at high temper-
atures and pressures to produce NH3
• The production of green NH3 could offer further options in the transition to net-zero CO2
emissions. These include:
• Energy storage – NH3 is easily stored in bulk as a liquid at modest pressures.
This makes it an ideal chemical store for renewable energy. There is an existing
distribution network, in which NH3 is stored in large refrigerated tanks and
transported around the world by pipes, road tankers and ships.
• H2 carrier – there are applications where H2 gas is used (e.g. in PEM fuel cells),
however H2 is difficult and expensive to store in bulk (needing cryogenic tanks or
high-pressure cylinders). NH3 is easier and cheaper to store, and transport and
it can be readily “cracked” and purified to give H2 gas when required.
• Zero-carbon fuel: NH3 can be burnt in an engine or used in a fuel cell to pro-
duce electricity. When used, NH3’s only by-products are water and nitrogen. This
could for example be adopted by the maritime industry.

4) Shipping:
• Key enabler of international trade, accounting for about 3/4 of total freight transport
activity. It is also the most energy-efficient way to carry cargo in terms of energy use
per tonne-kilometre (tkm).
• International shipping uses virtually no low-carbon fuels at present (due to a lack of
policy regulations), but by 2050 in the SDS they supply almost one-third of total energy
consumed.
• In April 2018, the IMO (International Maritime Organisation) adopted a strategy to re-
duce GHG emissions from international shipping to align the sector with Paris Agreement
climate goals. The strategy proposes to cut absolute GHG emissions by at least 50% by
2050, and thereafter to attempt to eliminate them altogether. It also aims to reduce
96

the carbon intensity of international shipping by at least 40% by 2030 and to pursue efforts
to reduce emissions intensity 70% by 2050 compared with a 2008 baseline.
• A number of policies aiming to reduce air pollution from shipping have been announced
in the past decade, many of which have already been enforced. The global sulphur cap
mandated by the IMO entered into effect in January 2020. It requires shipping vessels to
either use maritime fuels with a maximum sulphur content of 0.5% or install a scrubber to
comply with sulphur dioxide emissions regulations.
• While these regulations can help curtail air pollution as well as continue to reduce the
health impacts on populations living at or near major ports and the environmental
impacts on the oceans, there is a risk that they will lock in investments in fossil fuel
technologies and delay the transition to carbon-neutral fuels.

2.2 Example: Decarbonising Steel with Hydrogen

Hydrogen Europe, Hydrogen – Enabling a zero emission society, p.28.

Key message: This figure shows the importance of steel sector for global GHG emissions, the
potential by using hydrogen and what it requires to produce this hydrogen.
97

3. Steps to Find and Evaluate Your PtX Potential

3.1 Step 1: Create a Country-Specific Marginal Abatement
Cost Curve

Source: BloombergNEF, Hydrogen Economy Outlook, 2020, p.6/fig.7.

• Even at $1/kg, carbon prices or equivalent, measures that place a value on emission re-
ductions are still likely to be needed for H2 to compete with cheap fossil fuels in hard-
to-abate sectors.
• Why is this the case? This is because H2 must be manufactured, whereas natural gas,
coal and oil need only to be extracted, so it is likely always to be a more expensive
form of energy.
• H2’s lower energy density also makes it more expensive to handle.
• But if the required policy is in place, up to 34% of GHG emissions from fossil fuels and
industry could be abated using H2 – 20% for less than $100/tCO2.

H2 is a promising emissions reduction pathway for the hard-to-abate industry sectors:

• The strongest use cases for H2 are the manufacturing processes that require the phys-
ical and chemical properties of molecule fuels in order to work.
• H2 can enable a switch away from fossil fuels in many of these applications at surpris-
ingly low carbon prices.
• For example, at $1/kg, a carbon price of
• $50/tCO2 would be enough to switch to renewable H2 in steel making,
• $60/tCO2 to use renewable H2 for heat in cement production,
• $78/tCO2 for NH3 synthesis, and
• $90/tCO2 for aluminum and glass manufacturing.

But its role in transport should be focused on trucks and ships:

• H2 can play a valuable role decarbonising long-haul, heavy-payload trucks.
• These could be cheaper to run using H2 fuel cells than diesel engines by 2031.
• But the bulk of the car, bus and light-truck market looks set to adopt battery electric drive
trains, which are a cheaper solution than fuel cells.
98

• In our view, the fuel cell vehicle industry will also be the most expensive sector to scale
up, requiring $105 billion in subsidies to 2030.
• For ships, green NH3 from H2 is a promising option, and could be competitive with heavy
fuel oil with a carbon price of $145/tCO2 in 2050.
• Aviation: Not in the graph, abatement costs (USD/tCO2eq):
• Commuter: 20-40
• Regional: 40-80
• Short-range: 70-130
• Medium-range: 100-220
• Long-range: 160-350

Further notes:
• Sectoral emissions based on 2018 figures, abatement costs for renewable H2 delivered at
$1/kg to large users, $4/kg to road vehicles. Aluminum emissions for alumina production
and aluminum recycling only. Cement emissions for process heat only. Refinery emis-
sions from H2 production only. Road transport and heating demand emissions are for
the segment that is unlikely to be met by electrification only, assumed to be 50% of space
and water heating, 25% of light duty vehicles, 50% of medium-duty trucks, 30% of buses
and 75% of heavy-duty trucks.

Key messages:
• Creating a country-specific marginal abatement cost curve helps to determine your prior-
ities in your country.
• This cost curve is a world wide cost curve and does not reflect any country specific circum-
stances, but it shows that biggest potential is in steel production.
• It shows as well that oil refining is beside transport sector the lowest hanging fruit for
green hydrogen as it requires the lowest Carbon price on fossil fuels to make it economi-
cal.

Carbon prices around the world:

Source: BloombergNEF
99

3.2 Step 2: Check the Clean Hydrogen Ladder

Source: Recharge, Liebreich: ‘Oil sector is lobbying for inefficient hydrogen cars because it wants to delay electrification’, 06/2021.

“Michael Liebreich's "hydrogen ladder" chart identifying the merits of use cases for clean hy-
drogen. A simple chart showing which use cases for H2 are uncompetitive, which are unavoid-
able for decarbonisation, and which sit somewhere in the middle.”

Key message: There are some sectors and applications where hydrogen will be unavoidable,
that means to focus on those sectors offers a no regret option. In some sectors and application
hydrogen will be not competitive, so those sectors are not suitable to start hydrogen econ-
omy.

3.3 Step 3: Start with No Regret Options

Source: Agora Energiewende, Agora Industry, 12 Insights on Hydrogen, 2021, p. 12/fig.4.

„The figure groups applications from net-zero scenarios into those that: → figure across most
scenarios (“no regret”) → show large variation across scenarios (“controversial”) → appear in
few if any of the scenarios (“bad idea”).”

Key message: No regret options differ from country to country, here is the case for Germany.
100

3.4 Step 4: Consider Readiness Levels of Key PtX Production,

Storage and Distribution Technologies

Source: IEA, Global Hydrogen Review 2021, 2021, p.171.

Notes:
• BF = blast furnace.
• DRI = direct iron reduction.
• FC = fuel cell.
• HRS = hydrogen refuelling station.
• HD = heavy-duty.
• HT = high throughput.
• ICE = internal combustion engine.
• LD = light-duty.
• MeOH = methanol.
• MTO = methanol to olefins.
• PEM FC = polymer electrolyte membrane fuel cell.
• SOFC = solid oxide fuel cell.
• VRE = variable renewable electricity.
• Co-generation refers to the combined production of heat and power. Technology readiness levels based on Clean
Energy Innovation (2020), p. 67

Key message: Technology readiness in indusry like iron and steel is high enough to start to
role out the technologies. But for some applications, like aircrafts, hydrogen readiness poses
still a major challenge.
101

3.5 Step 5: Analyse Market in Own Country

Maximum CO2 reduction in Germany

2030: Direct reduction with natural gas and 7,5% blend of green hy-
drogen

Costs CO2 avoidance in Germany

2030: 60 €/t CO2 at 100% natural gas-based direct reduction

99 €/t CO2 for direct reduction with hydrogen
Source: Agora Energiewende und Wuppertal Institut (2019): Klimaneutrale Industrie: Schlüsseltechnologien und Politikoptionen für
Stahl, Chemie und Zement. Berlin, November 2019, p.167. HySteel / DWV, Grüner Stahl - Die Wasserstoffrevolution der Stahlindustrie,
Juni 2021.

• Specific additional costs per ton of crude steel (comparison blast furnace-converter
route 2019 with direct reduction with H2 (2050): +36-61%
• A car with an unladen weight of one ton consists of about 600kg of steel
• Cost of ton crude steel: 659$/t (20.12.2019) = 55.15€/t (06.04.2021, exchange rate of
0.85)
• Additional costs stemming from low-carbon steel for the production of about 500 Euro
per car
• Assumptions:
o Spec. capital cost of crude steel through H2-DRI (DRI plant, electric furnace): 40 €/t
crude steel
o Operating costs use of green H2: 105-191 €/t crude steel
▪ Assumption: Supply costs for green H2: 2.78-5.04 €/kg
• Elektrolyser (FLH): 250 €/kW (3,000) – 500€/kW (6,000)
• Transport costs H2: 0.35-2.0 €/kg
o Operating costs for electricity use in the steel mill (incl. replacement of metallur-
gical gases): 59-71 €/t crude steel (at electricity price of 50-60 €/MWh)
o Other costs (labour, 17% scrap content, alloys, lime, biomethane): 328 €/t crude
steel
o Production costs of low-CO2-steel:
▪ Lower limit: 532 €/t crude steel
▪ Upper limit: 630 €/t crude steel
102

4. Sector Applications – Case Studies

4.1 Green Steel
4.1.1 Green Steel in Sweden and Germany

Source: own illustration based on: Klimareporter (Wille, J.), Grüner Stahl am Start, 2021

The steel production is responsible for about 25% of EU’s industrial CO2 emissions (also world-
wide) – which is more than all flights departing from the EU.

Sweden: Project Hybrit (Hydrogen Breakthrough Ironmaking Technology)

• A pilot plant for climate-friendly steel was inaugurated a year ago in Lapland at the Ox-
elösund site
• First climate-friendly steel → 100% hydrogen instead of coal and coke
• Process: Replace blast furnace process, which removes oxygen from iron ore using car-
bon and coke, with direct reduction process where fossil-free hydrogen from fossil-free
energy sources is used
• Vattenfall supplies green electricity that is used to produce green hydrogen
• LKAB: Mining company, supplies iron ore.
• SSAB: steel producer
• Plan: 2026: Produce climate steel on an industrial scale and by 2030: capacity of 2.7 million
tons of steel raw material (sponge iron)
• First customers already supplied, e.g. Volvo
→ Sweden’s goal: become the first fossil free welfare state
• Project Components:
• RE input
• Iron ore pellet production using non-fossil fuels (LKAB)
• Direct reduction at pilot scale: iron ore, which mainly consists of different iron ox-
ides, is reduced to a porous, solid product of pure metallic iron (= sponge iron) by
removing O2 from the iron ore (traditionally done with carbon or coke)
• Direct reduction at demonstration scale: next step following lab and pilot scale →
now production on industrial scale which is the next step on the way to full com-
mercial operation (facility is planned in Vitåfors in Gällivare Municipality, Sweden
by 2026)
103

• Hydrogen storage in underground caverns: pilot hydrogen storage plant in

Svartöberget, in Luleå, Sweden next to the pilot plant for direct reduction and they
are connected by a pipeline. The storage facility will be built in 2021, tests will take
place in 2022-2024.
→ Holds the opportunity to stabilise the energy system by producing H2 when
there is plenty of electricity and storing it for later
• Smelting sponge iron (2019 – 2023): smelt sponge iron (product in solid form re-
sulting from direct reduction) in the form of so-called DRI (Direct Reduced Iron)
and HBI (Hot Briquetted Iron) in the arc furnace. DRI stands for Direct Reduced Iron
and is sponge iron in pellet form.
Germany:
• German steel industry, number eight in the world, is also working on a transformation.
• Thyssen-Krupp applied this method and states that up to 20% of emissions can be saved
this way → condition: Green Hydrogen is used! (so far mainly grey hydrogen finds its ap-
plication in the German steel industry)
• 2024: Direct reduction plant is planned to start its service → with which Thyssen-Krupp
wants to produce entirely without coal + there are plans to produce large quantities of
green hydrogen
• World market leader Arcelor Mittal is also building a demonstration plant for “climate-
controlled” steel in Hamburg, which will be operated with grey hydrogen from 2023.
• Bremen site: Arcelor Mittal wants to start large-scale production with green hydro-
gen in 2026.
• Problem: experts estimate that industrial scale production will be 30 – 40% more ex-
pensive than steel from countries with lower climate regulations
→ will customers accept higher steel prices when it comes with no climate trade-off?
→ will potentially a climate tariff by the EU keep out global cheap competition?
• BUT: there are also experts who believe it is possible that green steel will no longer
be more expensive than conventional steel in 2030!

Video:
- Episode 5: Addressing the root cause (0:25-4:34
104

4.1.2 Premium Markets for Green Steel

Source: www.h2greensteel.com; https://media.daimler.com/ 28.09.2021.

• Before 2030, H2GS will try to achieve a production capacity of five million tons of high-
quality steel. This will be a significant complement to existing Swedish steel production
and will increase Sweden’s net export value by an estimated SEK 30 billion.
• Traditional steel production is based on the supply of coke and coal. In H2GS process, the
traditional blast furnace-based technology is replaced by direct reduction reactors. H2GS
will replace the natural gas with green hydrogen to only allow for sponge iron and water
to be produced. In addition, we electrify every process step of the entire production flow.
In this way, virtually the only emissions are steam and carbon dioxide emissions is re-
duced by up to 95 percent from the outset, with the aim of reducing emissions to zero.
• Production will be located in Norrbotten because northern Sweden offers unique oppor-
tunities for fossil-free steel production, with good access to fossil-free electricity.
• This initiative has been developed in close collaboration between Vargas, and several stra-
tegic and financial investors that are global leaders in sustainability and digitalisation.
H2GS is in the process of closing its series A equity financing of €50 million from a select
group of investors, including Vargas, Scania, SMS group, BILSTEIN GROUP, EIT InnoEn-
ergy, Cristina Stenbeck, Daniel Ek, Altor Fund V, and IMAS Foundation.
• The total financing for the first phase of the project amounts to approximately €2.5 billion,
which will be raised through a combination of equity and green project financing. Morgan
Stanley, Societe Generale and KfW IPEX-Bank, are acting as financial advisors to H2GS.
• May 27, 2021 - Mercedes-Benz AG is the first car manufacturer to take an equity stake in
Swedish start-up H2 Green Steel (H2GS) as a way to introduce CO₂ free steel into series
production.
• A Mercedes Benz sedan is for example made from about 50% steel, which accounts for
about 30% of CO₂ emissions in production. With the partnership, Mercedes-Benz is ac-
tively and consistently tackling one of the biggest challenges in the automotive industry
on the road to CO₂ neutrality.
105

4.1.3 Decarbonising the German Steel Industry

• Options for closing the price gap between traditional and green steel:
• There are three main drivers that will help tip the balance from coal to H 2 in the steel in-
dustry:
1. Increases in the price of carbon emissions;
2. Large scale roll-out of H2 production driving down the cost of electrolyser fa-
cilities;
3. Further cost reductions of the price of renewable electricity.
• It is estimated that, at a carbon emission price of over €60/t of CO2, H2 would become the
most economical option.
• The price of emission certificates within the EU Emissions Trading System depends on the
overall number of certificates put up for auction. The price per ton recently jumped from
€5 - €20 when the European Commission reduced the offer in late 2018, but it is difficult to
predict whether it will further increase to reach €60/t anytime soon. Electrolytic, green H2
is currently typically produced in small scale facilities of around 2 MW.
• As the industry moves to larger facilities (up to 90 MW), producing larger quantities, the
contribution of investment costs (for electrolysis facilities) in the price of H2 could be re-
duced by as much as 60-80 %. The cost of electricity produced by wind energy could be 50
% lower in 2030, compared to 2017. The combined effect of lower investment costs and
lower prices of electricity could drive down the prices of H2 by 60% by 2030.
• Source:https://www.europarl.europa.eu/RegData/etudes/BRIE/2020/641552/EPRS_BRI(
2020)641552_EN.pdf

Key message: Hand calculation about required renewable electricity demand for greening
German steel industry and what impact it would have on the steel price.
106

4.1.4 Cost Sensitivesness for Ammonia and Steel Production

Source: IEA, Global Hydrogen Review 2021, Nov. 2021, p.66.

Notes: SMR = steam methane reforming. ATR = autothermal reforming. DRI-EAF = direct reduced iron - electric arc furnace. CCUS
= carbon capture, utilisation and storage.

Key message: Slide shows how the electricty costs for hydrogen production influence the
competitiveness of green ammonia and green steel. Below 15 $/MWh both products are eco-
nomical! For ammonia it is already nowadays below 35 $/MWh as natural gas has become ex-
pensive.

4.1.5 Australian Hydrogen Ship Maker to Develop 2.8 GW Green Facil-

ity

Source: (1) PV Magazine, Australian hydrogen ship maker to develop 2.8 GW green facility, 10/2021.

• “Storing hydrogen as a compressed gas has received far less attention than its denser
cousins, liquified hydrogen and ammonia.
• The Western Australian company is convinced: simplicity of compressed hydrogen makes
it quicker and more financially feasible way to supply the Asia-Pacific region.
107

• The Tiwi Islands were selected for the project because of their proximity to key future mar-
kets like Japan, Korea and China. The project’s location is also near to Port Melville, with
GEV saying it will continue working with the port’s owners AusGroup Limited to integrate
the project and port facilities.
• The company will be developing the Tiwi Hydrogen Project in parallel to its ship engineer-
ing and class approval program, which earlier this month cleared a significant approval
milestone after being issued its Approval in Principle from the American Bureau of Ship-
ping.
• The Northern Territory’s Minister for Renewables and Energy, Eva Lawler, welcomed the
news and the company’s work with the Tiwi Land Council and Traditional Owners of the
land. GEV’s proposed project is located on the traditional lands of the Munupi people, with
the company saying its next steps in developing the project include working with the Tiwi
Plantation Corporation, Tiwi Land Council and Munupi Landowners to progress securing
a Section 19 Lease/Licence over the proposed solar site.
• It is also seeking to finalize community benefits to the Tiwi people, in the form of leasehold
payments, employment, and supporting power and water infrastructure.
• GEV plans to fast-track the installation of solar monitoring stations at several locations on
the island, allowing it to establish bankable solar generation data for the proposed project
location. It will then move forward with feasibility studies, gathering further information
on the project development schedule, technical partners, project scale, solar monitoring
activities and appointment of consultants.”
• “Zero-emissions compressed hydrogen (C-H2) supply chain with minimal barriers. It ex-
pects commercialisation in the next five years, aiming to meet both demand and the time-
lines of Australian export projects.”
• “The study looked at exporting green hydrogen at volumes of 50,000; 200,000; and 400,000
tonnes per year at distances of between 2,000 and 6,000 nautical miles, comparing com-
pressed hydrogen with the other possible supply chains, liquified hydrogen and ammo-
nia.”
• “GEV says the scoping study shows its compressed hydrogen supply chain is economically
“very competitive” compared to shipping liquefied hydrogen or ammonia at distances of
2,000 nautical miles (3,700 kms). As the company notes, that is roughly the distance be-
tween northern tips of Australia and Singapore. Its C-H2 shipping remains competitive to
4,500 nautical miles (8,300 kms) – opportunely, the distance from Australia to Japan,
South Korea and China.”

Key message: Example of shipping green hydrogen from Australia and its cost comparison
between different energy carriers. In this case compressed hydrogen seems to be the most
economical for distance of up to 4000 km.
108

4.2 PtL Aviation Brazil

4.2.1 ProQR in Brazil

Source: GIZ (2020): https://www.giz.de/en/worldwide/63299.html

Brazil has a high potential of renewable power combined with a rapidly increasing fuel de-
mand both at industrial locations and remote airfields which provide an interesting first mar-
ket niche. The supply of aviation fuel to remote airports in Brazil is a huge logistic challenge.
As a result, the costs of fuels in these locations are extremely high, as well as their transport
presenting environmental risks.

4.2.2 Scenarios of the Synfuel Production

Source: ProQR (2021): Aviacao limpa para o Brasil. https://ptx-hub.org/wp-content/uploads/2021/06/20210611_Apresentacao-Marcos-Costa-

GIZ_Webinar_ProQR.pdf -
109

4.2.3 Model of the Plant

Source: ProQR (2021): Aviacao limpa para o Brasil. https://ptx-hub.org/wp-content/uploads/2021/06/20210611_Apresentacao-

Marcos-Costa-GIZ_Webinar_ProQR.pdf -

Technology:
• Fischer Tropsch (FT-SPK), Hydrocracking, Isomerization
• FT-SPK produced using renewable electricity and water as well as carbon dioxide prefer-
entially captured from ambient air (DAC), aiming at a container plant design potentially
installable in remote locations.
• Source: ICAO: https://www.icao.int/environmental-protection/GFAAF/Pages/Pro-
ject.aspx?ProjectID=52
110

4.3 Hydrogen Energy Storage French Guiana

Source: ESI Africa (2021) https://www.esi-africa.com/industry-sectors/smart-technologies/worlds-largest-

green-hydrogen-power-project-to-begin-construction/ -

CEOG Renewable Power Plant

• Centrale Electrique de l’Ouest Guyanais (CEOG) is an optimised combination of a solar
park, a hydrogen long-term energy storage and a battery (short-term energy storage)
to produce 24/7 baseload power
• 55 MW PV solar farm
• 16 MW alkaline electrolyser, 16 bar
• hydrogen storage unit to store 128MWh
• produce approximately 860t/a
• fuel cells generate 3 MW of electricity during night
• The project will also include a battery storage system.
• The integrated solar and green hydrogen power plant will deliver
• a fixed electrical output of 10MW from 8am to 8pm
• and 3MW from 8pm to 8am
• Supposed to have lower costs than a diesel power plant

Key message: Example of a remote 24/7 power supply where it is more economical to have a
night load covered by hydrogen fuel cell then using electrical batteries.
This may differ from location and application case.

• Scheduled for commissioning in April 2024, CEOG will be the world's first baseload renew-
able energy power plant using hydrogen technology
• The CEOG power project will combine a 55MW PV solar farm and a 16MW high-pressure
alkaline electrolyser to break water into hydrogen and oxygen using photovoltaic electric-
ity
• The facility will house a hydrogen storage unit to store 128MWh of electricity in the form
of hydrogen and use fuel cells to combine hydrogen and oxygen to generate 3MW of elec-
tricity during night. The project will also include a battery storage system.
• The CEOG integrated solar and green hydrogen power plant will deliver a fixed electrical
output of 10MW from 8am to 8pm and 3MW from 8pm to 8am daily without emitting any
harmful gases.
• Sources: https://www.nsenergybusiness.com/projects/centrale-electrique-de-louest-
guyanais-ceog-hydrogen-power-project/
6
111

Sustainability Criteria for Renewable

PtX
1. PtX Sustainability Criteria ......................................................................................... 112
1.1 Context: The Paris Agreement ................................................................................................. 112
1.2 The EESG Framework ............................................................................................................... 113
1.3 Sustainability at Different Assessment Levels ......................................................................... 114
1.4 Application of Sustainability Standards .................................................................................. 114
1.5 Embedding PtX Strategy in SDGs and NDCs ............................................................................ 115

2. Four PtX Sustainability Dimensions of the EESG .......................................................... 119

2.1 Environmental Dimensions ...................................................................................................... 119
2.2 Social Dimensions .................................................................................................................... 132
2.3 Economic Dimensions .............................................................................................................. 137
2.4 Governance Dimensions .......................................................................................................... 140
2.5 Overview: Sustainability Indicators According to Fraunhofer’s PtX Atlas ............................. 148
112

1. PtX Sustainability Criteria

1.1 Context: The Paris Agreement

• Paris Agreement: limit global warming to well below 2°C

(1.5°C)
• Need for decarbonisation of energy systems & economies
• Thus, to achieve the Paris Agreement in time, we need massive
increases in:
o Energy Efficiency,
o Electrification,
o Renewable Energy,
o Green H2 and PtX.

Often, we have a carbon tunnel vision and forget to look at many other negative externalities
that climate change can have and that it is caused by. Extending our perspective by the SDGs
can help us to see the bigger picture. The SDGs can be grouped in biosphere, society and econ-
omy.
113

1.2 The EESG Framework

• Without PtX - converting green electrons into green molecules – the Paris Climate Goals
cannot be achieved.
• PtX is key for reaching climate neutrality by 2050.
• The critical bottleneck for launching PtX production and ramping-up PtX markets is nei-
ther technology nor finance.
• What is missing are reliable regulatory frameworks for green H1 and PtX products, pro-
cesses and policies. Conceptualising such frameworks, defining derived PtX sustainability
standards and establishing corresponding certification schemes is a priority task for all
stakeholders involved.
• They must finally be enforced and enforced by national policy and international agree-
ments.
• Advancing international discussions on relevant sustainability dimensions and concerns
related to H2 and PtX is a priority for the International PtX Hub Berlin, established in 2019
to catalyse green H2 and PtX solutions on a global scale.
• The Hub is providing a platform for the exchange of ideas and experiences in the field of
PtX production and promotion.
• It brings together practitioners and academic researchers, potential PtX producers and
users as well as civil society organisations, policy shapers and regulatory agencies.
• Ensuring sustainability of PtX is a complex challenge.
• Thus it is necessary to develop a framework that is capable of covering the various di-
mensions and dynamics of PtX production and market development as well as the differ-
ent concerns and conflicts to be taken into account.
• Credible sustainability standards must help to ensure
o ecosystem integrity,
o economic prosperity,
o social inclusion,
o decent work and human rights,
o transparency,
o public acceptance and
o financial support.

Key message: PtX sustainability dimensions need to address the entire value chain and spe-
cifically analyse the environmental, economic, social and governance dimension.
114

1.3 Sustainability at Different Assessment Levels

• Both up-stream, along the supply chain, from the generation of renewable energy and the
conversion of water by electrolysis into oxygen and H2, as well as down-stream towards
the final feedstock and fuel use options, taking into account synthesis and refinement pro-
cesses, as well as storage, transport and logistics. Finally, beyond the levels of PtX prod-
ucts as well as PtX processes of their production and dissemination it is important to also
assess the wider policy context and governance frameworks set for regulation and sup-
port.
• Accordingly, sustainability assessments will have to distinguish and identify the appropri-
ate territorial levels of analysis.
• They reach from the local level, where the focus is on plant operations and investments,
and their impact on local ecosystems, economies and societies, to the regional and
national level, where structural and systemic inter-linkages must be analysed.
• Finally at international level even global geo-physical and geo-political balances might
be affected.

Key message: Focusing on PtX product characteristics is not enough, it is necessary to con-
sider the entire value chain from RE sourcing to end of life of the product.

1.4 Application of Sustainability Standards

115

1.5 Embedding PtX Strategy in SDGs and NDCs

Source: UNESCO, 2021.

Source: Nationaler Wasserstoffrat, Nachhaltigkeitskriterien für Importe von erneuerbarem Wasserstoff und PtX-Produkten, 06/2021.

CHANCES
a. Local value creation and jobs
By building new competencies and strengthening existing local economic actors, the hy-
drogen economy can contribute to economic development in the producing countries.
The relocation of individual stages of the value chain is also conceivable in order to
achieve a "win-win" balance of interests on both sides. Local value creation can arise from
the direct production of hydrogen and related services, upstream and downstream parts
of the value chain, locally required infrastructure, or renewable energy technologies. From
a geopolitical perspective, a new, potentially climate-neutral source of income can be se-
cured for the exporting countries of fossil raw materials in particular.
b. Making use of competence gains
The experience, expertise and knowledge gained from the export projects for the genera-
tion of renewable electricity and hydrogen can provide a good basis for initiating further
projects with a focus on the national market of the countries of the "global south". market
of the countries of the "global south".
c. Foreign Direct Investments
Through large internationally financed hydrogen projects, foreign investments flow into
the countries
d. Acceleration of renewable energy (RE) development
Through increased experience, improved regulation, falling capital costs, etc., countries
can phase out the use of fossil fuels, which are finite in any case. In particular, the devel-
opment of RE potentials in the solar and wind belts of the earth, which are far away from
load centres and could not be developed without conversion to hydrogen due to line
losses, offer enormous advantages for these countries in particular and for global climate
protection in general, from both an ecological and economic perspective. Expansion in
these regions will also strengthen the supply chain for electricity in exporting countries.
e. Improved energy access
116

Through, among other things, accelerated RE expansion or proportional direct use of the
additional electricity for the local population.
f. Infrastructure development and reconstruction
Infrastructure for energy and hydrogen production, but also transport or storage infra-
structure.
g. Meeting local syn. hydrocarbon demand
For example, for decarbonisation of local industry (incl. fertiliser production), in relevant
mobility sectors or for use as seasonal storage, which can lead to further acceleration of
local RE expansion.
h. Building long-term partnerships
Against the backdrop of long-term interest in such energy partnerships, these could not
only become ecologically, economically and socially important for the respective devel-
opment, but also contribute but also contribute in part to regional stabilisation.
RISKS:
a. Prolongation of fossil structures and power plants
Especially in countries whose electricity supply is still largely based on fossil sources, the
use of renewable electricity for hydrogen export could lead to a prolongation of the life-
time of fossil power plants if the addition of renewable capacities for local use is reduced.
b. Water scarcity
Electrolysis requires high-purity deionised water, which is an insufficiently available re-
source depending on the production site. Such water shortages may be exacerbated by
the climate crisis and lead to distribution conflicts in the water supply. The desalination
of seawater for water supply leads to not inconsiderable residues (brine). Here, it is im-
portant to develop sensible ecological concepts for their use at an early stage. In addition,
measures for the development of electrolysers that can handle seawater must be pro-
moted.
c. Impairment of ecosystems
Large-scale renewable projects (e.g. large dams but also large wind farms) can also lead
to consequential ecological damage and destroy local ecosystems.
d. Land use conflicts
The required renewable capacities for electricity production will take up large areas of
land. This can lead to land use conflicts, including in coastal areas (e.g. with local agricul-
ture, fisheries, tourism), and even forced resettlement (e.g. in the case of large dams) and
expropriation.
e. Corruption
Large-scale projects are particularly often affected by corruption, which prevents the im-
plementation of projects that are socially and ecologically compatible with local value
creation.
f. Debt
High initial investments are necessary to finance renewable capacities in particular. If the
exporting countries take on new debt for this purpose and the projects are not profitable,
there is a risk of a new debt trap or dependence on international financiers and their in-
terests.
g. Energy poverty
117

There is a risk of energy poverty being cemented if investments in decentralised renewa-

ble structures are pushed back and newly built renewable capacities are not used to sup-
ply energy to the local population.
h. Declining acceptance for renewable energies
If there are only few benefits for the local population, acceptance for further expansion in
export countries may decline and thus become politically and economically more difficult.
i. Lack of concepts for recycling / sustainable use of RE plants.
As part of the development of a sustainable hydrogen economy, care must be taken to
consider the life cycle assessment of the technology used at an early stage (carbon fibres
in wind turbines, rare metals in electrolysers, sustainability criteria...).

Further notes:
• Good governance and transparency
o Compliance with human rights and anti-corruption standards should be a prereq-
uisite for any engagement by Germany and Europe. Good governance in general
should also be promoted. This may require institutions and bodies that support
relevant government agencies. Hydrogen production requires large amounts of
electricity, and large-scale projects are often affected by corruption. Appropriate
transparency mechanisms are therefore fundamental.
• Participation
Local, civil society actors as well as affected people on the ground should be involved in
the planning, implementation and monitoring of projects - if possible also financially. For
the various forms of participation, it will be fundamental to invest in appropriate capacity
building for local actors, to create transparent grievance mechanisms and to create for-
mats in which citizens can actively participate in decision-making. In this way, it is possible
to build trust in the implementation of the necessary measures and to use extensive
knowledge about geographical, climatological, socio-cultural or technological aspects.
• Public debt
o New indebtedness of exporting countries to finance large-scale projects (espe-
cially renewable energy capacities) must not lead to obstacles or high risks in so-
cial, economic and ecological development.
• Systemic approach
o As a prerequisite for sustainable development, the development of hydrogen pro-
duction should be embedded in a national or regional energy transition that is in
line with the goals of the UN Agenda 2030 and aims at energy efficiency and energy
access for all. In addition, incentives for hydrogen production should be set (e.g.
regulatory framework, CO2 prices, contracts for difference).
• Existing electricity mix
o The greenhouse gas intensity of the electricity mix should be an exclusionary var-
iable: 1.) International investments to develop hydrogen generation appear prom-
ising as soon as renewables repeatedly represent the predominant form of gener-
ation in a country's electricity mix and a stable electricity supply is guaranteed. 2.)
The large-scale hydrogen production promoted by the German government can
only begin when - RE electricity generation takes place in regions where the elec-
tricity cannot be sensibly transported away via electricity grids or - the hydrogen
project demonstrably contributes to an accelerated decarbonisation of the en-
ergy system.
118

• Local value creation

o The creation of jobs and the expansion of local value creation potential in produc-
tion countries should be promoted in a targeted and sustainable manner. To this
end, existing economic actors (targeted investments in and promotion of local
companies) should be strengthened and new competencies built up (promotion
of training and innovation programmes). Possibly, a quota of participating local
companies should be agreed. In addition, the hydrogen should be processed into
downstream products locally as far as possible. This increases local value crea-
tion, reduces transport intensity and lays the foundation for an economy that is
not dependent on fossil fuels.

Key message: With the right policies potential risks of a PtX economy can be converted into
chances.
119

2. Four PtX Sustainability Dimensions of the EESG

2.1 Environmental Dimensions

2.1.1 Electricity

Sources:
ENSTOE, Power Facts Europe, 11/2020. https://eepublicdownloads.entsoe.eu/clean-documents/Publications/ENTSO-E%20gen-
eral%20publications/191113_Powerfacts.pdf
ENTSOE, Statistical Factsheet, 06/2019. https://eepublicdownloads.entsoe.eu/clean-documents/Publications/Statistics/Fact-
sheet/entsoe_sfs2018_web.pdf

Key message: Renewability of the RE used for PtX production is key, since carbon intensity of
the grid makes up a significant part of the final emission of PtX.
120

Source: adapted: Öko-Institut e.V., Not to be taken for granted: climate protection and sustainability through PtX, 2019, p.12.

Additionality:
The fuel producer is adding to the renewable deployment or to the financing of renewable
energy.
1. Needed to ensure that additional demand for renewable electricity for power fuels
does not interfere with the efforts to increase the share of renewable electricity in
existing electricity demand.
2. PtX production increases demand for electricity. Without adding to the renewable
electricity supply, the demand is met by fossil or nuclear plants.

Key message: When building a PtX plant you have to make sure to not draw away RE from the
existing capacities in the grid, but create additional / new RE infrastructure (in order to secure
RE supply).
121

2.1.2 Carbon

Key message: For the production of renewable PtX we have to ensure that carbon comes from
truly sustainable and renewable sources; carbon needs to have a short or closed carbon cycle.

Costs:
• DAC: as the technology has yet to be demonstrated at large scale, the future cost of DAC
is uncertain. Capture cost estimates reported in the literature are wide, typically ranging
anywhere from USD 100/t – 1,000/t (Source: IEA https://www.iea.org/reports/direct-air-
capture).
• Biogenic: depending on regional availability. The cost varies between process routes and
depending on if there are synergies with the main product of the biomass conversion pro-
cess. CO2 utilisation related to biomass gasification and anaerobic digestion is advanta-
geous in this regard. In the case of methanol obtained through synthesis and purification,
the total cost could be 6.8 M€/yr or €13/t methanol (source: Ericsson, K. (2017). Biogenic
CO2 as feedstock for production of chemicals and fuels: A technoeconomic assessment
with a European perspective. Miljöoch energisystem, LTH, Lunds universitet).
• CCU: the cost can vary greatly by CO2 source, from a range of USD 15-25/t CO2 for indus-
trial processes producing “pure” or highly concentrated CO2 streams (such as ethanol
122

production or natural gas processing) to USD 40-120/t CO2 for processes with “dilute”
gas streams, such as cement production and power generation (Source: IEA
https://www.iea.org/commentaries/is-carbon-capture-too-expensive)

Key message: DAC ensures a closed carbon cycle and is when powered with RE truly renewa-
ble. We want to avoid industrial point sources.

Criticalities:
1. No additional CO2 emissions, but still net flux of carbon from geological reservoirs into
the air → cannot ensure a closed carbon cycle
2. Fossil carbon sources might become scarce → not renewable
3. Significant risk of lock-in effect for CO2-intensive technologies and industrial processes

Key message: Industrial point source carbon is not sustainable since carbon is still released
in the atmosphere and because geological / fossil carbon is touched.

Key message: A renewable / closed carbon cycle lets the geological carbon untouched.
123

Source: Öko-Institut, Outline of sustainability criteria for synthetic fuels used in transport, 2017, p.12/table3-1.

• Electricity requirements: Long-term energy requirement projections based on current

technology assumptions for the DAC process are expected at around 2,000 kWh/t of
CO2 (source: Beuttler C, Charles L and Wurzbacher J (2019)
• Land use: according to Climeworks' estimations, around 2,000 km2 of non-arable land
would be needed to remove 1 gigaton of CO2 net from the atmosphere, including the
required renewable energy production. This calculation is based on the assumption that
solar PV is the sole energy source. The footprint of the actual DAC plants would cover just
62 km2. It is important to point out that depending on the location these footprints may
vary and their calculation should receive further analysis.
• Moreover, DAC does not require arable land, and has a much smaller physical foot-
print than bio-based approaches

Key message: DAC is a promising technology to obtain sustainable carbon in the future.

Information on biofuel sustainability criteria:

The EU Renewable Energy Directive (RED II) establishes that a minimum of 14% biofuels or
other renewable fuels for transport shall be used in every Member State by 2030. The Fuel
Quality Directive (FQD) is aimed towards fuel suppliers, obliging them to reduce greenhouse
gas (GHG) emissions with 6% by 2020. Only biofuels meeting the sustainability criteria regard-
ing net GHG savings, biodiversity and land use can be counted towards the targets. In RED II,
the Indirect Land Use Change (ILUC) is considered, which amongst other strives to reduce in-
direct GHG emissions from biofuel production.
124

The EU Directives
• The Renewable Energy Directive, RED I, (Directive 2009/28/EC), was adopted by the EU
in 2009. It mandated that all Member States (MS) shall have 10% (on energy basis) biofuels
in the transport sector by 2020. A revised version, RED II, (Directive 2018/2001/EU) entered
into force in December 2018 moving the legal framework from 2020 to 2030. In RED II, a
union target stating that the total share of energy from renewable energy sources shall be
32% of the final energy use in the EU by 2030. A national target is defined in RED II where
MS shall establish an obligation for fuel suppliers to ensure that the share of renewable
energy in the transport sector is at least 14% of the total energy used in the EU by 2030.
This 14% target may become stricter after 2023 to align with the 55% emission reduction
target by 2030 and the 2050 target of climate neutrality. RED II describes several sustaina-
bility and GHG emission criteria that MS need to meet for a biofuel to be considered con-
tributing to the RED II targets. Biofuels must also meet the sustainability criteria to receive
financial support, such as tax exemptions.
• The Fuel Quality Directive, FQD, (Directive 2009/30/EC) was adopted as an amendment
to Fuel Quality Directive 98/70/EC in 2009. It sets requirements on fuel specifications, but
also obliges fuel suppliers to reduce GHG emissions. By 2020 every sold unit of energy
must reduce life cycle GHG emissions by at least 6%, compared to the EU-average fossil
fuel in 2010. FQD gives the fuel suppliers a number of options to obtain this 6% reduction,
e.g. via reductions in oil refineries, or use of biofuels and alternative fuels. The biofuels
must meet the same sustainability criteria as in RED II. In 2021, discussions are ongoing
regarding an increased reduction value and to move the sustainability criteria from FQD
to RED II.
• In 2015, amendments to RED I and FQD were introduced with the Directive on Indirect
Land Use Change, ILUC, (Directive (EU) 2015/1513). It introduced ILUC values for biofuels,
and stricter sustainability criteria compared to RED and FQD. The ILUC rules are now in-
cluded in RED II along with the criteria for determining high ILUC-risk feedstocks for bio-
fuels.

Integration of renewable energy in the transport sector:

• As stated above, each MS shall establish an obligation for the fuel suppliers to ensure that
the final energy use within the transport sector is at least 14% in 2030. To reduce the in-
centives to support less sustainable biofuels, RED II introduces calculation rules for the
14% target. Biofuels based on food or feed crops can only represent 7% of the 14% target,
and there is a restriction for the amount that can be high-ILUC risk fuels (i.e. palm oil, as
defined in the delegated act 2019/2055). The amount of high-ILUC risk fuels is not allowed
to increase and should decrease to 0% in 2030.
• RED II promotes so-called advanced biofuels, e.g. biofuels based on algae, waste, manure,
sewage sludge, ligno-cellulosic and non-food cellulosic material (defined in Annex IX part
A). MS should introduce a binding sub-target for advanced biofuels of at least 0.2% in 2022,
1% in 2025 and 3.5% in 2030. The rest of the fuels that can be accounted to the 14% target
are fuels produced from used cooking oil and animal fats (category 1 and 2, defined in
Annex IX part B). Renewable electricity and recycled carbon fuels can also be included in
this group.
• Based on sustainability criteria (see next section) for different biofuels, RED II allows the
advanced biofuels to be counted twice towards the 14% target. For fuels produced from
used cooking oil or animal fats, 1.7% can be counted twice towards the 14% target or the
3.5% target for advanced biofuels. The reason for allowing only 1.7% to be double-
counted is to align with the limited availability of the feedstocks. Moreover, renewable
electricity for road transport shall be counted four times and in rail-bound transport, it
can be counted 1.5 times towards the target.Charts showing the target value for the
125

transport sector (14%) of which the maximum limit of biofuel from food or feed crops is
7% and the minimum limit for advanced biofuels is 3.5%.

The sustainability criteria:

• To be counted as sustainable, RED II states that raw material for biofuel production cannot
be taken from primary forest, nature protection areas, highly biodiverse grassland or land
with high carbon stocks such as wetland or peatland. If the raw material for biofuel pro-
duction is forest biomass, RED II defines different criteria to be fulfilled to minimize the
risk of using raw material received from an unsustainable production.
• RED I required a 35% GHG emission saving from the use of biofuels. From 1 January 2018,
GHG emission savings from the use of biofuels produced in old production units (starting
prior to 5 October 2015) must be at least 50%, according to the ILUC Directive. For units
where biofuel production started after 5 October 2015, the threshold is 60%. For units
where biofuel production started from 1 January 2021, the threshold is 65%. The biofuel
values are compared to a baseline of 94.1g CO2 eq/MJ for fossil fuels.

Compliance of sustainable criteria

• The sustainability criteria in RED I applied to biofuels and bioliquids [1]. In RED II, the sus-
tainability criteria also apply to solid biomass fuel used for electricity and heating, and
gaseous biomass fuel used for electricity and transport.
• The economic operators, in most MS identified as the companies that pay fuel tax, are re-
sponsible for showing that the sustainability criteria have been fulfilled. They are obliged
to have a control system that keeps track of the different batches of biofuels, where the
raw material is taken from, and the sustainability properties of each batch. Independent
auditors inspect and approve the quality of the control systems.

Implementation of RED II in Sweden

• In Sweden, the integration of renewable fuels in the transport sector is mandated by the
reduction mandate (Reduktionsplikten) that entered into force on 1 July 2018. Updates,
including, e.g, rules for which fuels that can be used to meet the reduction mandate and
regulation of high ILUC biofuels are suggested to enter into force on 1 August 2021.
• Implementation of the sustainability criteria is conducted by a revision of the legislation
2010:598 (sustainability criteria for biofuels and liquid biofuels) entering into force 1 July
2021.

GHG Calculations
• RED II includes a list of default GHG values for segments of the biofuel production chain:
cultivation, process, transport and distribution. The economic operators can choose to
use the default values (if the biofuel chain corresponds to those listed in the directive),
their own calculated actual values, or a combination of default and actual values. Calcu-
lation of actual values is made according to life cycle assessment methodology and rules
described in the Directives annexes.
• If there are by-products from the production process of the fuel, these can share the GHG
emissions in relation to their energy content. There is also several negative emissions that
can reduce the total GHG emission value. These are, e.g., improved agricultural manage-
ment methods allowing more carbon to be bound in soil, excess electricity produced in
the biofuel plant, CO2 that is separated and geologically stored, and CO2 that is separated
and replaced. There is also a GHG bonus if raw material is cultivated on severely degraded
land. One example of a feedstock that gives negative CO2 emissions is manure.
126

2.1.3 Water

Source: UBA (2016). Power-to-Liquids: Potentials and Perspectives for the Future Supply of Renewable Aviation Fuel. German
Environmental Agency.

The water usage (litre H2O/litre SAF) for HEFA (jatropha) is up to 14200 times higher than that
for PtL made by RE from wind or solar.

Source: IRENA, The Geopolitics of the Energy Transformation: The Hydrogen Factor, 01/2022, p.9.

Another frame of comparison that shows the comparatively low water usage impact of the
future H2 economy, is the projected water consumption of different sectors in 2050.
Hydrogen requires significant amounts of (pure) water as a feedstock. As the effects of climate
change continue to exacerbate water stress, a growing number of countries may need to con-
sider whether hydrogen production is suitable in the longer term. The projected 409 million
tonnes of green hydrogen needed by 2050 in IRENA’s 1.5°C pathway would require around 7–
9 billion cubic metres (m3 ) of water a year – less than 0.25% of current freshwater consump-
tion (World Bank, n.d.-c). Moreover, the choice of production path matters, as green hydrogen
has a smaller water footprint than blue. Solar PV and wind technologies are significantly less
water-intensive than thermal generation during the operational stage, thus freeing up in-
creasingly constrained water resources (IRENA, 2015). For instance, IRENA’s analysis of Na-
tionally Determined Contribution (NDC) commitments of China and India finds that scaling up
renewable power, particularly solar PV and wind, combined with improved cooling technolo-
gies, could reduce the water withdrawal intensity of electricity generation by 42% and 84% by
127

2030, respectively (IRENA, 2018b; IRENA, 2016b). In the Gulf Cooperation Council (GCC) region,
achieving renewable energy deployment targets and plans by 2030 can reduce water with-
drawal for power production and associated fuel extraction by 11.5 trillion litres, a 17% de-
crease (IRENA, 2019b).

Further Notes:
„Figure considers only water consumption, not water withdrawals. Withdrawals cover water
that is directly returned to the body of water from which it was taken. Consumption covers
any water that is converted into another form or is not returned to the original body. Although
most water can be recovered when hydrogen is combusted or used in a fuel cell, it is not gen-
erally returned to the original body of water and will be considered to be consumed”

Key message: Water consumption of H2 production is significantly lower than many expect.

Source: Energypost.eu, Hydrogen production in 2050: how much water will 74EJ need?, 2021.

• Assuming the world is using over 70EJ of electrolytic hydrogen by 2050, the water con-
sumption will be about 25 bcm (bcm = billion cubic meters of natural gas = cubic kilome-
ter of natural gas).
• According to the standard defined by IEA, this corresponds on average to 38.2 petajoules
(1.06×1010 kWh) of energy (Russian natural gas) and 41.4 petajoules (1.15×1010 kWh)
(Qatar's natural gas)
• Global figure of 2,800 bcm for agriculture (the largest consumer), 800 bcm for industrial
uses, and 470 bcm for municipal uses. It would be equivalent to a developed country
with 62 million inhabitants (400 m3/capita). Even in the most conservative case, where
water desalination is used, the water cost (treatment, transport) would be less than
2% of the total hydrogen production cost and the energy consumption for water de-
salination would be only about 1% of the total energy needed for the hydrogen pro-
duction. Blanco notes that the water footprint is very location-specific and depends on
the local water availability, consumption, degradation, and pollution. The impact on the
ecosystem will have to be considered too. But the numbers suggests that water con-
sumption shouldn’t be a major barrier for scaling up renewable hydrogen, says
Blanco.
• Even if the entire 2050 hydrogen demand would be satisfied with electrolytic hydro-
gen, the water consumption would be about 25 bcm. Figure 2 (below) puts this number
in perspective with other anthropogenic water consumption flows. Water consumption
128

for agricultural use is the largest one of the order of 2,800 bcm, water for industrial
uses is close to 800 bcm and 470 bcm for municipal uses [7-9]. Current hydrogen pro-
duction from natural gas reforming and coal gasification has a water consumption of
about 1.5 bcm.
• Another point of reference is that the water withdrawals per capita is between 75 (Luxem-
bourg) and 1,200 (US) m3 per year [10]. Taking an average value of 400 m3/(cap-
ita*year), the total 2050 hydrogen production would be equivalent to a country with
62 million inhabitants.
• Step 1: hydrogen production:
o Water consumption comes from two steps: hydrogen production and the pro-
duction of the upstream energy carrier. Looking at hydrogen production,
the minimum water electrolysis can consume is about 9 kg of water per kg of
hydrogen. However, taking into account the process of water de-mineralisa-
tion, the ratio can range between 18 kg and 24 kg of water per kg of hydrogen
or even up to 25.7-30.2 according to [1].
o For the incumbent production process (steam reforming of methane), the
minimum water consumption is 4.5 kgH2O/kgH2 (needed for the reaction),
which increases to 6.4-32.2 kgH2O/kgH2 when considering the water for the
process and cooling [1, 2].
• Step 2: the energy source (renewable electricity or natural gas):
o The other component is the water consumption for the production of renewable
electricity and natural gas. Water consumption for PV can vary between 50-400
l per MWh (2.4-19 kgH2O/kgH2) and between 5-45 l per MWh for wind (0.2-2.1
kgH2O/kgH2) [3]. Similarly, natural gas production can be 1.14 kgH2O/kgH2 in-
creasing to 4.9 kgH2O/kgH2 for shale gas (based on US data) [4].
o In sum: the total water consumption for hydrogen from PV and wind can be,
on average, around 32 and 22 kgH2O/kgH2 respectively (see Figure 1 below).
Uncertainties arise from the solar radiation, lifetime and silicon content [4]. This
water consumption is in the same order of magnitude as hydrogen production
from natural gas (7.6-37 kgH2O/kgH2 with an average of 22 kgH2O/kgH2) [1, 2].
• Total water footprint:
o lower when using renewable energy
o Similar to the CO2 emissions, a pre-condition for the electrolytic route to have
a low water footprint is the use of renewable energy. If just a fraction of fossil-
based generation is used the water consumption associated to the electricity is
much higher than the actual water consumed in the electrolysis process.
• For instance, water consumption for electricity production from natural gas can be up to
2,500 l per MWh [3]. This is also using the best case for fossil fuels (from natural gas). If coal
gasification is considered, it can consume 31-31.8 kgH2O/kgH2 for hydrogen production [2]
with another 14.7 kgH2O/kgH2 from the coal production [4]. Water consumption for PV
and wind is also expected to decrease over time as the manufacturing process be-
comes more efficient and the energy output per unit of installed capacity also im-
proves.
• Cost of water supply:
o Water is a relatively small share of both energy consumption and cost. The worst
case for both parameters is the use of water desalination. The dominant tech-
nology for desalination is reverse osmosis with almost 70% of the global capacity
and the main technology installed since early 2000s [11]. This technology has
a cost of USD 1,900-2,000/(m3/d) with a learning curve rate of 15% [12]. With
such an investment cost, the treatment cost is about USD 1/m3 and potentially
lower in regions with low-cost electricity.
129

o Furthermore, transport cost can roughly add another USD 1-2/m3 [13]. Even in
such a case, the water treatment cost would be around USD 0.05/kgH2. To put
this in perspective, renewable hydrogen cost can be USD 2-3/kg H2 today with
good renewable resources and USD 4-5/kgH2 with average resources.
o Thus, the water cost would represent less than 2% of the total cost in this con-
servative case (see Figure 3, left). Using seawater would increase the water intake
by 2.5-5 times (based on the recovery ratio) [11].

Source: IRENA, The Geopolitics of the Energy Transformation: The Hydrogen Factor, 01/2022, p.9.
Picture Source: Indiatimes, Solar Desalination Device Will Turn Sea Water Into Fresh Water For 400,000 People, 10/2021.

Key message: Desalination can create local value for regions suffering water stress; Addition-
ality + Renewability apply to energy for desalination plants.
130

2.1.4 Land

Key message: Land coverage of biomass, PV and wind PtL is significantly lower than landcov-
erage of biofuels.
131

2.1.5 Critical Raw Materials

Source: IEA, TheRoleofCriticalMineralsinCleanEnergyTransitions. https://iea.blob.core.windows.net/assets/24d5dfbb-

a77a-4647-abcc-667867207f74/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf

Key message: Many rare materials are found in countries where Human and Labour rights are
not respected or where working conditions do not follow safety standards.

Key message: The demand, production and usage of CRM will drastically grow in the future –
driven not only be demand for H2 electrolysis, but also other electrochem.-usages.

Key message: Prevention, extension and recycling regarding CRM can save up to 95% of the
materials.
132

2.2 Social Dimensions

2.2.1 Access to Energy and Resources

Source: Our World in Data, Access to Electrictiy, 2021.

Key message: Energy poverty is a key issue specifically in many African countries --> the elec-
trification of households has to be secured before moving to a PtX economy with a high energy
demand.
133

2.2.2 Human Rights and Labour Standards

• “The deployment and expansion of renewable energy technologies will play an integral
role in reducing our collective carbon footprint, but can come at a cost for workers and
communities if companies do not ensure respect for human rights in their operations and
through their supply chains. The ambitious and necessary goal of achieving carbon neu-
trality by 2050 requires equally robust steps to ensure this transition is truly just.”
• “This first human rights benchmark of the largest renewable energy companies reveals
that most lack the essential human rights policies to avoid abuse of the communities and
workers on which a just transition depends.”
• “The results of the benchmark suggest that none of the companies analysed are currently
fully meeting their responsibility to respect human rights, as defined by the UN Guiding
Principles. Nearly half the companies benchmarked (7/16) scored below 10%, with three
quarters (12/16) scoring below 40%. The average score was just 22%, indicating that, as a
whole, the industry has a long way to go to demonstrate its respect for the human rights
of communities and workers in their operations and supply chains.”
• Source: https://www.business-humanrights.org/en/from-us/briefings/renewable-
energy-human-rights-benchmark/

Further notes:
• “Take solar energy, the fastest-growing renewable energy source. Ninety-five percent of
solar modules rely on one primary material – solar-grade polysilicon. Polysilicon manu-
facturers in the Uyghur Region account for approximately 45 percent of the world’s solar-
grade polysilicon supply – and the supply chain that produces it is reported to be rife with
forced labor.”
• “A similar picture appears with wind energy. In October, Norway's Supreme Court
stripped two wind farms of their operating licenses as the cultural and land use rights of
indigenous Sami people were violated.”
• Source: https://www.sustainability.com/thinking/human-rights-at-the-center-of-the-
energy-transition/

1. Within the scope of the United Nations Organisation:

“International Bill of Human Rights”, including:
i. Universal Declaration of Human Rights, 1948
ii. International Covenant on Civil and Political Rights, 1966
iii. International Covenant on Economic, Social and Cultural Rights, 1966
Instruments to protect vulnerable people and groups, including:
134

i.International Convention on the Elimination of All Forms of Racial Discrimi-

nation (1965)
ii. Convention on the Elimination of All Forms of Discrimination against
Women, 1979
iii. Convention on the Rights of the Child, 1989
iv. International Convention on the Protection of the Rights of All Migrant Workers
and Members of Their Families, 1990
v. Convention on the Rights of Persons with Disabilities, 2006
vi. Declaration on the Rights of Indigenous Peoples, 2007

2. Within the scope of the International Labor Organisation (ILO):

The eight Fundamental Principles and Rights at Work and related conventions, includ-
ing:
i. Freedom of Association and Protection of the Right to Organise Convention,
(No.87), and the Right to Organise and Collective Bargaining Convention, (No.98)
ii. The elimination of all forms of forced or compulsory labor (Conventions 29 and
105)
iii. The effective abolition of child labor (Conventions 138 and 182)
iv. The elimination of discrimination in relation to employment and occupation
(Conventions 100 and 111)
v. Respect Labor Standards on Working time (Conventions 1, 14 and 106)
vi. Protection of Occupational Health and Safety (Conventions 155 and 187, Protocol
2002)
vii. The guarantee of payment of a minimum wage (2008 ILO Declaration on Social
Justice for a Fair Globalization).
viii. Understanding the Indigenous and Tribal Peoples Convention, 1989 (No. 169)
xi. The Tripartite Declaration of Principles concerning Multinational Enterprises and
Social Policy regarding the principles and conventions not included in the eight Fun-
damental Principles and Rights at Work where applicable.
• Source: https://www.edp.com/en/human-rights

Further sources:
https://old.business-humanrights.org/en/case-studies-renewable-energy/?page=1&sec-
tor=&issue=&country=&tool=&directory_nid=141756
https://media.business-humanrights.org/media/documents/files/Renewable_En-
ergy_Benchmark_Key_Findings_Report.pdf

Source: EDP, Human and Labor Rights Policy.

135

2.2.3 Jobs and Skills

Source: IRENA / ILO: Renewable Energy and Jobs Annual Review 2021, 2021, p.90/fig.23.

„Jobs in the just energy transition: Challenges and policies”

Further notes:
Check out the case study about coal mining in South Africa: https://www.sei.org/wp-con-
tent/uploads/2019/02/planning-a-just-transition-in-south-africa.pdf
Find the whole report here: https://www.ilo.org/wcmsp5/groups/public/---dgreports/---
dcomm/---publ/documents/publication/wcms_823807.pdf

Key message: Just Transition affects all levels of our society, economy and environment and
provides us with many intervention levels.
136

Source: IRENA / ILO, Renewable Energy and Jobs Annual Review 2021, 10/2021, fig. 9,11,15.
Notes:
STEM: science, technology, engineering and mathematics
PES: Planned Energy Scenario

• “Human resource requirements for workers in solar PV, wind energy (onshore and off-
shore), and solar water heaters”
• “Renewable energy employment in selected countries “
• “Jobs in renewable energy, by technology, in the 1.5°C Scenario and PES, 2030 and
2050”

Key message: RE does not only eradicate jobs in the fossil industry, but it creates new jobs
and opportunities; especially the PV industry is growing strong.
137

2.3 Economic Dimensions

2.3.1 Energy Mix and Transformation

PtX strategy must fit into overall energy strategy!

• How is renewable energy share raised?
• Based on energy (kWh) and not only in capacity (kW installed)?
• How is power market designed to cope with private sector investment into additional RE?
• The market design especially for the whole sale market is crucial for increase of RE? Are
there any PPA’s, what kind of oter policies exosts to promote RE expansion?

Key message: The energy mix must adopt to the additional demand for RE. It is a different
situation if you come from a position of high RE share, like in Costa Rica or from a position like
South Africa.
138

2.3.2 Value Added and Decoupled Growth

Source: IRENA, Renewable Energy Benefits: Measuring the economics, 2016, p.33.

Combined indicator for welfare considers:

• Economic impacts based on consumption + investment;
• Social impacts based on expenditure on health + education;
• Environmental impacts, measured as GHG emissions + materials consumption

Key message: Improvements in human well-being and welfare would go far beyond gains in
GDP and have to consider social aspects and environmental achievements at the same time.

Source: UNIDO, The Circular Economy: A driver of inclusive and sustainable industrial development, 04/2021.

Key message: We distiniguish different ways of decoupling, but essentially a decoupled

growth describes breaking the link between economic output and environmental impact.
Further Reading: https://www.oecd.org/env/indicators-modelling-outlooks/1933638.pdf
139

„Note that the sequencing of policy instruments depicted in this graph is purely for illustration
of the role sequencing can play. A well-adapted policy mix, including a sequencing approach
based on evaluation of past experiences will have to be tailored to each sector or resource
under scrutiny.“

Source: https://dynamix-project.eu/sites/default/files/DYNAMIX_D1.3_Common_Ap-
proach_Revised_261015.pdf

Source: SRIP – Circular Economy.

Source II: https://pbs.twimg.com/media/ETzOWQpXgAQYnr7.png

Further Reading:
https://www.oecd.org/cfe/regionaldevelopment/Ekins-2019-Circular-Economy-What-Why-
How-Where.pdf

Key message: Circular economy is all about a smart design of the value chain and value crea-
tion process and about reusing the material that is already in the „cycle“.
140

2.4 Governance Dimensions

2.4.1 Policy Commitment and Coherence

Key message: The national H2 and PtX strategy and roadmap MUST fit into the overall na-
tional net zero carbeon policy, NDC committment. It needs to be coherent.
141

2.4.2 Standards and Certifications

Requirements for PtX Certification:

• Simplicity: requirements should be simple and easy to verify, to avoid creating loopholes
and suffocating the market
• Transparency: criteria and assessment processes must be transparent
• Coherence with existing regulation: certification schemes must be based and updated
on existing regulations
• Stakeholder approach: it is important to have input and feedback from a wide spectrum
of stakeholders to facilitate market recognition and gather information.
• Sustainability requirements along the whole supply chain and for each relevant ele-
ment
• Practical mass balancing along the supply chain
• Ensuring a level playing field across different sectors through certifications principles
that apply to all markets and products
• Attention to human and labour rights, including socio-economic aspects in the assess-
ment, especially when operating in areas with high social risk.

Note:
IPHE: International Partnership for Hydrogen and Fuel Cells in the Economy

ISCC complies with the Renewable Energy Directive (RED) and the Fuel Quality Directive
(FQD) of the European Commission. Since 2011, the Renewable Energy Directive (RED) and
Fuel Quality Directive (FQD) build the legal framework for the implementation of renewable
energy targets for the transport sector in the European Union.
142

Source: Guidehouse, EU certification frameworks Sustainability criteria for green hydrogen, Knowledge Session Certification of
Green Hydrogen, 24.11.2021.
Notes:
RFNBO: renewable fuels of non-biological origin. REDII revision proposed to expand this to all end use sectors.
REDII = Renewable Energy – Recast to 2030;
NOx = nitrogen oxides; gCO2 /MJ = grams of CO2 per megajoule;
gCO2 /kWh = grams of CO2 per kilowatt hour;
tCO2/tH2 = tonnes of CO2 per tonne of H2.

• Guarantees of Origin for H2 and PtX products will play a big part in the upcoming market,
and their credibility is likely to influence the success of these technologies.
• H2 and PtX GOs should include some key elements:
• Sustainability requirements along the whole supply chain and for each relevant ele-
ment.
• Practical mass balancing along the supply chain.
• Ensuring a level playing field across different sectors through certifications principles
that apply to all markets and products.
• Attention to human and labour rights, including socio-economic aspects in the assess-
ment, especially when operating in areas with high social risk.

Further Reading: https://www.irena.org/publications/2020/Nov/Green-Hydrogen

Green Hydrogen: A guide to policy making (irena.org)
143

Source: World Energy Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.7/table1.
Notes:
+ : Criteria is covered
: Criteria is not covered
+/- : The topic is mentioned, but no actual criteria is implemented
n/a : No information available, if the respective criteria is covered in the standard/regulation
tbu : to be updated
v : voluntary
r : is based on the national framework in order to get state benefits granted

Source: World Energy Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.17/figure1.

„To show compliance with the obligation regarding the usage of renewable fuels, the pro-
ducer shall report the quantity of RFNBOs placed on the market and their associated green-
house gas emissions towards the responsible authority. This can be done by Proofs of Sustain-
ability (PoS), if a national registry is in place. This is preceded by a chain of evidence starting
with the purchase of electricity and ending with the consumption of the fuel. A comprehensive
certification process has been established to ensure that sustainability is fully documented.
An overview of the certification process in the EU is illustrated in Figure 1: PoS certification
process and linked competent bodies (modified from Sailer et al. (2021).“
144

Source: World Energy Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.25/table5.

GHG emission reduction targets of hydrogen/RFNBOs according to different regulatory frame-

works and standards.

Source: (adapted) TÜV SÜD, Certification systems on Hydrogen and its relevance for a sustainable future, Knowledge Session Certi-
fication of Green Hydrogen, 24.11.2021.
*Trading unit: 1 Green Hydrogen (GH) – Guarantee of Origin (GO) in unit of 1 MWh (based on lower heating value)
.

„Existing certification systems: Hydrogen from renewable energy resources ISCC, CertifHy
(only EU) and TÜV SÜD GreenHydrogen incl. Emissions related to compression, liquefication
and transportation CertifHy EU-wide worldwide Chain of Custody certification CertifHy-GO-
Registry earmarked 100 % renewable No GHGReduction required Mass balanced MB “
145

Source: (adapted) TÜV SÜD, Certification systems on Hydrogen and its relevance for a sustainable future, Knowledge Session Certi-
fication of Green Hydrogen, 24.11.2021.

“In the case of Book & Claim, the physical delivery of the energy carrier and the issuance of the
respective certificate are not linked to each other (dena, 2021a). Book & Claim is therefore a
mechanism of pure certificate trading. The certificates represent a precisely determinable
quantity of sustainable hydrogen that is produced, but not physically traded as certified
goods. Similar to renewable electricity, a tradable certificate is issued to the producers, which
can be auctioned by the manufacturers of end-products via a bidding process (FONAP, 2021).
GO schemes under RED II Art. 19 follow the Book & Claim principle. A Book & Claim principle
would allow certificates to be traded separately from the physical product, thus paving the
way for more flexibility. This aspect is relevant against the background that any trading re-
strictions in form of physical transport obligations between individual countries may lead to
the creation of separate national and less liquid markets for renewable and low-carbon gases,
which would then have the potential to further split the market into small submarkets for e.g.
renewable hydrogen, low-carbon and other kind of renewable gases.” (Source: World Eneryg
Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.23).

Further notes:
GOs should be issued in the standard size of 1 MWh and should be valid for 12 months after
the physical energy production or cancelled after 18 months of energy delivery.

Key message: BC describes the trading of Guarantees of Origins (Gos) that can be virtually
purchased. This approach certifies that a certain amount (measure: 1 MWh) of your H2 or PtX
product used in the process is of renewable origin.
146

Key message: The virtual trading of certificates opens up new chances of not having to
transport e.g. fuel around the planet before use, but to acquire simply the certificate of having
contributed to the use of sustainable fuel which is being tanked on the other side of the planet
potentially.

“The mass balancing approach links the certificate with the respective physical delivery of the
energy carrier. Sustainability certificates are traded via mass balancing, so that a physical de-
livery of an energy carrier goes hand in hand with the certificate. Within the framework of the
mass balance, an exchange of qualitative properties is possible via the PoS. In addition, the
renewable energy carrier can still be traced if it is mixed with energy carriers. The mass bal-
ance primarily serves the purpose of tracing a renewable energy carrier from its use to its pro-
duction. Thus, a physical link is established throughout the value chain. There are, however,
different views regarding the delivery form in a mass balance system. The use of the natural
gas grid, into which hydrogen can be fed but not withdrawn in its pure form, would only be
possible if the definition of renewable hydrogen refers only to the energy content.
In the dena Biogasregister, mass balancing of hydrogen starts at the electrolyser and ends at
the end consumer. However, the consumed renewable electricity is traced as well, but the
electricity plant is not registered in the system.
147

Requirements for mass balancing of hydrogen are the following (Sailer et al., 2021):
• Supply contract for renewable hydrogen and meter data must be provided along the
entire chain of custody.
• The delivery has been documented in a mass balance system (e.g. dena Biogasregis-
ter).
• Gaseous RFNBO: Documentation of interface point (injection and extraction meter
points).
• Liquid RFNBO: Delivery notes from transport companies. In case of multiple outputs,
the produced hydrogen volume is distributed among the outputs by percentage basis
or attribution. An example for multiple outputs would be to produce multiple end-
products from the renewable hydrogen e.g. e-methanol for the transport sector and
green metal for the industry”
Source: World Energy Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.23f.

Key message: MB certifies that a certain percentage of your end product consists of green H2
or renewable PtX.

Source: (adapted) https://ars.els-cdn.com/content/image/1-s2.0-S0301421520300586-gr2.jpg

Materials are either physically segregated in production processes throughout the supply
chain (“physical segregation”) or mixed in production but separated in bookkeeping (“mass
balance approach”) or entirely independently of each other.

Further sources:
https://www.fch.europa.eu/sites/default/files/CertifHy_Overview_phase1_EN_V1.pdf
148

Source:https://www.weltenergierat.de/wp-content/uploads/2022/01/dena_WEC_Harmonisation-of-Hydrogen-
Certification_digital_final.pdf
World Energy Council, Global Harmonisation of Hydrogen Certification , 01/2022, p.34/table10.
Notes:
+ : Criteria is covered
- : Criteria is not covered
+/- : The topic is mentioned, but no actual criteria is implemented
n/a : No information available, if the respective criteria is covered in the standard/regulation
tbu : to be updated
v : voluntary
r : is based on the national framework in order to get state benefits granted

2.5 Overview: Sustainability Indicators According to Fraun-

hofer’s PtX Atlas
7
149

Support Policies and Regulations for

Renewable PtX
1. The Start: Setting Up a Green Hydrogen Project .......................................................... 150
1.1 Holistic Project Approach......................................................................................................... 150
1.2 Steps of Scaling Up a Market .................................................................................................... 150

2. Policy Recommendations and Regulatory Architecture ............................................... 152

2.1 2030 Climate Targets ................................................................................................................ 152
2.2 Regulatory Architecture as a Policy Framework for the H Economy ..................................... 153
2

2.3 Policy Recommendations – Connection of Supply and Demand Side ................................... 156
2.4 Roadmap of Policy Recommendation Integration .................................................................. 157
2.5 Important Policy Instruments .................................................................................................. 157
2.6 Focus on the Policy Instrument: Finance and Investment ...................................................... 158

3. Strategies of Policy Making ....................................................................................... 159

3.1 Setting Up a National Strategy................................................................................................. 159
3.2 Establishing Policy Priorities .................................................................................................... 160
3.3 Country Examples .................................................................................................................... 161

4. Summary and Outlook on a Renewable PtX Economy .................................................. 166

150

1. The Start: Setting Up a Green Hydrogen Project

1.1 Holistic Project Approach

Key message: When you design a hydrogen project think from a customer perspective. Ap-
proach must be holistic.

1.2 Steps of Scaling Up a Market

• PtX faces the typical hen-egg-dilema. It is technologically ready for take-off, yet, eco-
nomically the rocket is not yet flying.
• On the supply side: investors claim that there is not yet sufficient solvent demand.
• On the demand side: potential customers (such as airlines) complain, that there is not
yet sufficient stable supply (e.g. of synthetic E-Kerosene) at affordable prices.
• For a breakthrough and effective transformation market mechanisms alone will not be
suffient.
• Policy intervention will be required providing regulatory frameworks, R&D and financial
support, on both sides of the market, supply and demand.
• The Renewable Energy sector is offering valuable lessons of unexpected steep learning
curves and dramatic cost degressions.
151

• Take the example of solar PV modules. It is reasonable to assume, that similar develop-
ments could be triggered also for modular electrolyser units.
• The up-scaling debate is often twisted to looking at scale in terms of size instead of scal-
ing by number.
• Yet, PV costs came down not by increasing the size but by serial production of a rapidly
increasing number of modules.
• There will be no global market without compliance with comprehensive sets of sustain-
ability standards and criteria. Impact assessments must cover a broad range of EESG
sustainability concerns and criteria.
• For supply chain due dilligence they must be considered at every step of the value chain
and at every level from local projects to national programmes to international planetary
perspectives

Further notes:
• The costs of synthetic fuels may sink considerably during this period. This is mainly be-
cause of the digression of the investment costs for renewable energy power stations and
conversion facilities due to the learning effect of a growing global market. In addition, the
efficiency of water electrolysis is likely to increase over time, further cutting costs.
• The savings from importing synthetic fuels depend on the investment costs for offshore
wind and the FLH at each site Another factor are the differences in cost of capital the ex-
porting countries are subject to country-specific risk premiums on account of political or
regulatory instability, and these premiums could increase the costs of imported synthetic
fuels
• The most important determining factors for the future cost of synthetic fuels are the costs
of power generation, investment in production facilities, and the capacity utilisation of
conversion facilities. Transport costs play a less significant role, especially when it comes
to liquid fuels.

Key message: Scaling up hydrogen and/or PtX market requires development of the two sides
in parallel: the demand side and the supply side
152

2. Policy Recommendations and Regulatory Architec-

ture
2.1 2030 Climate Targets

Key message: The figure shows the very complex composition of policy tools developed by
the EU for 2030 climate target. Some of them are useful to be considered as tool for other
countries as well. Objective of the different policy targets is among others to increase demand
and supply for green H2 and minimise commercial off-taker risk!
153

2.2 Regulatory Architecture as a Policy Framework for the H2

Economy

Besides policy in-

struments, ade-
quate support ar-
chitecture is
needed to ramp
up supply and de-
mand for GH2

Source: illustration adapted: Matthias Deutsch (Agora Energiewende) / Matthias Schimmel (Guidehouse), Mak-
ing renewable hydrogen cost-competitive Policy instruments for supporting green H2, ONLINE EVENT, 08
JULY2021, p.16-21
Notes:
*CHP:
Central Heating Plant
**BEHG: Brennstoffemissions-handelsgesetz. The German Fuel Emissions Trading Act creates the basis for
trading in certificates for emissions from fuels and ensures that these emissions are priced insofar as they are
not covered by EU emissions trading. .

Architecture - Infrastructure and markets:

Labelling of green products: establishing green lead markets:
• Goal: The goal is to refinance investments in new production processes based e.g. on re-
newable H2.
• Design: Labels are likely to be most effective in combination with other instruments, such
as carbon limits on final products. As the initial demand-side pull will not be enough
to justify investments in H2 technologies, additional instruments such as a CCfD may
be required. The labelling is mandatory for the covered scope, i.e. basic materials,
which may include steel, basic chemicals, and cement. Additional costs are passed on to
the consumer via the final products.
• Timing: The label could be introduced as soon as possible and kept thereafter. It should
be complimented by additional supply-side policies.
• Legal analysis: A legal basis for the introduction of the label is required. For implemen-
tation at EU level, integration into the Ecodesign Directive may be considered. The idea
of a label may also be addressed in the context of the RED III. Alternatively, a new regula-
tion may be considered. For reasons of proportionality or appropriateness, it would be
necessary to gradually introduce the necessary measures to create transparency and es-
tablish quality standards.
154

Supply side:
H2 supply contracts: bridging the cost gap:
• Goal: Cover difference between lowest possible renewable H2 production cost and
highest willingness to pay in a double auction model.
• Design: H2 supply contracts pay for defined time spans a fixed premium in EUR/t H2. An
intermediary entity administers the public funds to cover the difference. The instrument’s
focus is on the (German) industry sector.
• Timing: In the short term (towards 2030), H2 supply contracts must be tied to a fixed de-
livery location within Germany (integrated projects). In the long term (beyond 2030) the
goal is to buy hydrogen from producers and sell it to end users via auctions.
• Legal analysis: The instrument is in principle legally feasible. The instrument qualifies as
state aid since the funds are from tax revenues. It must therefore be notified with the Eu-
ropean Commission. Due to civil law regulations, the contractual period should be limited
to 5, maximum 10 years.
Demand side:
• Carbon Contracts for Difference (CCfDs): de-risiking breakthrough technologies
o Goal: Facilitate investments by industry in breakthrough technologies by com-
pensating the difference between effective CO2 price (EU-ETS) and mitigation
costs of a breakthrough technology.
o Design: A CCfD can be awarded to industry on a project-by-project basis or in a
competitive auctioning scheme. If the awarded party sells its product as green
against a premium that remunerates the implied emission reduction, no funding
is paid. A labelling of climate-friendly basic materials could incentivise off-takers
to pay that premium, thereby creating green lead markets.
o Timing: First CCfDs will start in 2022. With H2 becoming cost competitive, increas-
ing CO2 prices and the development of green lead markets, the instrument can
likely be phased out in the late 2030s.
o Legal analysis: Legal feasibility depends on the specific design. A state aid notifi-
cation would need to carried out. The CCfD must be designed in such a way that
overfunding is avoided. The contract duration must therefore be limited from the
outset and the tenders must be equipped with maximum bid limits. Due to the
permissible aid intensities, 100% of the eligible costs can only be funded through
tenders.
• PtL quota for aviation: putting aviation on track to net-zero
o Goal: A PtL quota in the aviation sector creates demand for e-kerosene, a H2de-
rivative.
o Design: A sustainable aviation fuel (SAF) quota of at least 10% is implemented
with a sub quota for PtL of at least 5%, to be reviewed in 2025, and, if feasible,
increased to at least 10%. Obligated parties are all kerosene distributors for avi-
ation in the EU. The price premium could be passed on through the airlines to con-
sumers.
o Timing: The quota obligation can only start a few years after its announcement,
e.g. in 2025. PtL and other SAFs must cover 100% of kerosene by 2050. The PtL
quota must therefore increase in coordination with a quota for SAFs.
155

o Legal analysis: The instrument is in principle legally feasible. Non-European pro-

ducers must be granted market access. The quota must be technically achievable
and place no undue burden on obligated parties to fulfill the principle of propor-
tionality. It may be challenged if the quota covers only e-kerosene and excludes
bio-based kerosene.
• Support for H2-fuelled CHPs: providing flexibility to the power system

o Goal: Plants receive a fixed feed-in-premium per unit of electricity generated, cov-
ering both the incremental CAPEX as well as the OPEX cost difference between us-
ing H2 instead of natural gas, thereby incentivising the use of H2.

o Design: Awarded CHP plants are required to physically consume pure H2. This
means that they need to be located close to electrolysers or H2 networks. To en-
sure that the supported capacities are used as a flexible source, operating hours
should be limited to around 3000 hours p.a. System-friendly dispatch is incentiv-
ised through electricity spot market prices.
o Timing: This instrument could be introduced in the next legislative term and be
replaced by a H2 quota in gas plants once coal-based electricity generation has
stopped.
o Legal analysis: Support should be regulated and conducted separate from ten-
dering under sec. 8a KWKG. The operating hours may be adapted to simplify the
integration in the KWKG or allow stronger orientation towards building capacity.
The total duration of support is not specified, but rather refers to the depreciation
period.
156

2.3 Policy Recommendations – Connection of Supply and De-

mand Side

Key message: Global auctioning system by the EU ensures together with Carbon Contracts
for Difference that both sides: the supply side has a long term future to invest into the produc-
tion of green hydrogen as well the consumer/demand side for the green hydrogen has assur-
ance that the purchase price is limited by a ceiling price determined by the carbon price de-
velopment to ensure that the use of green hydrogen does not lead to higher production costs
than if consumer uses fossil input.
157

2.4 Roadmap of Policy Recommendation Integration

Source: (Adapted) Matthias Deutsch (Agora Energiewende) / Matthias Schimmel (Guidehouse), Making renewable hydrogen cost-
competitive - Policy instruments for supporting green H2, 2021, p.32.

Key message: Overview on main hydrogen policies and their timeline in the EU, working on
demand, supply and market development in parallel.

2.5 Important Policy Instruments

Source: own reflections and IEA, The future of H2: https://www.iea.org/reports/the-future-of-Hydrogen

Key message: Within the context of international cooperation the following interventions and
tool are considered to be useful and applicable.
The EU wants to crate a “premium market” for green hydrogen, here the EU standards and
certification scheme will play an important role
158

2.6 Focus on the Policy Instrument: Finance and Investment

159

3. Strategies of Policy Making

3.1 Setting Up a National Strategy

Source: (adapted) IRENA, Green Hydrogen – A Guide to Policy Making, 2020, p.20/fi.2.2.

Steps to establish a political strategy:

• Initiation of R&D programs: to develop the knowledge base that will inform future stages
and to explore multiple technologies and possibilities. R&D programmes are not always
necessary if already conducted by other countries.
• Vision document: clarifies the “why H2”, “why this jurisdiction”, and “why now”. It guides
research, industry efforts and early demonstration programs. Such documents are often
co-created by governments and private actors attracted by the growth prospects of break-
through applications.
• Roadmap: defines an integrated plan with the activities needed to better assess the po-
tential for H2. It identifies the short-term actions needed to advance deployment and de-
fines the research areas with the highest priority and the applications where demonstra-
tion projects are most needed.
• Strategy itself: defines the targets, addresses concrete policies and evaluates their coher-
ence with existing energy policy.
• Source: https://www.irena.org/publications/2020/Nov/Green-hydrogen

Key message: Four steps lead to national strategy: Develop an adequate R&D programme
adopted to needs of your country. It must not be basic research it can be as well a focus on
applied research, testing and adaptation of technologies, development of balance of equip-
ment, etc. National production of parts of supply chain, etc.. Parallel to this the vision docu-
ment is necessary to raises the visibility of the national hydrogen strategy, while the roadmap
and strategy defines details of the approach.
160

3.2 Establishing Policy Priorities

Source: adapted from: IRENA Coalition for Action, Decarbonising end-use sectors: Practical insights on green hydrogen, 2021,
p.13/fig.3.

• Financial tools: investment incentives, funds and loans

• Fiscal tools: tax incentives, carbon pricing
o Regulations: sustainability criteria and methodologies
o Policies & quotas
• Public procurement
• Research support
o International collaboration: facilitate international trade, international market
agreement

Key message: All gear wheels of policy making need to fit into each other; all parts need to be
turned to develop supply and demand.
161

3.3 Country Examples

3.3.1 German National Hydrogen Strategy

Source: Yele, Low-Carbon Hydrogen Development Analysis of Strategies & Roadmaps Around the World, 2020, p.10.

• The National Hydrogen Strategy states the following goals as the main objectives:
o Establish H2 technologies as core elements of energy system,
o Create the regulatory conditions for the market take-off,
o Strengthen German companies and their competitiveness by promoting re-
search and development,
o Securing and shaping the future national supply of CO2-free H2.
• Among others, this means: promote H2 globally, make H2 competitive by boosting market,
develop a H2 market in Germany.
• For H2 €7 bil. are foreseen to be invested in Germany and €2 bil. in international co-
operation.
• Constructing 5 GW of electroyser capacity and renewables until 2030.
• Only H2 produced with renewable energy (green H2) considered to be sustainable in the
long-term.
• However, carbon-free, blue or turquoise, H2 will be traded temporarily.

Further Reading: German National Hydrogen Strategy:https://www.yele.fr/wp-content/up-

loads/2020/12/hydrogen-strategies-and-roadmaps-analysis_Yele-Consulting_2020.pdf

Key message: Germany has focused on some aspects and has set quantitative figures for the
amount of green hydrogen, capacity of electrolyzer and additional RE to power them.
162

3.3.2 National Hydrogen Strategies Globally

Source: BloombergNEF

As of January 2022 and according to Bloomberg New Energy Finance, 26 nation hydrogen
strategies existed, 22 countries prepared theirs, 3 pilot or demonstration plants existed/ were
supported and 8 countries started initial policy discussions.
163

3.3.3 PtX in Chile

Green H₂ in Chile -Overview:

• Government and private sectors are strongly committed in green H₂.
• National Green H₂-Strategy: Launched on 03.11.2020 and in implementation
• Actual projects (production of green H2/derivates) in development: >15 big (export); >20
small H₂-projects (local demand)
• Application: >30 H₂-projects in development (transport, industry applications).
• International agreements: With several countries like Singapore, Port of Rotterdam (NL),
GB, Correa, Japan, …. Germany: Energy-Partnership..
• Goals of National Green H2 Strategy of Chile until 2025:
• 5 Billion USD of investments committed in H2 infrastructure in Chile
• 5 GW installed capacity of electrolyser in development
• Until 2030:
• <1,5 USD/ kg production cost for green H2 (most economic worldwide)
• >2,5 Billion USD exports of green H2/ derivates
• Chile is among the top 3 exporters of green H₂ and its derivates.

Key message: Last slides show how Chile approached their development of a national hydro-
gen strategy. First, a SWOT analysis and then a series of many activities since 2014 to come to
a first national strategy in 2020 and first investment projects in 2021. It gives a good idea what
countries can do to create a movement within their country to get supports to develop na-
tional hydrogen strategy.
164

GIZ support in Chile for a national H2 strategy

165

Framework changes for a H2 economy

Key message: This slide shows what is required in Chile to adopt the international regulations
and norms to Chilean conditions to produce, transport, store and use hydrogen.
166

4. Summary and Outlook on a Renewable PtX Econ-

omy

Source: (adapted) BNEF, Hydrogen Economy Outlook, 2020.

• H2 has experienced a hype cycle before, and right now, there is still insufficient policy
to support investment and to scale up a clean H2 industry. But the growing number of
countries getting serious about decarbonisation could change this.
• Investors should watch out for the following key events to help determine whether a
H2 economy is emerging:
1) net-zero climate targets are legislated,
2) standards governing H2 use are harmonised and regulatory barriers removed,
3) targets with investment mechanisms are introduced,
4) stringent heavy transport emission standards are set,
5) mandates and markets for low-emission products are formed,
6) industrial decarbonisation policies and incentives are put in place and
7) H2 ready equipment becomes commonplace.
167

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