Hydrogen

A key part of a clean and secure energy future

Hydrogen can help tackle various critical energy challenges, including helping to store the variable output from renewables like solar and wind to better match demand. It offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help improve air quality and strengthen energy security.


Production of hydrogen today

Around 70 Mt of dedicated hydrogen are produced today, 76% from natural gas and almost all the rest from coal.

Annual hydrogen production consumes around 205 billion m3 of natural gas (6% of global natural gas use) and 107 Mt of coal (2% of global coal use), with coal use concentrated in China. As a consequence, global hydrogen production today is responsible for 830 Mt CO2 per year – corresponding to the annual CO2 emissions of Indonesia and the United Kingdom combined.

These emissions can be avoided by using more low-carbon hydrogen in these applications, i.e. hydrogen produced with either the capture of CO2 from hydrogen production from fossil fuels, or by producing hydrogen from water and clean electricity. Both these approaches can also be used to expand low-carbon hydrogen use into other sectors to tackle emissions.

Capacity of new projects for hydrogen production for energy and climate purposes, by technology and start date
	Industrial feedstocks	Vehicles	Gas grid injections	Electricity storage	Heat 
2000	0	0	0	0.04	0
2001	0	0	0	0	0
2002	0	0	0	0	0
2003	0.01	1.06	0	0	0
2004	0	0.03	0	0.08	0.01
2005	1.53	0	0	0.05	0
2006	0	0.22	0	0.01	0
2007	0	0.07	0	0.09	0.03
2008	0.02	0.02	0	0.68	0
2009	0	0.26	0.02	0.12	0
2010	0	0.13	0	0.15	0.04
2011	0.42	5.34	0.24	2.94	0.11
2012	1.28	1.27	1.24	0.9	0.21
2013	0.36	2.72	7.24	1.18	0.09
2014	1.9	1.11	1.02	0.22	0.09
2015	1.18	2.21	1.52	0.55	0.09
2016	0	0.18	0.45	0.68	0.31
2017	8.29	8.35	1.51	3.4	1.7
2018	0.78	10.34	2.49	2.16	0
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	Industrial feedstocks	Vehicles	Gas grid injections	Electricity storage	Heat 
2000	0	0	0	0	0
2001	0	0	0	0	0
2002	0	0	0	0	0
2003	0	0	0	0	0
2004	0	0	0	0	0
2005	178	0	0	0	0
2006	0	0	0	0	0
2007	0	0	0	0	0
2008	0	0	0	0	0
2009	0	0	0	0	0
2010	0	0	0	0	0
2011	0	0	0	0	0
2012	0	0	0	0	0
2013	724	0	0	0	0
2014	0	0	0	0	0
2015	489	0	0	0	0
2016	400	0	0	0	0
2017	0	0	0	0	0
2018	0	0	0	0	0
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Electrolysis currently accounts for 2% of global hydrogen production, but there is significant scope for electrolysis to provide more low-carbon hydrogen. Surplus electricity from variable renewables has low costs, but the number of hours during which this surplus occurs is generally low. Falling costs mean that dedicated renewables for hydrogen production in regions with excellent resource conditions could, however, now become a reliable low-cost hydrogen source.

Hydrogen costs from hybrid solar PV and onshore wind systems in the long term

Notes: Electrolyser CAPEX = USD 450/kWe, efficiency (LHV) = 74%; solar PV CAPEX and onshore wind CAPEX = between USD 400–1 000/kW and USD 900–2 500/kW depending on the region; discount rate = 8%. Source: IEA analysis based on wind data from Rife et al. (2014), NCAR Global Climate Four-Dimensional Data Assimilation (CFDDA) Hourly 40 km Reanalysis and solar data from renewables.ninja (2019).

If all current dedicated hydrogen production were produced through water electrolysis (using water and electricity to create hydrogen), this would result in an annual electricity demand of 3 600 TWh – more than the annual electricity generation of the European Union. Water requirements would be 617 million m3, or 1.3% of the water consumption of the global energy sector today; this is roughly twice the current water consumption for hydrogen from natural gas.

There are huge regional variations in hydrogen production costs today, and their future economics depend on factors that will continue to vary regionally, including prices for fossil fuels, electricity and carbon. Natural gas without CCUS is currently the most economic option for hydrogen production in most parts of the world, with costs being as low as USD 1/kgH2 in the Middle East.

	CAPEX	OPEX	Natural gas
	0.34	0.17	0.49
	0.61	0.37	0.54
	0.34	0.17	1.22
	0.61	0.37	1.34
	0.34	0.17	0.6
	0.61	0.37	0.66
	0.34	0.17	1.27
	0.61	0.37	1.4
	0.34	0.17	0.43
	0.61	0.37	0.47
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kgH2 = kilogram of hydrogen; OPEX = operational expenditure. CAPEX in 2018: SMR without CCUS = USD 500–900 per kilowatt hydrogen (kWH2), SMR with CCUS = USD 900–1 600/kWH2, with ranges due to regional differences. Gas price = USD 3–11 per million British thermal units (MBtu) depending on the region.

Among low-carbon options, electrolysis requires electricity prices of USD 10–40/MWh and full load hours of 3 000–6 000 to become cost-competitive with natural gas with CCUS (depending on local gas prices). Regions with good renewable resources or nuclear power plants may find electrolysis an attractive option, especially if they currently depend on relatively high cost natural gas imports.

	Blank1	Blank2	Blank3	Blank4	Blank5	Coal without CCUS	Coal with CCUS	Natural gas without CCUS	Natural gas with CCUS	Electrolysis renewables
Australia	2.29	2.29	1.65	1.88	2.28	1.51	0.15	0.65	0.12	1.43
Chile	0	0	1.84	2.06	1.59	0	0	0.69	0.08	1.39
China	1.53	1.5	1.88	2.08	1.57	1.53	0.17	0.66	0.15	0.7
Europe	2.29	2.29	1.93	2.19	3.12	1.51	0.15	0.65	0.12	0.93
India	1.8	1.78	1.99	2.19	1.67	1.48	0.12	0.59	0.13	0.98
Japan	0	0	2.35	2.66	4.09	0	0	0.62	0.08	2.08
Middle East	1.97	1.95	1.15	1.31	1.65	1.54	0.19	0.66	0.14	2.64
North Africa	1.8	1.78	1.49	1.68	1.55	1.48	0.12	0.64	0.12	1.65
United States	2.32	2.32	1.3	1.5	2.24	1.51	0.15	0.7	0.18	1.31
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Conversion of hydrogen into other hydrogen-based fuels could be attractive where few other low-carbon alternatives are available, but is not economic at current prices.

The conversion of hydrogen to ammonia benefits from existing infrastructure and demand; it also does not need carbon as an input. For synthetic liquid fuels from electrolytic hydrogen, however, electricity costs of USD 20/MWh translate into costs of USD 60–70/bbl without taking account of any capital expenditure or CO2 feedstock costs. For synthetic methane the equivalent figure is USD 10–12/MBtu.

Carbon pricing or equivalent policies would be needed to reduce the cost gap between synthetic hydrocarbons and fossil fuels. Cost-effective sources of carbon, ideally non-fossil carbon, would also be needed in the form of captured CO2.

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