The green hydrogen hierarchy

As shown above, the fertilizer, chemical, shipping, and steel industries represent the vanguard of low-carbon hydrogen and e-fuel applications. These sectors currently either rely on hydrogen or necessitate an energy-dense, liquid energy carrier such as methanol, ammonia, or kerosene, as is the case in shipping and aviation. From a demand perspective, the refining and industrial sectors drove 99% of the existing 95-million-tonne global hydrogen demand in 2022.¹ Unfortunately, this demand also made a substantial contribution to greenhouse gas emissions (approximately 2.5% of global emissions) due to the predominant use of environmentally polluting production methods.

Alternatives to green hydrogen and e-fuels for these use cases can be biofuels – also in the form of methanol and kerosene – made from biomass and waste, based on different feedstock and chemical processes than the e-fuels made from water electrolysis.

Less favourable cases

Less favourable use cases include residential space heating and urban mobility. These applications are much better addressed by direct electrification. For the heating of buildings, heat pumps would require approximately five to six times less renewable electricity compared to a hydrogen fired boiler.² Electrification might become the most widespread but not the only alternative for space heating. Low-temperature waste heat from industrial processes or e.g. data centres may be utilised in district heating systems.

For cars, electric vehicles (EVs) have already won this debate by offering a cheaper and less complex solution compared to hydrogen cars or fuel cell electric vehicles (FCEV’s). EVs are generally cheaper to manufacture and operate, given the increasing affordability and availability of batteries. They are also less complex from an engineering standpoint, requiring fewer specialised components than FCEVs. Additionally, the infrastructure for charging EVs is becoming more widespread and accessible, further tipping the scales in favour of electrification. The efficiency of converting electrical power to motion is also higher in EVs compared to the multiple-step process of converting hydrogen to electricity in FCEVs. All these factors have effectively made EVs the go-to solution for passenger mobility, making the case for hydrogen in this sector increasingly untenable. A similar approach can be extended to evaluate other technologies adaptable to both hydrogen and electrification. Key considerations include assessing efficiency, complexity, and the existing infrastructure.

The in-between use case

For the use cases in the middle, things become less certain. Herein lie applications in high-temperature heat for industrial processes, long-haul trucking, and energy storage. Production costs, geographic considerations, energy density, and infrastructure are important to consider here.

This significant financial commitment would likely increase significantly if we were to opt for complete electrification whenever it is technically feasible. Therefore, while theoretically possible, it may not always be the most optimal choice for every application. Strategic assessment of applications should therefore be taken to ensure hydrogen offers the best available solution when compared to the trajectory of other technologies. Moreover, it is expected that these later applications will benefit from the learning rates and production scale-up expected in the hydrogen and electrolyser manufacturing industry that will run parallel to current deployments.⁴ While they may not be viable today, they could be in 2030 or 2035 depending on the hydrogen industry’s momentum.

Industry perspectives

There is a debate in the industry on practical applications of hydrogen and e-fuels as well as wide ranging estimates for the predicted size of the future hydrogen market. While hydrogen has gained recognition as a versatile decarbonisation tool, the extent of its practical application remains a point of contention among industry experts.

Michael Liebreich, known for popularising the “clean hydrogen ladder” concept and likening hydrogen to a versatile “Swiss Army knife” of energy solutions, leans towards electrification where possible and highly questions some speculative hydrogen applications. He emphasizes that versatility does not’ always equate to efficiency or cost-effectiveness, using the example of using a Swiss Army knife for various tasks when more specialised tools are often more practical, safer, or cheaper. Liebreich’s hydrogen ladder diagram assesses hydrogen’s viability in proposed applications, highlighting competition not only from electrification but also from biofuels.

Conversely, companies heavily investing in hydrogen technologies might tend to overemphasise its potential applications and benefits to expedite market adoption. These differing perspectives can contribute to a proliferation of opinions, making it difficult to reach a neutral, evidence-based assessment of hydrogen’s role. Furthermore, established energy entities may seek to shape the discourse to align with their particular interests, such as infrastructure assets or business models, potentially prioritising their own agenda over broader societal and climate objectives, further complicating the evaluation process.

It does not have to be a competition

Taking both views into account, Ramboll underscores the need to evaluate hydrogen’s role within a broader, decarbonised energy context and does not frame the discourse as a competition between hydrogen and electrification. Instead, we view hydrogen and Power-to-X technologies as complementary to electrification efforts – and the logical next step in the hierarchy where the integration of both hydrogen and electrification is deemed essential for achieving decarbonisation goals. Both hydrogen and electrification have roles to play, in the current and anticipated energy demands, and a cautiously optimistic approach is a good way to move forward.