In this article I take a look at some of the drivers and narratives that have propelled hydrogen to be top of zero carbon pops, and to look beyond the hype, expose some magical thinking and say why investors are so enthusiastic.

Proposed as an energy source by the great luminary, Jules Verne, who wrote in ‘The Mysterious Island” in 1874 “I believe that water will one day be employed as fuel, that hydrogen and oxygen which constitute it, used singly or together, will furnish an inexhaustible source of heat and light, of an intensity of which coal is not capable”. Verne has a strong track record when it comes to predictions, including submarines, helicopters, elevators, newscasts, and high speed trains, not all of which have come to pass in Northern England.

Hydrogen’s rising popularity is due to it literally producing water when combusted or used in a fuel cell, enough to wash away old strains and to put a new shine on existing energy technologies like oil & gas and nuclear. It promises zero carbon without catastrophic disruption, keeping much of the infrastructure, skills and patterns of work and society as we have them.  No surprise that it is being heavily backed by the established energy giants.

Hydrogen has also been embraced by politicians (some, no doubt, persuaded by industry lobbying). It is proving very popular with the public as well, looking for a new hope in combating the economic post pandemic recovery and the need to avoid the larger calamities of the climate emergency.  

It is a rare day when industry, politics and the public reach consensus, and such alignment involves a degree of magical thinking to assign significant structural change with affordability, secure communities and steady state industrial progression.  

Where the hype isn’t so clear is about cost and clean air. Hydrogen can be produced without creating carbon dioxide, such as from electrolysis from renewables, or from nuclear electricity, and it can be generated directly from high temperature nuclear reactors, but these methods are expensive, and the hydrogen may be produced far from where it is needed.  

To produce hydrogen cheaply from methane gas means carbon dioxide emissions, and while combustion of hydrogen does not produce carbon dioxide, it does produce nitrogen oxides (NOx) which are a key component of air pollution in cities.

And because it is so light it needs to be moved and stored at very high pressures, 350bar or 700bar, and because it is such a tiny molecule, and highly chemically reactive, the containers need to be extraordinarily strong, impermeable and non-reactive, which means added weight and cost.  

These challenges are important to overcome, but are surmountable, and necessary, and investors who are experienced in assessing risk and separating science fact from science fiction can see beyond these challenges, looking instead at the fundamental drivers. 

And the fundamental driver is that, in the UK of the ~1,800TWh UK annual energy consumption, around 79% is from hydrocarbons.  And after more than 20 years of subsidising wind farms and solar fields, these still only provide ~9% of UK energy. To decarbonise, the UK needs to decarbonise ~1500TWh annually - that is an astonishing figure, and means we have to achieve more in the next five than in the last twenty years.  

The UK power generation system (all the gas, coal & nuclear power stations, solar, wind etc.) and the electricity grid currently supply 294TWh.  So, to wholly electrify our transport, which uses around 660TWh, we need to find three times as much electricity as the UK currently generates! Even if only half the UK’s transport were electrified, it would need the UK to double its generation capacity, and invest very significant sums to upgrade its transmission, distribution and storage network to carry this load. No wonder investors and governments are looking for new sources of zero carbon energy to set alongside nuclear, wind & solar.    

As for heating, hydrogen can do that too, in fact, older accountants reading this will remember the conversion from ‘town gas’ to natural gas’ in the 1970s, town gas being a mix of hydrogen, carbon monoxide, and other gases. 

Since the magnitude of the gaps in the zero-carbon delivery plan are so vast, and with hydrogen poised to fill that gap, predicting that hydrogen will be a key component in the future of energy is not science fiction any longer, and with the backing of established energy institutions, the levels of public and private investment in hydrogen in 2021 and 2022 means that hydrogen will continue its run at top of the energy agenda.