Blue hydrogen is not a low-cost solution in the ongoing gas price crisis, as the projected cost of production is now 36% higher than the UK Government estimate in 2021, a new report by the US-based Institute for Energy Economics and Financial Analysis (IEEFA) finds on Tuesday.
The study reveals that an extension of the gas value chain to include blue hydrogen would risk Europe's energy security.
'Continued investment in blue hydrogen would deepen the country's (UK) vulnerability to gas price volatility and supply uncertainty, at a time when Europe is scrambling to reduce its dependence on gas,' the study finds.
The analysis questions the continued support for blue hydrogen, as set out in the UK’s recently announced British Energy Security Strategy, which calls for up to 10 gigawatts (GW) of low carbon hydrogen by 2030, of which up to 5 GW could be blue hydrogen.Using blue hydrogen for heating requires one-third more natural gas than if the gas was used directly for heat.
In the UK alone, blue hydrogen for domestic heating would increase natural gas imports by 10%.
The IEEFA's blue hydrogen cost forecasts suggest the technology should lose government support in the near term because green hydrogen will become cheaper to produce by 2030.
'This year alone, 26 green hydrogen projects are expected to begin construction around the globe; no blue hydrogen projects are slated, indicating that the riskiness of blue hydrogen is already playing out in the global market,' the report says.
By Gulsen Cagatay