In recent years, “blue” hydrogen has attracted much attention from both policymakers and energy-sector firms alike, for its alleged potential in facilitating the clean energy transition while providing alternate revenue streams for traditional fossil fuel companies. These assertions are not without controversy, given criticisms of how “blue” hydrogen production perpetuates greenhouse gas emissions while side-lining its “green” counterpart. This article examines such issues in the wider context of clean energy transition.

Historically, much of the hydrogen produced is derived from fossil fuel combustion, with natural gas used as an input for approximately 75% of over 110 million tonnes of hydrogen produced annually. Waste carbon dioxide from this process is released into the atmosphere, earning such hydrogen its “grey” label. Its “blue” variety retains the same production technique, but aims to trap and store these carbon emissions underground using carbon capture and storage (CCS) technologies. There also exists “green” hydrogen, which is manufactured via electrolysis of water powered from renewable energy.

Several major stakeholders have announced plans to develop their capabilities in “blue” hydrogen. Notably, the Norwegian energy company Equinor hopes to install its production facilities in Hull within the UK, using CCS technology to extract and bury the resulting carbon under the North Sea, while OPEC nations are in the midst of discussing its potential exploration.

Simultaneously, criticisms have arisen over the dependency of “blue” hydrogen on natural gas, which subjects it to commodity price fluctuations and geopolitical risks. This comes before considering that technical viability and lifetime costs of CCS facilities remain wrought with uncertainty, while modern CCS technologies only capture between 71% and 92% of the carbon in steam methane reforming (production of hydrogen and carbon monoxide), falling significantly short of any ‘net-zero’ emissions targets.

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Forecasted global production capacity of blue (top) and green (bottom) hydrogen by region, between 2020 to 2028 (Source: S&P Global Platts Analytics). 

Despite its shortcomings, “blue” hydrogen remains a beneficial, even necessary, option for the energy transition, since its “green” counterpart lacks both production capacity and cost-competitiveness in the short-term. As fossil fuel reserves can be utilised, energy giants would probably be more receptive towards “blue” hydrogen, possibly even funding research and development efforts instead of lobbying against it. By installing the necessary infrastructure and stimulating uptake of hydrogen-based energy technologies, “blue” hydrogen can set the stage for the subsequent emergence of its “green” counterpart, especially if renewable energy prices continue to plummet in the future. All avenues for improvement should be explored in constructing a more sustainable economy, rather than allowing the strive for perfection to impede progress.

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Bloomberg New Energy Finance (BNEF) projections of the cost of producing green hydrogen, when compared with hydrogen derived from natural gas (Source: Bloomberg). 

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