Deloitte Report Prepared for the Renewable Thermal Collaborative and World Wildlife Fund Provides Considerations for Scaling Green Hydrogen for Industrial Heat Applications
WASHINGTON, D.C. – Apr. 25, 2023 — Green hydrogen has a unique and critical role to play in decarbonizing hard to abate sectors according to the Green Hydrogen Technology Assessment released today by Deloitte and World Wildlife Fund (WWF) together with the Renewable Thermal Collaborative (RTC). Currently, the industrial sector accounts for approximately 24% of total greenhouse gas (GHG) emissions in the U.S., more than half from fossil fuel combustion to generate process heat that powers most industrial functions. Green hydrogen, which is produced by electrolysis using renewable electricity, is uniquely positioned to decarbonize high-heat industrial processes due to its high heating value and high flame temperature during combustion. However, given the capital expense required for industrial end-users to incorporate hydrogen into their processes, policy support is critical to the development of a green hydrogen market for industrial heating.
“RTC members – leading U.S. and global manufacturers from all sectors of the economy, institutions, and localities – are all working to decarbonize their thermal energy use. Especially for manufacturers and industrials, green hydrogen is a critical decarbonization technology,” remarked Blaine Collison, RTC Executive Director. “This new assessment will help manufacturers and industrials better understand their opportunities around green hydrogen, right as we’re seeing really important new federal policies, billions of dollars of funding, and the release of the Department of Energy’s National Clean Hydrogen Strategy and Roadmap.”
The Green Hydrogen Technology Assessment is intended as a resource for large corporate energy buyers and other key market and policy stakeholders. It is focused on five priority subsectors, which together account for more than 70% of industrial heat demand: oil refining, chemicals manufacturing, pulp and paper, iron and steel, and cement. It specifically evaluates the technical and economic potential for and pathways to scaling green hydrogen for application in industrial process heat in a cost-effective, environmentally friendly, and socially responsible way. It also explores the nuances of the nascent hydrogen market in the U.S., as well as the technological, financial, policy, and other barriers that need to be addressed to enable future growth.
“The Inflation Reduction Act is a game changer for production cost of green hydrogen. It generated increasing interests from various sectors,” said Cihang Yuan, WWF Climate and Energy Senior Program Officer and a lead author of the report. “However, with the limited supply of green hydrogen in the short- and mid-term, and various competing use cases, energy buyers and policymakers need to better understand the potential and barriers to the use of green hydrogen for industrial heat applications in the broader hydrogen economy.”
The Technology Assessment identifies three key takeaways for energy buyers to consider to accelerate the growth of the broader hydrogen economy:
- Take advantage of current policies. As green hydrogen could be a key component of the decarbonization strategy for chemicals, cement, and iron and steel, energy buyers in these sectors should begin to take advantage of the Inflation Reduction Act (IRA), which is a critical enabler for lowering production costs of green hydrogen.
- Pursue additional policy support. Even with the cost-lowering benefits of the IRA, the cost of green hydrogen adoption, including transportation, storage and retrofitting required on the end-use side still poses a barrier and will likely need additional policy support to overcome.
- Explore innovative procurement options. Buyers from other sectors can leverage geographic proximity to hydrogen hubs and be proactive in developing early relationships with hub developers. These early efforts to enter buyers’ consortiums or teaming agreements with larger buyers and explore innovative procurement options, while not the key pathway to scale, are important in advancing the broader hydrogen economy.
“As evidenced by our research, green hydrogen can and should play a leading role in decarbonizing high-heat industrial applications,” said Martin Stansbury, Deloitte Risk & Financial Advisory’s U.S. power, utilities and renewables sector leader, Deloitte & Touche LLP. “It is likely to take enhanced coordination among policy makers, regulators, end-users, and producers to realize green hydrogen’s full potential in helping achieve this energy transition.”
Download the Green Hydrogen Technology Assessment at https://www.renewablethermal.org/gh2-tech-assessment/.
About the Green Hydrogen Technical Assessment Partners
Renewable Thermal Collaborative (RTC) is a global coalition of companies, institutions, and governments committed to helping reach midcentury climate goals by scaling up renewable heating and cooling technologies at their facilities to dramatically reduce their carbon emissions. The RTC collaborates with its members and sponsors to accelerate industrial decarbonization by addressing and identifying ways to overcome the technology, policy, and market challenges that large thermal energy users face. Visit www.renewablethermal.org to learn more.
World Wildlife Fund (WWF)
WWF is an independent conservation organization, with over 30 million supporters and a global network active in over 100 countries. WWF’s mission is to stop the degradation of the Earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption. Visit www.panda.org/news for the latest news and media resources and follow us on Twitter @WWF_media.
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