Why COP26 should focus on hydrogen demand

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The 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) took place one week. It has been called the “last and best hope” for nations to reach Paris’s target of limiting temperature rises to 1.5 degrees C by mid-century.

So far, the high profile announcements and promises from many countries are impressive. The world is starting to look like it is on an inevitable, albeit hesitant, path to a low-carbon economy.

The leaders ‘summit is now over and negotiators are getting to work to work out the details and rules for countries’ carbon reduction plans. What comes out of it will say a lot about the future of low carbon hydrogen. A good basis for judging the outcome already exists in a report published as a “manual” for the conference.

A roadmap until 2050

Two recent events leading up to COP 26 show how fundamentally the conversation around energy has changed. One symbolic and the other directly influencing politics, they can portend significant progress in Glasgow.

Symbolic was the announcement last month of the first Nobel Prize directly linked to climate change. The physics prize was awarded to three scientists whose research decades ago closely correlated CO2 emissions with global warming.

Their breakthroughs have enabled the development of reliable long-term climate models producing energy and climate scenarios.

That same climate modeling made possible another significant breakthrough this year when the International Energy Agency (IEA) released Net Zero by 2050: A Roadmap for the Global Energy System. It is now a guidance document for the agency.

This is an important institutional threshold that places very strong climate action at the center of its work. But the IEA scenario is not a forecast of what the agency thinks is going to happen; rather, it is a roadmap showing how to get to a desired goal.

It is not a forecast, and what governments will do is fundamentally unknown; they might go back on their promises or fail to implement them. There is no case assessing what the IEA considers likely to happen, or what happens if countries fail to meet their commitments. Some see the agency’s refusal to forecast a problem.

“The IEA seems stuck between its two missions of energy security and sustainability, as do much of the Western energy policy establishment,” says Robin Mills, columnist and CEO of Dubai-based Qamar Energy.

“I sympathize with their dilemma,” he adds, “because it is a very difficult message to communicate accurately to policy makers and the general public.”

The real impact of the IEA scenario building is now being tested at COP 26, where the agency plays an important advisory role. Its net zero emissions scenario is now an integral part of its annual World Energy Outlook (WEO-2021), released last month to serve as a “handbook” for the summit.

Thus, the work of Nobel laureates decades ago has come to play directly in energy policy, and with some urgency. IEA Executive Director Fatih Birol, in comments accompanying WEO-2021, said the 2020s will be a pivotal decade for climate efforts. And the new report makes it clear that this is especially true for low-carbon hydrogen, which plays a key role in the scenarios.

Scenarios: bridging the gap

WEO-2021 was released earlier this year than in previous years in anticipation of the next meeting of COP26. It focuses on the gap between the pledges made by countries and the zero carbon roadmap, presumably to spur them on to Glasgow.

It is structured around three scenarios that progress from policies to commitments towards net zero, with its Net Zero Emissions (NZE) scenario as the central goal and aspiration, a difficult but still achievable path against which the other scenarios are compared.

The report shows subtle changes in the agency’s perspective to support its net zero scenario.

For the first time, it says more renewables are needed not only to achieve carbon neutrality, but also to stabilize energy systems and mitigate volatility in oil and electricity prices. This addition reverses the usual emphasis on renewable energy volatility and seems quite pragmatic in light of the current global energy crisis.

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Another first is the abandonment of the base scenario of current trends. Instead, a ‘stated policy scenario’ (STEPS) serves as the baseline scenario, which shows for the first time a slight decline in demand for fossil fuels by 2050, with net growth in demand for fossil fuels. energy from low carbon sources.

Thus, the report shows modest but real progress already made in current initiatives to control carbon emissions around the world, although these are far from reaching the Paris target. Or, as the IEA report says, “A new energy economy is on the horizon”.

In the STEPS program, demand for fossil fuels plateau in the 2030s. More ambitious public policies are contained in the “Pledged Commitments Scenario” (APS), which causes demand for oil to peak in the 2020s. This scenario assumes enhanced Nationally Determined Contributions (NDCs) under the COP, to limit temperature rise to 2 degrees C by the end of this century. But this is a far cry from the climate security offered by the NZE.

Much of the WEO-2021 report aims to close this gap, showing the gaps that could be filled in Glasgow, to truly achieve net zero emissions by 2050. Currently, the pledges pledged fill almost 20% of the gap between base case of declared policies and ambitious NZE.

The report examines the gap in the electricity sector and in each end-use sector: industry, transport and buildings. Hydrogen plays an important role in everyone.

Intervention needed now

The decarbonisation of the electricity sector gives the biggest boost to the NZE scenario over the next ten years. Energy efficiency and avoided demand are also essential. And in all sectors, clean energy innovation must happen to meet the Paris target. Low carbon fuels and hydrogen electrolyzers are considered “key technology areas” in the IEA roadmap.

For hydrogen, the WEO-2021 report emphasizes the need to test technologies and build enabling infrastructure during the 2020s, even if their significant impact on emissions will not occur until after 2030. Thus, , in the APS and NZE scenarios, the actual amount of low-carbon hydrogen-based fuels in 2030 are quite low, representing less than 1.5% of total final consumption by 2030 (compared to almost nothing today). hui). But progress through 2030 will be essential for their subsequent success.

But more political support is now needed, says the IEA, with a big expansion of policies to support the development of hydrogen-based fuels. Concerted policy and regulatory interventions must begin now to lay the groundwork for hydrogen, potentially reducing production costs and expanding use beyond 2030.

Create markets to stimulate innovation

With the technology and infrastructure in place, the low-carbon hydrogen market grows exponentially in the years after 2030, according to the IEA’s Net Zero Emissions Roadmap. The supply of hydrogen and hydrogen-based fuels from low-carbon sources is increasing six-fold from current levels to a remarkable 10% of total final energy consumption in 2050. Their use s ‘extends to the entire energy sector.

Achieving this result will require massive investment over the next ten years. According to IEA data Global Hydrogen Review 2021 report, also released in October, approximately $ 37 billion was committed to clean up H2 by countries with hydrogen strategies. An investment of 300 billion dollars has been announced by the companies. However, according to the IEA, the level of public and private investment will have to reach 1,200 billion dollars by 2030 for hydrogen to reach its contribution to net zero emissions by 2050.

From this it appears that the big project announcements of the past two years, while important, are only part of the equation. They paid a lot of attention to efforts to produce low carbon hydrogen in large quantities. However, what is also needed are policies to increase demand and significantly expand the clean hydrogen market.

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Therefore, what COP 26 is expected to deliver are much broader commitments to policies designed to create demand and thus stimulate major investments in innovation. Such demand creation will encompass a wide variety of policy instruments, including carbon prices, auctions, quotas, mandates and procurement requirements. Governments will need to impose standards, incentives and rules to create markets. For example, they can set specific dates and deadlines for the production of low-carbon and even non-carbon steel and other industrial products.

These types of measures have not been widely applied or even discussed. But their great use would be to create investor confidence, knowing that the markets for hydrogen-based fuels and the innovative technologies needed to produce them at competitive prices will be there.

A widespread commitment to policies to increase hydrogen demand would be a major achievement of COP 26. These could significantly reduce the cost of clean H2 technologies around the world, thus laying the groundwork for rapid expansion. of production in the decades to come. What happens in Glasgow could make or break the pivotal decade.

By Alan P. Mammoser for Oil chauffage

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