Climate change is an increasing concern for governments, people and industries across the globe; 2023 broke records for greenhouse gas levels, surface temperatures, ocean heat and glacier retreat, among other markers. And 2024 is shaping up to end similarly. Extreme weather events accompanying climate change, such as heat waves, floods and wildfires, are also disrupting daily life and, oftentimes, business continuity. In response, many companies and organizations are putting enormous effort and investment into “going green.” In most cases, the specific goal is primarily to achieve net zero, which generally refers to limiting the amount of carbon emitted while offsetting those emissions that are unavoidable.

The energy sector faces unique challenges in responding to the climate crisis. Currently, 75% of greenhouse gas emissions and nearly 90% of carbon emissions come from fossil fuels. Because of this, the industry is deeply motivated to address the issue and demonstrate effective solutions. There is also a substantive effort to support the growth of clean energy creation. In the United States, clean energy and transportation investments have reached record levels, hitting $71 billion in Q1 of 2024. Globally, the amount spent on clean energy technology is on track to surpass $2 trillion in 2024 – twice the amount spent on fossil fuels.

In response to this demand, energy companies are turning to hydrogen as an answer, due to its unique potential to decarbonize a wide range of industries, primarily consisting of those in which emissions have been historically challenging to limit such as steel, manufacturing and long-haul shipping.

Supply and infrastructure: Responding to increasing demand

Despite the promise of hydrogen, there is a major roadblock: the lack of an available supply of quality, low-carbon hydrogen. This is primarily due to limitations around the method used to create “green hydrogen.” The first is that the machines used in the process, which are called “electrolyzers,” are incredibly expensive and there is a limited number of them currently available. The second is that renewable energy from solar or wind is not available at all times of the day and night, which limits the time the electrolyzers can be run. There is also a compounding issue of the amount of renewable energy sources not meeting the necessary demands for creating hydrogen energy, which can be massive.

For example, two different steel companies undertaking projects in the Southern United States and Midwest regions are facing similar hurdles: The existing infrastructure of renewables is not sufficient to power the planned projects. A facility under development in Mississippi would require more than a 500% increase in renewable energy sources currently in the state. Likewise, the Midwestern facility would require roughly two times the amount of wind and solar power currently installed in its home state of Ohio. This is not an impossible battle to win, but it will require dedicated, creative solutions to build new sources or import energy from other states. This will likely require new infrastructure for delivery in addition to production.

Regardless of the industry, the supply issue is impossible to ignore. The majority of hydrogen energy, as with all global electricity, is created using fossil fuels. This means the coveted low-carbon hydrogen is a subset of an already limited source – 0.01% of all hydrogen produced as of 2023. The majority was created using natural gas without carbon capture, utilization and storage. Another significant portion was created by burning coal. These types of hydrogen energy, sometimes referred to as “black,” “brown” or “gray” hydrogen, depending on the specific method of production, are the most detrimental in terms of emissions. They are, in fact, the total opposite of the ideal low-carbon or “green” hydrogen. The cost of electrolyzers and renewables is decreasing, which may boost their proliferation. Until that day, the current lack of supply is an opportunity for creative solutions, such as utilizing data exchange to inform global hydrogen trading or implementing digital twin technology to optimize performance.

In other cases, a limited supply of hydrogen is an auxiliary factor tacked on to a laundry list of tangentially related issues. In Germany, a fleet of first-of-its-kind hydrogen-powered trains ran into a multitude of problems. The issues were partly due to infrastructure: Germany has a more established system of non-hydrogen green energy trains and struggled to pivot. However, some of them could be pinned to logistical snags. These included the unexpectedly long time required to train the conductors and engineers to operate the trains, as well as issues with fuel stations. Funding for the project was ultimately cut, which led to the eventual replacement of the trains with other models, which were electric or battery-powered.

This option was feasible for Germany because it already has an infrastructure suitable for electric and battery-powered trains. This is due to the lines that need to be decarbonized having charging stations that are relatively close together and an industry preference for maintaining batteries over hydrogen fuel cells. However, one of hydrogen’s strong points is its ability to quickly refuel for long-haul trips. For regions where it would be ideal for trains to travel long distances without stopping to refuel, low-carbon hydrogen can be key to decarbonization. This is especially true for areas like California, where many railroads are owned by private companies that are resistant to installing the overhead wiring required for electrification. Investing in hydrogen-powered trains and the fueling infrastructure they require enables people and goods to travel longer distances while creating the lowest possible level of emissions.

Transportation challenges and potential solutions

It is important to remember that this is still an evolving area for the energy industry. These examples can be learned from as the energy industry pivots to low-carbon hydrogen. Production, transmission and distribution are all still areas of development and experimentation. The challenges experienced by these rail and steel projects are natural growing pains, and other industries considering turning to low-carbon hydrogen should examine these early projects as case studies.

Currently, the primary method of transporting hydrogen is via vehicular transport, by way of either trucks or trains. Hydrogen’s natural composition creates challenges for other distribution methods such as pipelines. This is because it is a sticky molecule that can pull atoms from the steel, plastic or other materials commonly used for pipelines. The molecule also tends to escape containment because of its small size, necessitating a careful system for transportation and delivery to avoid leaks. Its size can also contribute to the embrittlement of pipelines, which is when the hydrogen erodes the steel in gas pipelines, potentially causing leaks. These features of hydrogen do not preclude pipelines as a method of transportation – they will, in fact, be necessary for large-scale distribution. However, it will require ingenuity and investment.

To make existing infrastructure compatible with transporting hydrogen alone, it must be updated to resist hydrogen molecules’ tendency to escape and harm incompatible materials. This could include building new pipelines out of material better suited for containing hydrogen, such as fiber-reinforced polymer, or retrofitting older distribution lines. Given that this would be a costly overhaul, many gas distribution companies are still evaluating the impact of adding hydrogen to their offerings. These companies are weighing the benefits of hydrogen against the potential harm to their current assets.

Alternatively, some companies are in the proof-of-concept stage and conducting trial programs with specific supply lines, including a percentage of hydrogen mixed in with their natural gas products. Interestingly, transporting hydrogen in a blend is not a new idea. Before the widespread conversion to natural gas, “town gas” was widely used throughout the United Kingdom and other parts of the world. This gas, produced from coal gasification in the 19th and 20th centuries, contained a mixture of carbon monoxide and hydrogen as its burnable components and up to 60% hydrogen by volume. As companies revitalize this Industrial Revolution-era idea with new technologies, projects like these will expand as companies gain confidence and increase their learning.

One piece of these proof-of-concept projects that cannot be neglected is tracking the carbon intensity of the hydrogen sources and any applicable certificates. Since hydrogen can be produced along any point of the gas network with the right combination of factors to create and inject it into the pipeline, gas distribution companies must manage the pipeline itself. They will need to track and measure the source, record the carbon intensity of the supply and certificates and report to their stakeholders.

Because various injection points are mixed in the pipelines transporting hydrogen or storage tanks holding it, accounting and auditing carbon is more complex than when shipping via truck, boat or train. However, carbon intensity is vital to maintain awareness, as many stakeholders, including consumers, want to know the carbon implications of hydrogen production and delivery for their environmental, social and governance (ESG) reporting. Since environmental concerns are a motivating factor for the pursuit of hydrogen power, proving the efficacy of decarbonization efforts is essential for showcasing the return on investment.

Finally, there are early-stage deployments of distribution lines built for hydrogen-specific point-to-point production and supply purposes. While limited in their present availability and usage, there are plans to expand availability around the globe. Europe is leading the way in this endeavor, with 1,600 km of pipelines that have already been constructed and a further 3,300 km of pipelines that will span Austria, Germany and Italy. And that is only the beginning. There are plans to expand to multiple countries with tens of thousands of pipelines, in addition to an undersea delivery channel and a connecting line to North Africa. In the near future, Latin America, the United States and Canada plan to implement their own pipelines.

The potential of point-of-use production

While pipelines are being built or updated to transport hydrogen, point-of-use production provides an alternative solution. To some degree, it is also a natural alternative due to the current lack of transport networks. In the United States, for example, much of the current hydrogen is produced at or near the point of use due to the lack of transmission infrastructure. As hydrogen continues to become more affordable and able to be produced by end consumers, it may bypass existing supply chains entirely. This method of hydrogen production will likely continue to expand in the coming years and must be considered part of the future of the clean energy landscape.

Data centers are another potential candidate for on-premises (on-prem) hydrogen as a primary power source. Their already substantive power consumption is projected to skyrocket with the recent boom in artificial intelligence (AI). As technology usage continues to expand, so too will the corresponding energy required. Point-of-use hydrogen could be the key to offsetting and, ideally, reducing the resulting increased emissions. Even those who rely on hydrogen created with fossil fuels or fossil fuel sources directly to deal with surges could have net negative carbon and greenhouse gas emissions by introducing low-carbon hydrogen as their primary power agent.

Bespoke point-of-use hydrogen power is both an opportunity and a threat to traditional energy distributors that must be considered and responded to in order to stay ahead of the curve. The proliferation of on-prem systems could limit the amount of hydrogen that needs to be moved. However, these systems will need backups and fail-safes to remain functional during surges or other irregularities. Transmission and delivery companies and professionals are well suited to be the solution to these problems.

The number of challenges facing the world and the energy industry is daunting but represents an opportunity for positive change that will benefit the world. Prioritizing low-carbon hydrogen power may be the key to capping emissions and accelerating the race to net zero. However, the infrastructure needed to produce green hydrogen is not yet in place, nor are the systems required to transmit and distribute it once it is produced. Energy professionals have an opportunity to face these challenges head-on to achieve global climate goals and provide a return on the large – and increasing – investments in low-carbon hydrogen.