A clear understanding of the emissions associated with hydrogen production can help enable investment and boost scale-up

Most large-scale projects for the production of low-emission hydrogen are facing important bottlenecks. Only 4% of projects that have been thus far announced are under construction or have taken a final investment decision. Uncertainty about future demand, the lack of infrastructure available to deliver hydrogen to end users and the lack of clarity in regulatory frameworks and certification schemes are preventing project developers from taking firm decisions on investment.

Transparency on the emissions intensity of hydrogen production can bring much-needed clarity and facilitate investment. Using colours to refer to different production routes, or terms such as “sustainable”, “low-carbon” or “clean” hydrogen, obscures many different levels of potential emissions. This terminology has proved impractical as a basis for contracting decisions, deterring potential investors. By agreeing to use the emissions intensity of hydrogen production in the definition of national regulations about hydrogen, governments can facilitate market and regulatory interoperability. This report aims to assist governments in doing so by assessing the emissions intensity of individual hydrogen production routes, for governments to then decide which level aligns with their own circumstances

The production and use of hydrogen, ammonia and hydrogen-based fuels needs to scale up

The G7 is a cornerstone of efforts to accelerate the scale-up of the production and use of low-emission hydrogen, ammonia and hydrogen-based fuels. G7 members – Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union – account for around one-quarter of today’s global hydrogen production and demand. At the same time, G7 members are frontrunners in decarbonising hydrogen production and technology development for new hydrogen applications in end-use sectors. The G7 can use its technological leadership and economic power to enable a greater increase in the production and use of low-emission hydrogen. However, G7 members cannot undertake this challenge alone. The development of an international hydrogen market will require the involvement of a wide range of other stakeholders, including among emerging economies.

Hydrogen, ammonia and hydrogen-based fuels have an important role to play in the clean energy transition. Global hydrogen demand reached 94 million tonnes in 2021, concentrated mainly in its use as a feedstock in refining and industry. Meeting government climate ambitions requires a step-change in demand creation for low-emission hydrogen, particularly in new applications in sectors where emissions are hard to abate, such as heavy industry and long-distance transport. At the same time, hydrogen production needs to be decarbonised; today, low-emission hydrogen represents less than 1% of global production.

The development of international supply chains can help to meet the needs of countries and regions with large demand and limited potential to produce low-emission hydrogen. Regional cost differences and growing demand in regions with less potential to produce low-emission hydrogen, ammonia and hydrogen-based fuels could underpin the development of an international hydrogen market to trade these fuels, despite the additional costs arising from conversion and transport. The global energy crisis has further strengthened interest in low-emission hydrogen as a way to reduce dependency on fossil fuels and enhance energy security, becoming a new driver for global trade in hydrogen.

Hydrogen definitions based on emissions intensity can form the basis for robust regulation

The emissions intensity of hydrogen production varies widely depending on the production route. Today, hydrogen production is dominated by unabated fossil fuels; emissions need to decrease significantly to meet climate ambitions. The fuel and technology used, the rate at which CO2 capture and storage is applied, and the level of upstream and midstream emissions all strongly influence the emissions intensity of hydrogen production. For example, production based on unabated fossil fuels can result in emissions of up to 27 kg CO2‑eq/kg H2, depending on the level of upstream and midstream emissions. Conversely, producing hydrogen from biomass with CO2 capture and storage can result in negative emissions, as a result of removing the captured biogenic carbon from the natural carbon cycle. The average emissions intensity of global hydrogen production in 2021 was in the range of 12-13 kg CO2‑eq/kg H2. In the IEA Net Zero by 2050 Scenario, this average fleet emissions intensity reaches 6‑7 kg CO2‑eq/kg H2 by 2030 and falls below 1 kg CO2‑eq/kg H2 by 2050.

The emissions intensity of hydrogen produced with electrolysis is determined by the emissions from the electricity that is used. Using the methodology developed by the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE)1, renewable electricity2 generation has no associated emissions, resulting in 0 kg CO2‑eq/kg H2. In the case of grid electricity, the emissions intensity varies greatly between peak load and baseload hours, depending on which technology is used to meet additional demand for the electrolysers. To reduce emissions, it is therefore important to ensure that grid-connected electrolysers do not lead to an increase in fossil-based electricity generation.

Carbon capture and storage technologies can reduce direct emissions from fossil-based hydrogen production but measures to mitigate upstream and midstream emissions are needed. Hydrogen production from unabated natural gas results in an emissions intensity in the range of 10-14 kg CO2‑eq/kg H2, with upstream and midstream emissions of methane and CO2 in natural gas production being responsible for 1-5 kg CO2‑eq/kg H2. Retrofitting existing assets with capture of CO2 from the feedstock-related use of natural gas (capture rate around 60%) can bring the emissions intensity down to 5‑8 kg CO2‑eq/kg H2. Higher capture rates (above 90%) can be achieved with advanced technologies, reducing emissions intensity to 0.8‑6 kg CO2‑eq/kg H2, although no plants using these technologies are in operation yet. At high capture rates, the emissions intensity of hydrogen production is dominated by upstream and midstream emissions, which account for 0.7-5 kg CO2‑eq/kg H2, underscoring the importance of cutting methane emissions from natural gas operations.

Governments should define roadmaps to decarbonise hydrogen production, both domestic and imported, in accordance with their national circumstances. This report therefore does not provide a generic acceptable upper threshold for the emissions intensity of hydrogen production. However, governments should take into account factors such as emissions intensity, supply volumes and affordability to inform decision-making to scale up production and use of low-‑emission hydrogen. The higher production cost of low-‑emission hydrogen and the relatively young age of existing unabated fossil fuel-based hydrogen production assets in the chemical sector are barriers to the uptake of low-emission hydrogen. Retrofitting existing production assets with CO2 capture and storage can be a cost-effective near-term option to partially decarbonise production. In regions with abundant renewable resources, the use of renewable electricity to produce hydrogen is set to be the most cost-effective option, even before 2030.

Reference to the emissions intensity of hydrogen production in regulations can enable interoperability and limit market fragmentation

Several certification systems or regulatory frameworks defining the sustainability attributes of hydrogen are currently being developed, but there is a risk that lack of alignment may lead to market fragmentation. Existing efforts have some commonalities in scope, system boundaries, production pathways, models for chain of custody and emissions intensity levels. But inconsistencies in approaches risk becoming a barrier for the development of international hydrogen trade. Referring to the emissions intensity of hydrogen production, based on a joint understanding of the applied methodology used for regulation and certification, can be an important enabler of market development, facilitating a minimum level of interoperatibility and enabling mutual recognition rather than replacing or duplicating ongoing efforts.

Regulation and certification that uses the emissions intensity of hydrogen production should also be able to accommodate additional sustainability criteria. Governments and companies may wish to consider other potential sustainability requirements when making decisions about the use of hydrogen as a clean fuel and feedstock. Criteria related to the origin of the energy source, land or water use, and socio-economic aspects such as working conditions are already incorporated into some regulations and certification schemes. The use of emissions intensity is a first step to enable interoperability, but should not preclude governments and companies incorporating additional criteria. The use of “product passports” can help to bring all these criteria together, as well as to standardise processes, minimise costs and maximise transparency.

  1. The IPHE has developed a methodology for calculating the greenhouse gas emissions intensity of hydrogen production and conditioning, and is due to complete the methodology for hydrogen transport. The IPHE methodology will serve as the basis for the first international standard on this topic and can serve as a first step for the adoption of emissions intensity of hydrogen production in regulations.

  2. IPHE methodology assigns zero emissions to solar PV, wind, hydro- and geothermal power.