Out with green hydrogen, in with carbon capture

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Policymakers and industry’s love for green hydrogen – has cooled in recent months. While hydrogen derived from renewable energy is still a key part of Europe’s decarbonisation drive, teething problems have made clear that this new industry is incapable of scaling up overnight.

Green hydrogen projects have struggled with lack of customers, insufficient renewable energy, supply chain delays, and financing challenges. Earlier this year the International Energy Agency revised downwards by 50% of its 2028 projections for hydrogen production in Europe.

Governments and industry are now looking for alternative solutions to fill the gap. Enter carbon capture, which has sprung back on the agenda in recent months, most notably when the European Commission crowbarred it into the EU’s Net Zero Industry Act.

Carbon capture and green hydrogen do indeed have an overlap in some use cases. For example Germany is exploring, to generate electricity on demand.

But blue hydrogen is where industry is most likely to push for carbon capture to substitute green hydrogen.

In Brussels blue hydrogen produced using carbon capture, has been treated with scepticism, for much the same reasons that decisionmakers are wary of carbon capture. Blue hydrogen is not so environmentally friendly, if too much carbon is allowed to escape in the production process, or if there are methane leaks upstream.

Environmentalists are particularly wary of blue hydrogen’s ‘business as usual’ nature. Its production allows fossil fuel extraction to continue, risking locking gas permanently into Europe’s industrial ecosystem.

If industry does want to have blue hydrogen back on the agenda, it will have some work to do in Brussels. The forthcoming EU definition of ‘low carbon hydrogen’ will be a priority.

But anyone dismayed by green hydrogen’s teething problems is unlikely to find comfort in carbon capture.

Both technology faces much the same scale-up challenges. Similar to hydrogen, carbon capture requires the creation of a large trading market, the development of expensive transport infrastructure, and the de-risking of technology.

For both hydrogen and carbon capture, Europe has had its hopes dashed before, and time is running out. Europe’s Emissions Trading Scheme foresees no carbon emissions from the power or industry sectors by 2039. In investment terms, this is just around the corner.

Teething problems are unavoidable, but sooner rather than later, these technologies need to start delivering on their promises.

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[Edited by Rajnish Singh]

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