Energy transition

What Color Is Your Hydrogen?

Green hydrogen is currently dominating the energy transition conversation. But will it dominate the future market for clean energy?

Hydrogen energy concept
Petmal/Getty Images/iStockphoto

Is green H2 better than blue? Is gray going away? As the world transitions from “black gold” to greener alternatives, many questions are being raised about hydrogen (H2) and its role in the current and future energy mix.

H2 was among the “hot topics” during the 2021 CERAWeek by IHS Markit held virtually in March. The global energy research firm estimated that hydrogen currently costs $200 to $250/bbl to produce—as much as five times the cost to produce a barrel of oil.

Low-carbon hydrogen has a tiny share of the global energy market today, but investors are betting on its long-term potential, according to Wood Mackenzie, who said shares with meaningful exposure to hydrogen have been among the best-performing of energy transition stocks in the past few months. By 2050, low-carbon hydrogen will constitute 7% of global energy demand—211 Mt—from practically zero today.

For this and other reasons, many oil companies are researching and investing in hydrogen projects. IHS Markit believes that energy companies will invest $5 billion to $10 billion in hydrogen of various colors over the next 5 years, helping to develop breakthrough technologies that will reduce its cost and increase its competitiveness, not only with renewables such as wind and solar, but eventually with oil and natural gas.

Paul Browning, president and chief executive officer of Mitsubishi Power Americas, said, “What’s really driving green hydrogen is net zero, from regulators to shareholders.

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