What does wider adoption of green hydrogen mean for SMEs?

green hydrogen

One of our greatest goals around the world to achieve by 2050 is to decarbonise the planet. To achieve this, we need to decarbonise elements like hydrogen. This gives rise to green hydrogen. It could be a key enabler of the worldwide transition to net zero emission economies and sustainable energy. 

There is a lot of momentum globally to fulfill hydrogen’s long-standing potential as a clean energy solution. It is time to tap into its potential and identify how it could help us tackle critical energy challenges. 

The success of electric vehicles and renewable energy technologies has already revealed green technology innovation and policy have the power to help us establish worldwide clean energy industries. Let’s look at what the wider adoption of green hydrogen could mean for small and medium enterprises. 

What is green hydrogen? 

Hydrogen is the smallest and simplest element in the periodic table. Despite how it is produced, it ends up with the exact same carbon-free molecule. In saying that, the pathways to create it are rather diverse, as are the emissions of greenhouse gases like methane and carbon dioxide. 

Essentially, green hydrogen is hydrogen created by splitting water into oxygen and hydrogen through the use of renewable electricity. This is quite a different pathway when compared to both blue and grey hydrogen. By contrast, grey hydrogen is generally created from methane which is a primary culprit for climate change

Blue hydrogen follows the exact process as grey but with some additional technologies to capture the carbon dioxide created when the hydrogen is split from methane. Where renewable power is the cheapest source of electricity, electrolysis for green hydrogen production requires significant scale-up and reductions to its costs. 

Strategies to engage SMEs in green hydrogen

As mentioned previously, hydrogen has emerged as a leading option for storing energy from renewables. Green hydrogen, in particular, was featured in several emissions reduction pledges at COP26 as a method to decarbonise heavy industry, aviation, shipping, and long-haul freight. 

Both industry and governments have recognised its potential and importance in a net zero economy. As a result, the adoption of green hydrogen is increasing in large corporations globally. In saying that, it is also becoming common for small and medium enterprises. 

However, the need to build expensive electrolysers for the green hydrogen generation has resulted in the process being rather costly for small businesses. Therefore, for small businesses to engage in green hydrogen, cost reductions must occur that match with the other energy sources. 

SMEs can create enhanced cross-sectoral applications of green hydrogen by combining sectors. In saying that, when you consider the above, it is still essential for a sustainable energy policy ecosystem for green hydrogen to be created for SMEs. 

This can be done by subsiding the cost differential between fossil fuel cost and green hydrogen production. Additionally, duty-free import of plant technologies and machinery for renewable energies. Improvement in the performance and cost of the hydrogen supply chain on a bigger sale should also be acted upon. 

The above actions will help SMEs engage in the green hydrogen ecosystem most efficiently. As mentioned, green hydrogen is an essential pillar of the energy transition, but it is not the next immediate step. We first must accelerate the deployment of renewable electricity to decarbonise our existing systems. 

Moreover, we need to accelerate the electrification of the energy sector to create low-cost renewable energy before finally decarbonising sectors that are challenging to electricity through green hydrogen. Currently, we produce significant amounts of grey hydrogen, so the priority is to begin to decarbonise the existing hydrogen demand. 

How can green hydrogen fill the renewable energy gaps?

Businesses are currently working hard to create electrolysers that can produce green hydrogen as affordably as blue or grey hydrogen. Additionally, analysts predict them to be able to do this within the next decade. Simultaneously, energy businesses are beginning to integrate electrolysers into renewable power projects. 

Renewable power technologies like wind and solar will be able to decarbonise the energy industry by as much as 85 percent by supplementing coal and gas with clean electricity. However, other areas of the economy, like manufacturing and shipping, are much more challenging to electrify due to how regularly they require fuel. This fuel is also heated at high temperatures andis  high in energy density. 

For this reason, green hydrogen has huge potential to fill renewable energy gaps in these sectors. The Energy Transitions Commission also supports green hydrogen, stating it as one of the four essential technologies to achieve the Paris Agreement Goal. This technology aims to reduce ten gigatons of carbon dioxide annually from challenging industrial sectors like construction, chemicals, and mining.

Green hydrogen remains in its infancy; however, countries, particularly those with affordable renewable energy, are investing in green hydrogen technologies. For example, Australia, Chile, and China. In fact, China is aiming to have one mission of hydrogen-green fuel-cell vehicles on their roads by 2030. There are also similar projects happening in the US, Norway, South Korea, and Malaysia. As a result of all these trends, Goldman Sachs has predicted green hydrogen will become a $12 trillion market by 2050. 

Hydrogen as fuel

Hydrogen is a quickly growing renewable resource and has many benefits for a range of industries. It is a clean alternative to methane and natural gas. Additionally, it is the most abundant chemical element. In particular, the construction industry. Hydrogen can be delivered to sites similar to how traditional fossil fuels can, and it can then be utilised in fuel cells to create power, heat, and electricity. 

From this point, it only emits water which makes it a zero or near-zero emission fuel. Hydrogen fuel cell technology provides a far longer usage and range and is well suited to supplement diesel generators and machinery on construction sites. The best part is hydrogen does not need to be recharged frequently, so this eases pressure on businesses to have to send their teams out to sites to recharge, replace, and service them. 

Hydrogen fuel cells are also durable and reliable and not weather-dependent. While other renewable energy sources are weather-dependent, hydrogen is a perfect choice for busy construction sites. Hydrogen is the best fuel option when it comes to the climate crisis because when it is burnt, it provides heat energy and does not release carbon dioxide. 

There are already plenty of vehicles running on hydrogen fuel cells across the globe. There are 96 open hydrogen refuelling stations in Japan. Additionally, Germany has 80 of these, and the US has 42. It is an exciting lightweight fuel option for shipping, air, and road transportation. DHL, the global delivery company, has implemented a fleet of 100 ‘H2 panel vans’, which are capable of driving 500 kms without needing to top up on fuel. The only barrier to hydrogen being a viable alternative to methane is that it must be produced economically and at scale. 

Additionally, we must adapt the current infrastructure. However, transporting hydrogen through existing gas pipelines reduces the need for expensive new infrastructure and minimises disruption in creating a new hydrogen transmission network. Furthermore, no significant culture change is required in our homes, as people are already accustomed to using natural gas for heating and cooking, and many hydrogen energy equivalents are emerging.

Can SME contractors be hydrogen-powered?

As you can tell, there are so many advantages of hydrogen fuel cell technology. However, without the infrastructure or ecosystem, it will be difficult to implement it and make the switch. There are gaps within the infrastructure which make hydrogen unscalable and unaffordable. 

This affects the largest construction businesses but also small and medium enterprises within the construction sector that feel they cannot afford to decarbonise. In order to create a supportive and successful hydrogen ecosystem, the barriers must be lifted. This means that specific legislation related to hydrogen power must become more transparent.

Additionally, there needs to be more funding and better strategies around the implementation of hydrogen. For example, in 2021, the UK government committed to an investment of £4 billion into its Hydrogen Strategy. Strategies should include incentivisation, and specific funding streams should be adopted to help construction businesses adopt hydrogen power.

It is also important to note that a hydrogen power supply chain is a difficult one and requires fuel cell manufacture, production, storage, distribution, and transport. Suppliers can help with large capacity compression of hydrogen so the construction industry can better work towards net zero targets. 

Ultimately, we need to establish complete and successful supply chains to implement hydrogen at a large scale. There also needs to be education about hydrogen and related technologies. SME contractors, once overcoming these barriers, should be able to adopt hydrogen power, significantly aiding in the decarbonisation of the planet and hard-to-decarbonise industries.

Summary

Green hydrogen is an alternative that reduces emissions and is considerate of our planet’s needs. It has huge potential when it comes to achieving the goals within the Paris Agreement, as it can tackle industries that are difficult to decarbonise. However, we need to make the implementation of hydrogen more accessible and affordable to small and medium enterprises, which are the backbone of our economies.

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