Hydrogen has become relevant in recent times, due to its ability to decarbonise the sectors of the economy that are most difficult to electrify and allow the fulfillment of the climate commitments acquired by countries worldwide, as well as potentially being a new vector for energy exports.
Conceptually it seems simple to understand, hydrogen is generated from renewable sources (solar, wind, hydroelectric, biomass) to replace the use of fossil fuels in areas difficult to decarbonize such as heavy transport, maritime, aviation, heavy industry, etc. And as a result, the energy use of hydrogen generates water and oxygen.
At the end of the day the hydrogen molecules are identical regardless of whether they were produced by renewable energy or with fossil fuels, there are no chemical characteristics that allow to differentiate from how they were produced. But for the purposes of decarbonisation and the reduction of emissions associated with economic activity, we are particularly interested in how the production process of hydrogen molecules was.
How do we ensure that hydrogen comes from sustainable sources? Or how to quantify the impact on the sustainability of the hydrogen used?
In a recent blog post we began to dig into the answer, highlighting the importance of hydrogen sustainability certification.
Sustainability certification guarantees the required characteristics of hydrogen. There are three fundamental reasons why a hydrogen consumer would be interested in buying a product with sustainability certification:
- Image of companies and their commitment to sustainability. The certification of the Htwo It provides certainty and security about the characteristics of the product in the market, agreed between all its participants (producers, intermediaries, and final consumers). Many companies are betting their strategy and image as leaders in sustainability. For these companies, having a product that is certified sustainable has strategic value.
- Strategies that consider the price of COtwo expected for the next few decades. Considering the net emissions target for 2050, there are many discussions about which are the best mechanisms to achieve them depending on the context. However, the vast majority of forecasts expect a substantial increase in the price of COtwoin both existing and new markets that are expected to be created. The price of COtwo it will impact the competitiveness of hydrogen. In this way, the certifications will be able to define the segmentation of the H market.two according to environmental attributes and these will impact pricing. And to verify the final emission of CO2, it is expected that a premium will be paid for hydrogen that this certificate that was generated by renewable sources –Green Hydrogen- compared to that generated by fossil fuels – Hydrogen Gray.
- Regulations and emission restrictions in production chains. The certifications of the Htwo They will serve as a reporting and verification tool to demonstrate and analyze the fulfillment of renewable energy goals or the reduction of emissions. The long-term strategies of many countries are beginning to have emission reduction goals not only in the energy sector, but also for industries and products. With these rules of the game, they can negatively impact, for example, the export of products from some industries that do not decarbonise their production.
What are the potential benefits of certifying hydrogen?
Both producers and consumers will be able to benefit. They may have financial benefits such as access to tax incentives or tax reductions, subsidies and special financing programs. The certification provides traceability, transparency and trust to the process, and in particular the final consumer for the contribution with the fulfillment of obligations.
Certifications may facilitate access to sustainable financing, thus impacting the cost of capital and profitability of projects. And they will be able to allow the industry to guarantee the low carbon content of its products, generating a comparative advantage or even a need to remain in some markets, such as Europe.
In addition, for the Latin American and Caribbean countries that are emerging as potential exporters of HtwoIt must be considered that the certification schemes will allow it or not to enter certain markets or jurisdictions that have restrictions regarding the emissions associated with Htwo.
What is a certification scheme?
Certification schemes are a set of rules and procedures used to standardize the process for tracking and validating environmental attributes.
The attributes are the characteristics of the hydrogen to be certified. These could include:
|Source||What input was used to produce the Htwo?||Renewable energy, natural gas, coal, etc.|
|Carbon footprint||What are the emissions associated with Htwo?||Intensity of greenhouse gas emissions from hydrogen. Example. Kg of COtwo per kilogram of Htwo|
|Production Device||With what technology was it produced?||Electrolyzer or steam methane reformer|
|Energy renewability||What are the necessary conditions to consider the electrical energy from the grid as renewable?||Guarantees of origin: The need to have a certificate of guarantee of origin that proves that the hydrogen was produced from a renewable source. Additionality: ensuring that the electrical energy used comes from a new renewable energy installation that does not benefit from incentives. It is established with the objective of preventing fossil fuels from displacing renewable energy that can be used in other sectors, increasing fossil fuel emissions. Temporal correlation: The electricity used to produce hydrogen must be generated in the same time frame. Days, Hours, Minutes. Geographical correlation: The renewable electricity used for production is at a certain distance from the H production planttwo. The objective is to prevent the additional generation capacity required to produce hydrogen from generating bottlenecks in the electricity transmission and distribution networks.|
Certification involves not only defining attributes but also how they are tracked. In particular it must:
- Define the limits of the system in which emissions are evaluated and accounted for, here the most used schemes are cradle-to-gate Y Cradle-to-Grave.
- The chain of custody, what will be the chronological documentation, on paper or electronic, that records the sequence of custody, control, transfer, analysis and disposition of the Htwo.
The development of hydrogen certification schemes worldwide is still in its early stages. Current schemes cover different domains, using different benchmarks and thresholds. For this reason the definition of green hydrogen is not unified, and therefore the environmental attributes of the product differ.
With the support of the consulting firm Hinicio, the IDB is working so that the countries of the region can understand the possibilities of the available certification schemes. This is a first step in the IDB’s support in promoting the best certification strategies to boost the sustainable hydrogen economy in Latin America and the Caribbean.