Bridging the Gap
to a Carbon-Free World

In the battle to reduce the impact of climate change, today’s renewables aren’t going to be enough.

As the world increasingly commits to a net zero future, the energy transition requires new sources of clean energy.

Green hydrogen looks best placed to fill that space.

Closing the
energy gap

Using hydrogen as fuel isn’t a new concept, and this plentiful, clean-burning element has been under development as an energy solution for many years. But climate change has provided a tipping point to accelerate this technology.

Facing an average global temperature rise of between 2.9 and 3.4 degrees Celsius by 2100, the world’s most polluting nations have made commitments to reduce their CO2 emissions. In May, for the first time in history, the world’s leading banks invested more in green projects than in fossil fuels 1, while the U.S. and EU have committed trillions of dollars and euros to the development of a green economy.

Committed to tackling climate change

Sources: Energy Climate Intelligence Unit, Global Sustainable Investment Alliance

2030

30%

2040

75%

Source: BloombergNEF

The need for an
alternative to fill the
energy gap

According to the Energy Transitions Commission, electrification could supply up to 70% of global energy demand by 2050.

However, that will leave at least 30% of emissions, mostly from energy-intensive industries and processes that require higher temperatures or a chemical reaction. According to the International Renewable Energy Agency, almost one-third of global energy-related emissions come from hard-to-abate sectors for which there is presently no economic alternative to fossil fuels.

Easy-to-decarbonize industries

Power generation Renewable energy

Transport Battery-powered electric vehicles

Manufacturing Electrification

Buildings Electric heat pumps

Hard-to-decarbonize industries

Peak power generation

Heavy transport Shipping vessels, trucks, aviation

Industrial processes Cement, aluminum, steel, glass

Production chemicals Fertilizers, plastics

Creating clean power from hydrogen

Using renewable energy to power hydrogen electrolysis—the process that separates hydrogen from oxygen in water—creates green hydrogen, a fuel that burns clean and hot. Green hydrogen could enable clean energy to power sectors in which electrification—and thus decarbonization—is difficult. Using green hydrogen in steel and cement manufacturing, for example, would enable these two industries—which together contribute 12% to 15% of the world’s total CO2 emissions—to decarbonize.

“It does not look like there is a path to net zero emissions without hydrogen.”

Martin Tengler, Lead Hydrogen Analyst, BloombergNEF

Is It Time To Give Hydrogen the Green Light?

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Iberdrola and the
100% solution

Iberdrola, a global energy leader, is using its extensive renewable energy capacity, combined with investment in green hydrogen projects, to tackle the complete scope of CO2 emissions. “We are promoting the electrification of the economy, and we are starting to discover how hydrogen could fill the gap that is left, so we can decarbonize the whole economy,” explains Agustín Delgado, Iberdrola’s Chief Innovation and Sustainability Officer.

Iberdrola has long been a pioneer in the green energy sector, beginning its transition to renewables more than 20 years ago. It owns and operates 35.5 GW of renewable capacity, with plans to nearly triple it to 95GW by 2030, backed by its €150 billion ($178 billion) investment plan. Its aim is to become the world’s biggest producer of green electricity.

The company has already submitted 54 projects to the EU's Next Generation programme, designed to repair the economic and social damage caused by the coronavirus pandemic, which would trigger investments of €2.5bn ($2.9 billion) to reach green hydrogen production of 60,000 tonnes/year.

“Today, hydrogen is where renewables were in the late 90s and early 2000s,” says Delgado. “There is enough momentum to start developing the technology and ride along the learning curve.”

Iberdrola’s commitment to a renewable future

Gray to green:
focusing on the
immediate opportunity

To ensure that green hydrogen will have a rapid impact, Iberdrola’s ambition is to replace hydrogen created using fossil fuels, known as gray hydrogen, with the green variety. According to the International Energy Agency, switching from gray to green hydrogen would reduce global CO2 emissions by 830 million metric tons a year—as much as Germany emitted in 2013.

"Everywhere where Iberdrola is developing renewable energy, hydrogen is there, if our customer needs it,” explains Millán García-Tola, Iberdrola's Hydrogen Unit Director. "We can give them the whole solution, green hydrogen and green electricity."

From gray, to blue, to green: hydrogen explained

Gray hydrogen

Uses fossil fuel and produces carbon dioxide as a byproduct

Blue hydrogen

Captures and stores most of the carbon dioxide output

Green hydrogen

The only byproduct is oxygen

Is Green Hydrogen the
Miracle Molecule?

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The miracle molecule: five reasons why
hydrogen could be the answer

1. There is lots of it.

Hydrogen is the most abundant element in the known universe. The clean energy challenge isn’t so much about energy consumption, but about energy conversion.

2. It emits zero emissions.

Hydrogen does not emit polluting gases during combustion, even at very high temperatures. When it’s produced using renewable energy, it’s a zero-carbon product.

3. It’s storable.

Hydrogen can be stored and used after production,
and can complement solar and wind power
generation.

4. It’s easily transportable.

Hydrogen can be mixed with natural gas and travel through the same networks, without requiring construction of new infrastructure.

5. It’s versatile.

Hydrogen can be used for domestic, commercial, industrial or mobility purposes in liquid or gas form.

A fuel for today and tomorrow

The versatility of hydrogen means that it has the potential to help decarbonize a host of industries. In the rail sector, the first fleet of hydrogen trains has been deployed for commercial service in Germany, to replace diesel trains on non-electrified lines. Similar plans are underway in Poland, Austria, the UK and the Netherlands.

In the maritime sector, hydrogen fuel cells to power various ships and vessels, including passenger ferries, are in the demonstration stage. Hydrogen fuel cells used for onboard and onshore power supplies can eliminate pollutants including nitrogen oxide, sulfur oxides and harbor particulates. For long-distance vessels, liquefied hydrogen is being developed to help meet the International Maritime Organization’s emission reduction target of 50% by 2050.

For aviation, hydrogen has three times the energy potential of jet fuel and more than 100 times that of lithium-ion batteries. In addition to ongoing development of hydrogen systems for smaller aircraft by a range of operators, Airbus has plans to deploy its first hydrogen/electric-powered commercial passenger aircraft by 2035.

The future outlook
for green hydrogen

Despite its potential, carbon-free hydrogen is still at a nascent stage, and cost is a key challenge. At present, gray hydrogen production is far cheaper, and according to BloombergNEF, generating enough green hydrogen to meet around one-fifth of the world’s energy needs would require more electricity than the world currently generates from all sources combined, plus an estimated $11 trillion investment in production, storage and transportation infrastructure.

However, pushed by the urgency of climate change, momentum is building.

By 2025, hydrogen strategies can be expected in countries that represent over 80% of global GDP, according to the World Energy Council.

The Hydrogen Council, a coalition committed to the energy transition, formed with 13 members in 2017, and now has 109 companies on board from more than 20 countries. The council reports that there are now 228 large-scale hydrogen projects with a combined $300 billion of proposed investment through 2030, with $80 billion of this either in an advanced planning stage, having passed a final investment decision, deployed for construction, or commissioned.

The Hydrogen Council

109

Companies on board

Countries

228

Large-scale projects

Countries committing to hydrogen

National hydrogen strategy, more robust plans

Sources: Eurasia Group; International Energy Agency; Bloomberg

The falling costs of green hydrogen production

The costs of producing green hydrogen from renewable electricity should fall by up to 85% from today to 2050, leading to costs below $1 per kg by 2050 in a number of leading markets, according to BloombergNEF.

Solar or onshore wind power are now the cheapest sources of large-scale power generation in countries that account for more than 66% of the world’s population, 77% of global GDP and 91% of electricity generation.

“In the market, you will see a lot of people talking about renewables. You will see a lot of people talking about electrolyzers,” says Barry Carruthers, Hydrogen Director at ScottishPower, part of the Iberdrola group. “It’s when you join it all together into a coherent, integrated system—that’s when you get a competitive advantage.”

Cost comparison:
renewable hydrogen vs. fossil fuel-based hydrogen

$ per kg/year

Source: BloombergNEF

“The end of this year and the beginning of next year are crucial for the hydrogen economy. If governments make their priorities clear, we will see a lot of opportunities in every country.”

Martin Tengler, Lead Hydrogen Analyst, BloombergNEF

Source
1. bloomberg.com/graphics/2021-wall-street-banks-ranked-green-projects-fossil-fuels

The Opportunity for a
Green, Cleaner World

Play video

Bridging the Gap to a Carbon-Free World

In the battle to reduce the impact of climate change, today’s renewables aren’t going to be enough.

As the world increasingly commits to a net zero future, the energy transition requires new sources of clean energy.

Green hydrogen looks best placed to fill that space.

The need for an alternative to fill the energy gap

“It does not look like there is a path to net zero emissions without hydrogen.”

Iberdrola and the 100% solution

The miracle molecule: five reasons why hydrogen could be the answer

1.

There is lots of it.

2.

It emits zero emissions.

3.

It’s storable.

4.

It’s easily transportable.

5.

It’s versatile.

A fuel for today and tomorrow

The future outlook for green hydrogen

The falling costs of green hydrogen production

“The end of this year and the beginning of next year are crucial for the hydrogen economy. If governments make their priorities clear, we will see a lot of opportunities in every country.”

Bridging the Gap
to a Carbon-Free World

The need for an
alternative to fill the
energy gap

Iberdrola and the
100% solution

The miracle molecule: five reasons why
hydrogen could be the answer

The future outlook
for green hydrogen