Producing hydrogen from renewable power only could drive up its price over the coming decades as the gas becomes the low-carbon fuel of choice for the European Union. As the EU moves to aggressively cut carbon emissions across all sectors in order to hit climate neutrality by 2050, green hydrogen is seen as key to achieving that goal. Should the bloc shun the use of hydrogen made from fossil fuels completely then using the green version of the gas across all sectors will become more costly as demand grows over the coming decades.
Producing hydrogen from renewable power could be a boon to developers of solar and wind farms. Electrolyzes, the machines that split hydrogen out of water, could turn on when there is little demand elsewhere and power prices are cheap. However, if European governments decide only to focus on green hydrogen, that could have drawbacks for the industry. Should green hydrogen be used beyond heavy industry, trucks and buses to also heat homes and fuel cars, planes and ships, then the demand would require electrolyzes to run at times of the day when the power price is higher. That would drive the price 37% up on average from 2030 to 2050 compared with a scenario where blue hydrogen is used as well.