Growth in renewable energy is “unstoppable” but keeping global warming close to a 1.5°C climate target requires investment in green hydrogen, according to Statkraft’s latest annual Low Emissions Scenario.
The report highlighted that 2020 investment in renewable power was 7% higher than in 2019, despite the pandemic.
By 2050 power demand will more than double, with renewable power covering around 80% of supply in the global power system in 2050.
The combined effect of lower renewable energy costs and stronger climate policies will result in carbon emissions following a two degree pathway, Statkraft’s report stated, while stopping global warming at 1.5°C, however, will require a “substantial increase in both political ambitions and pace of global action”.
Green hydrogen is necessary to limit climate change to Paris Agreement levels, said Statkraft and highlighted that regional hydrogen markets and seasonal storage become “increasingly attractive with higher power price variation”.
About 10% of global power demand will come from green hydrogen production in 2050 and more than 20% for Europe, in the Statkraft Low Emissions Scenario.
Electrolyser costs have fallen by 60% over the last five years, a decline that is expected to continue due to increased automation, standardisation, and technology improvements, Statkraft noted.
“We expect that investment costs for green hydrogen production will fall an additional 60% by 2050. Falling costs of both renewable energy and electrolysers will make an increasingly attractive business case for green hydrogen,” said the report.
The majority of clean hydrogen will go to industry, to replace existing hydrogen feedstock and remove emissions in industries where direct electrification is impossible or costly, such as the steel industry.
“With the world slowly re-opening, so too are emissions returning to pre-pandemic levels, reinforcing our belief that the only way towards a 1.5-degree path is through the energy transition,” said Statkraft chief executive Christian Rynning-Tonnesen.