Low-carbon hydrogen: A path to a greener future

With the global imperative towards sustainability driving organizations to explore sustainable energy solutions, the Capgemini Research Institute has been exploring possible routes to accelerating decarbonization.

The most prominent hydrogen production methods continue to rely on fossil fuels. To solve this problem, the world is currently exploring “low-carbon hydrogen” (such as green hydrogen or pink hydrogen), which has only marginal carbon emissions in the production process and is emerging as a promising tool for emissions reduction and sustainable development.

Recognizing the potential for low-carbon hydrogen to contribute to a sustainable future, we examine the topic in depth in our newest Capgemini Research Institute report, Low-carbon hydrogen: A path to a greener future. We answer the question of “what is green hydrogen?”, assess the current state of it, and look at how organizations can capitalize on the opportunities that it creates. To this end, we surveyed over 800 global executives from the energy and utilities (E&U) sector as well as end-user sectors and conducted 20 in-depth interviews with stakeholders across a variety of organizations.  

Our findings indicate that with government support, declining renewable energy costs, rapid technological advances, and a growing focus on decarbonization and sustainability, the demand for low-carbon hydrogen will increase manifold in the coming years. E&U organizations expect low-carbon hydrogen to meet up to 18% of energy demand by 2050. Investment in the area is already taking off and is set to increase significantly – 64% of E&U organizations in our survey plan to invest in low-carbon hydrogen initiatives by 2030, and 9 in 10 plan to do so by 2050.

Nevertheless, there are several obstacles that low-carbon hydrogen will have to overcome to fulfil organizations’ hopes. A big challenge is cost, with low-carbon hydrogen still being 2–3 times more expensive to produce than carbon-based hydrogen. Moreover, the high costs of storage, transportation, as well as energy losses across the value chain all contribute to an increased total cost of operations. Finally, there are also engineering and skill shortage challenges that organizations must contend with.

Still, it is evident that low-carbon hydrogen holds real decarbonization potential. But in order to succeed in their initiatives, organizations will need to navigate several obstacles along the way to seize the opportunity, mitigate costs, and scale at pace. In this report, we provide insight into how E&U organizations can approach these challenges, exploring five major themes of low-carbon hydrogen and three layers that organizations will need to address in order to achieve their goals.

To learn more about low-carbon hydrogen and how organizations can capitalize on the opportunity it presents, download the report.