Why do we need low-carbon hydrogen?

Why low-carbon hydrogen is critical to the energy

Hy24 is the first asset management company in the world to focus exclusively on investing across the entire low-carbon hydrogen industrial value chain. The geographical areas most favorable for its large-scale deployment include Europe, Asia Pacific, North America, and the Middle East and North Africa (MENA) region. These regions are the most promising for the development of this key energy vector for a low-carbon economy. They possess advanced regulatory frameworks and proactive public policies to support sector investment, beneficial geographical and geopolitical conditions, and in some countries, abundant natural resources that ensure increased and competitive production of renewable energies. 

The versatility of hydrogen

Our investment philosophy and identity as a sustainable asset management company are built around two dimensions: firstly, the versatility of hydrogen as an energy carrier with multiple potentials for decarbonizing various industrial applications (where electrons alone are insufficient) and the transport and mobility sector; and secondly, the systemic nature of the energy transition driven by the climate agenda. The energy transition is systemic because it will profoundly change the energy architecture established since the industrial revolution, which has been dominated by fossil fuels. Hydrogen also has a strong systemic dimension and has been utilized in various applications for decades: it has been used in space exploration since the 1960s, in industrial processes to manufacture fertilizers, paper pulp, to produce steel, and to desulfurize fuels for our vehicles. This versatility gives hydrogen enormous potential for decarbonizing sectors that cannot rely solely on electrification, making it a crucial ally in the complete transformation of our energy systems.

From fossil-based hydrogen to low-carbon hydrogen

Today, with our investment policy and the funds we are mobilizing, we can help transform hydrogen production in Europe and around the world. We aim to shift from predominantly fossil-based production (grey hydrogen) to more sustainable and low-carbon methods, and to open new markets for this versatile energy carrier.

Global hydrogen consumption reached 95 million tonnes by 2022, with over 95% of this hydrogen derived from fossil fuels. The Hydrogen Council estimates that annual production of low-carbon hydrogen could reach 15 million tonnes by 2030. Regardless of the scale of ambitions, these projections highlight the sector's dynamism and the potential for hydrogen to gradually transition away from fossil fuels. This shift is achievable through more responsible production technologies such as water electrolysis powered by solar, wind, and hydro energy (green hydrogen), nuclear-based electricity grid (pink hydrogen), and transitional solutions like carbon capture and storage technologies to capture the CO2 produced through an SMR (blue hydrogen). These transitional solutions, although favored by some countries, have not yet been tested on a large scale. By investing in the deployment of the infrastructure and technologies needed to produce, distribute, supply, and use low-carbon hydrogen through our two impact funds, we are contributing to the decarbonization of various sectors.

Decarbonizing uses

Low-carbon hydrogen can help decarbonize different markets including the steel industry, the refining sector, the chemical industry (particularly through decarbonizing ammonia production for fertilizers), aviation (with sustainable aviation fuels and e-fuels produced from hydrogen), maritime transport (with e-methanol produced from hydrogen), as well as intensive and heavy urban transport (such as professional fleets of taxis, delivery vans, and lorries) and trains on non-electrified sections.

Finally, hydrogen can play a key role in balancing the energy system, especially as electricity generation becomes increasingly dependent on intermittent renewable energy sources such as wind and solar. The growing demand for electrical applications like battery-powered vehicles, electric heat pumps, and electric ovens adds further pressure to the system. Three key factors underpin hydrogen's usefulness: it can generate power through hydrogen turbines or fuel cells; it can be stored in large-volume, high-capacity underground tanks; and it can be rapidly produced in electrolyzers when needed, serving as a balancing mechanism for the electricity grid and demand response.

To know more, please visit the Hydrogen Europe website