Prioritizing electrolytic hydrogen use based on cost-effectiveness: A comparative analysis of eleven pathways

As governments expand subsidies for “green” hydrogen (here, H2 produced through electrolysis powered by renewable electricity), competing demands on a scarce resource with several alternative applications are intensifying. This motivates the comparison here of alternative uses of electrolytic hydrogen (for ammonia, oil refining, steel, long-term electricity storage, trucking, sustainable aviation fuel, and methanol) based on multiple indicators of environmental and economic performance. These indicators are calculated using fundamental stoichiometric and thermodynamic calculations, consistent system boundaries and select major drivers of levelized cost of final product in each application. We analyze the sensitivity with respect to three key variables – carbon intensity of electricity for electrolysis, cost of green H2 and price of incumbent product. We identify the more cost-effective applications among those examined here, based on avoided lifecycle emissions per unit H2, avoided emissions per unit product and incremental levelized cost relative to incumbent or displaced product. Current policies worldwide simply provide a flat subsidy per kg of green H2 that is independent of the lifecycle carbon intensity of green H2 or the net avoided carbon emissions per kg of green H2. We discuss how the approach outlined here can help design subsidies or regulations indexed to lifecycle emissions, which can be more cost-effective compared to flat subsidies or regulations when there is variability in avoided lifecycle emissions both within and across applications. Nevertheless, some support for even the currently less cost-effective pathways is justifiable, given potential learning and infrastructure spillovers relevant to hard-to-abate sectors in the longer run.