Hydrogen Economy

03 June 2013 04:18 PM | #Market Research

Fluctuating energy costs, vulnerable centralised distribution networks and increasing reliance upon politically unstable regions have been at the heart of issues relating to the use of fossil fuels and their associated effects on climate change. Alternative forms of energy are thus becoming a priority issue. Hydrogen is an example of one such form of alternative energy.

A hydrogen economy is based on the fundamental principle of producing hydrogen from renewable and low carbon sources, with any resulting CO2 emissions being captured. This can then be used as a fuel to power fuel cells producing electricity on demand, or burnt in a similar manner to current fossil fuels and produce heat and mechanical energy, but with minimal or zero emissions of harmful pollutants. As hydrogen is the most abundant element globally, it could be used to replace fossil fuels in much of modern life –powering transport and industry.

Hydrogen itself is not a source of energy, but an energy carrier. There are two main sources from which hydrogen can be derived - fossil fuels and water. A variety of methods for obtaining the hydrogen from each exist with varying degrees of efficiency. Steam reformation of natural gas is currently the most cost effective and efficient means of hydrogen production, but still heavily relies on fossil fuel reserves and results in relatively high CO2 emissions.

Storage and distribution of hydrogen are critical issues and at present the hydrogen supply chain is considered to be extremely inefficient. This is due to the additional energy requirements involved in processes such as compressing and transporting the hydrogen. Hydrogen is advantageous however in that it can be produced from essentially any source using power sourced from anything. Similar to natural gas, hydrogen can also be stored for times when supply and demand needs to be balanced. Hydrogen has yet to be neither proven nor disproven, thus enormous sums are being poured into research and development as it may prove to be the future of clean energy and transport.

Investing in Hydrogen

Experts suggest that the uptake of hydrogen is hindered by several barriers, including the high cost of development and realisation of the technology, the fact that the concept of a hydrogen economy still needs to be proven, the lack of public awareness in terms of education, demonstration and safety perceptions, as well as the fact that the current technology is significantly more expensive than fossil fuels.

Despite these barriers, experts predict that the UK could potentially have a significant market in hydrogen when associated problems are resolved. The UK possesses the range of expertise necessary to build an effective infrastructure for the hydrogen, from research and development to finance. Additionally, there is a large base of expertise within UK universities, who collaborate closely with experts globally and are involved in cutting edge research. As these research programmes develop solutions to the barriers faced by hydrogen, the UK will hold a potential significant share of global market opportunities in hydrogen.

Large amounts of capital, particularly from industry, is currently being directed towards hydrogen research globally. According to the 2007 Worldwide Fuel Cell Industry Survey, global sales for all types of fuel cells were reported to be up by 10% and had reached $387 million in 2006, with spending on research increasing by 4% to $829 million.

Hydrogen-based products are slowly making their way into the market, with several large automobile manufacturers rolling out hydrogen fuel cell cars. The first hydrogen fuel stations in the UK were recently installed as well as the soon to be operating sustainable hydrogen generation system, the first of its kind in the UK. Recent years have also seen the UK sector grow, with acceleration in the establishment of hydrogen-based firms.

UK Industry Drivers

Increasing governmental support towards development of hydrogen technology is bringing large amounts of investment into the sector.

Regulatory Drivers

Financial Drivers