Over the past decade, hydrogen has been highlighted by climate experts as a crucial element in the fight against catastrophic global warming, with net-zero models predicting it could account for up to 20% of the world’s primary energy by 2050. This has led to ambitious global plans, including the EU’s goal to produce and import 10 million metric tons of carbon-free hydrogen by 2030 and significant investments from countries like the U.S., Chile, Australia, Egypt, and China.
However, a major challenge looms: most hydrogen projects lack committed buyers. According to Bloomberg New Energy Finance (BNEF), only 12% of hydrogen plants have customers with off-take agreements, and many of these are non-binding, leaving producers vulnerable if potential buyers withdraw. This uncertainty is compounded by the high costs associated with green hydrogen production, which is nearly four times more expensive than grey hydrogen.
The high cost of green hydrogen and the need for industries to undertake costly retooling to use hydrogen have made it difficult to secure demand and build infrastructure. While successful hydrogen projects today are those that integrate the entire ecosystem, with plants near clean energy sources and ready customers, investment delays in Europe due to unfinished regulatory frameworks further complicate the sector’s growth.
Cheap Fuel On The Planet
Thankfully, it’s not all doom and gloom for the hydrogen sector. Although hydrogen gas is rarely found in oil operations, large stores of natural hydrogen may exist all over the world. After all, several known natural phenomena in the Earth’s crust continuously generate hydrogen gas including water-rock interaction known as diagenesis, radiolysis, the activity of certain bacteria as well as friction on the fault planes and also release some H2, but in smaller quantities.
Two years ago, the U.S. the Geological Survey (USGS) presented a model that estimates there might be a trillion tons of hydrogen than we can tap–enough natural hydrogen to meet global demand for thousands of years.
The Big Catch
Underground hydrogen could be considerably cheaper than hydrogen made from natural gas.
Anglo-Spanish company Helios Aragón claims it can produce natural hydrogen from a vast underground reservoir in the Pyrenees for €0.75 per kilogram, about half the cost of gray hydrogen. The field, estimated to contain 500 billion cubic feet of hydrogen and helium, is located near an old oil well drilled in the 1960s, where natural hydrogen was discovered trapped beneath a rock layer.
Three years ago, South Australia expanded its oil regulations to allow drilling for natural hydrogen. South Australia has plenty of natural hydrogen, and could become the first to start producing and, possibly, exporting the cheapest fuel on the planet.