The buzz around hydrogen has grown increasingly tumultuous over the past few years — many see it as an important tool in reducing the environmental impact of heavy industry and helping economies reach the net zero goal. .
The field of green hydrogen, which focuses on producing it using renewable energy sources such as wind and solar, has attracted particular interest and boasts a number of prominent sponsors.
They include German Chancellor Olaf Scholz, who in 2022 called it "one of the most important technologies for a climate-neutral world" and "the key to decarbonizing our economy" we."
In the business world, multinationals from Iberdrola to Siemens Energy are also looking to use green hydrogen.
But while there's a lot of excitement about hydrogen's potential - the International Energy Agency describes it as a "versatile energy carrier" - there are also unquestionable challenges.
For starters, much of hydrogen production is still based on fossil fuels, not renewables - a fact that is clearly at odds with zero goals.
And when it comes to green hydrogen in particular, production costs are an important issue and will need to fall in the coming years.
Transporting hydrogen from the point of production to the user is another equally important factor to consider.
“Moving hydrogen is quite expensive,” Murray Douglas, head of hydrogen research at Wood Mackenzie, told CNBC in an interview.
"It's harder to transport than natural gas... technically, technically wise... it's just harder," he added.
Douglas is not alone in highlighting some obstacles to hydrogen delivery.
For example, the US Department of Energy notes key challenges "include reducing costs, increasing energy efficiency, maintaining hydrogen purity, and minimizing hydrogen leaks."
The DOE added that more research is needed to "analyze the trade-offs between hydrogen production options and hydrogen delivery options when considered as a system."
Important position
Regarding the logistics around green hydrogen in particular, one area that needs attention is the location of the production facilities.
Typically, they are intended for areas with many renewable energy sources - such as Australia, North Africa and the Middle East - but miles away from where the hydrogen will actually be used.
Wood Mackenzie's Douglas referenced transportation options when reflecting on investment horizons over the next 10 years.
“Obviously you can create a pipeline, but you probably need a dedicated pipeline,” he said, noting that this may need to be a new and close to end-user build.
The only other realistic option in this range of investments, he said, involves exporting hydrogen in the form of ammonia.
“You produce hydrogen, blue hydrogen, and then you synthesize it into ammonia with nitrogen,” he said.
Douglas notes that ammonia shipping is "a fairly old industry and technology - there's already a wide range of receiving ports available."
This ammonia can then be sold directly to end users, such as fertilizer manufacturers.
An alternative would be to "break the ammonia back into hydrogen", although this is not without its own problems.
“As soon as you start 'cracking' back into using hydrogen, you start to suffer some… pretty big energy losses,” says Douglas.
Efficient distribution system needed
In a statement sent to CNBC, Jorge Chatzimarkakis, CEO of industry association Hydrogen Europe, is optimistic about the prospects for green hydrogen.
He said it would "become a global commodity" before stressing the importance of having "an efficient distribution system".
Chatzimarkakis also stressed the need for a certification program, because "green hydrogen needs to demonstrate that it is derived from renewable energy."
Despite some obviously major obstacles, partnerships and programs related to the supply and distribution of green hydrogen are beginning to take shape.
For example, earlier this year, Greenergy and Octopus Hydrogen - later part of the Octopus Energy Corporation - announced that they had begun a "green hydrogen supply partnership".
Elsewhere, German company Enertrag said it has "operated an oil tanker and transport trailer to deliver large quantities of green hydrogen to customers" since 2021.
And back in 2022, Madrid-based energy company Cepsa said it would work with the Port of Rotterdam to develop "the first green hydrogen corridor between southern and northern Europe."
Important Obstacle
Despite the technology and knowledge of hydrogen production and distribution, a difficult point remains.
"The industry knows how to transport hydrogen," Wood Mackenzie's Douglas adds, adding that the energy and chemical industry has been transporting hydrogen since "a long time -- it's not new, it's just expensive."
Expanding on his point, Douglas said reducing production costs was key. The lower these numbers are, the more manageable shipping costs become.
"I'm not sure if any kind of magical... cost-reducing technology will make its way into the shipping side of the equation," he added.
"We're not going to suddenly find… a better material to transport hydrogen through," he said.
"If you're liquefying it, you have to chill it, and that's very expensive," he continued. "If you turn it into ammonia, there's a price to pay and then a series of challenges around toxicity."
"They know how to do all this," he went on to conclude. "It still only comes down to cost."
