Why Green Hydrogen Just Might Be the Silver Bullet Against Climate Change

Expectations for green hydrogen to become the fuel of the future are high.

By 2050, according to research by Goldman Sachs, green hydrogen could supply up to 25% of the world’s energy needs and become a €13 trillion (US$15 trillion) market. But until we get there, current challenges of storing and transporting hydrogen need to be overcome first.

Not All Hydrogen Is Created Equal

In the long run, only CO2-free hydrogen produced with the help of renewable energies is sustainable. However, it will be quite a while before there is enough green hydrogen to meet the growing demand. The reason: there is not enough green electricity. Of the many alternative production methods, the most popular today is blue or grey hydrogen produced from natural gas.

In the future, many industrial processes will use green or blue hydrogen or downstream products made from it, such as ammonia and methanol. Hydrogen can particularly help clean up emission-intensive industries like transportation, chemical iron, and steel production, which account for about 7% of global CO2 emissions each year. But the high number of potential users contrasts with the limited availability and high production costs of hydrogen.

Cross-Company Alliances to Accelerate the Value Chain

In line with the European Green Deal to reduce emissions at least 55% by 2030 and make Europe climate-neutral by 2050, governments have adopted similar sustainability goals and consider hydrogen a critical component to reach them. Companies are also taking action to support green and digital transformations in the EU. For instance, the European CEO Alliance was founded by 12 executives from leading European companies to develop concrete recommendations for action and help companies undergo the green transition. This alliance is driven by the conviction that no company will solve the greatest challenges of our time alone. To succeed, companies need to collaborate across value chains, build partnerships, and work together with governments and academia.

One project that has emerged from these cross-company efforts is looking at how to accelerate the complete value chain of green hydrogen – from production, transport, storage, and sale, to the energy customer. Instead of operating in silos, these market segments need to be linked together.

A Data-Sharing Platform as the Single Source of Truth

The first prototype of a green hydrogen platform based on SAP Analytics Cloud looks promising. The platform combines data from all participants of the hydrogen value chain and, therefore, enables better data-driven business decisions. Instead of managing complicated spreadsheets, an energy provider can use the platform as their single source of truth to run simulations and calculate how much energy they can produce, how much they want to sell to the electrolyzer, and how much power they need for vehicles, households, and industries.

For such platforms to be successful, visibility across the value chain of green hydrogen is a prerequisite. Supply chain solution GreenToken by SAP helps companies to track hydrogen across the entire supply chain, from production to energy customer, via electrolyzers and carriers using blockchain technology. The solution is designed to provide auditable proof of what percentage of the hydrogen is green, blue, or grey. GreenToken can also be used to track scope 3 CO2 emissions that are caused when hydrogen is imported from far away. Companies can leverage the data to prove that their purchased hydrogen is truly green. They can also see how much CO2 has been created during the journey from production origin to customer site and, therefore, how much they would need to offset to make the hydrogen 100% green again.

Klaus Schimmer is chief innovation architect of Sustainability at SAP.
The article was initially published on the Wall Street Journal.