As countries draw up their roadmaps, they must consider how to get the cheapest H2 possible. Most of the national hydrogen strategies outline ambitions to export or import hydrogen. High-capacity pipelines are likely to be the most cost-effective hydrogen transport, and countries capable of importing hydrogen by high-capacity pipeline could find importing hydrogen cheaper than making it at home. This could well be the case for much of Europe. Germany, for example, should be able to import hydrogen via a pipeline from sun-drenched Spain or Algeria for a comparable cost to domestic production from onshore wind, and at a lower cost than production from domestic offshore wind.
European regulators and gas grid operators are getting ready for a hydrogen future. The European Commission has proposed a groundbreaking set of updates to its pipeline rules that would pave the way for funding of hydrogen infrastructure. A group of 11 European gas grid operators have proposed a hydrogen backbone connecting 10 European countries with a network of new H2 and converted natural gas pipelines.
Deep-dive: Clients can access the report Hydrogen: The Economics of Transport and Delivery for more in-depth analysis.
Hydrogen shipping: ammonia gains traction
Exporting hydrogen via ship is likely to be much trickier. Our analysis shows that those planning to import hydrogen by ship, such as Japan, may find themselves paying a high premium. In spite of this, 2020 saw a flurry of hydrogen shipping project announcements, as well as ship designs and feasibility studies. Our research indicates that ammonia is likely to be the cheapest method of moving hydrogen by ship, both today and in the future. Ammonia’s natural advantage is that a market for shipping it already exists, which means no new technology needs to be developed.
The industry has begun heading in this direction. Seven proposed hydrogen shipping projects plan
to carry hydrogen as ammonia, compared to three each as liquefied hydrogen (LH2) or liquid organic hydrogen carrier (LOHC) and one as compressed hydrogen (CGH2).
