The CEO of Siemens Energy has spoken of the challenges facing the green hydrogen sector, telling CNBC that there was “no commercial case” for it at this moment in time.
In comments made during a discussion at CNBC’s Sustainable Future Forum on Tuesday, Christian Bruch outlined several areas that would need attention in order for green hydrogen to gain momentum.
“We need to define boundary conditions which make this technology and these cases commercially viable,” Bruch, who was speaking to CNBC’s Steve Sedgwick, said.
“And we need an environment, obviously, of cheap electricity and in this regard, abundant renewable energy available to do this.” This was not there yet, he argued.
Hydrogen can be produced in a number of ways. One method includes using electrolysis, with an electric current splitting water into oxygen and hydrogen.
If the electricity used in this process comes from a renewable source such as wind or solar then some call it green or renewable hydrogen.
While there is excitement about the potential of green hydrogen in some quarters, it’s currently expensive to produce. Indeed, National Grid describes grey hydrogen as being the “most common form of hydrogen production” today.
This grey hydrogen, it says, “is created from natural gas, or methane, using steam methane reformation but without capturing the greenhouse gases made in the process.”
In his remarks, Bruch also stressed the importance of building up an industry to support the commercialization of green hydrogen.
Technical systems and an operational knowledge built up over 10 to 15 years were crucial, he explained, noting that this was what one normally saw in the power industry.
“This is all still to come to make it … a commercial system,” Bruch said. “So the biggest problem is [that] under the current boundary conditions there is not yet a commercial case for green hydrogen.”
Another participant in Tuesday’s discussion was Marco Alverà, the CEO of Italian energy infrastructure giant Snam.
Among other things, he talked about the importance of establishing a framework to encourage the development of more sustainable industry.
“You need the fine print and the policies to incentivize or make it mandatory: to switch from grey to green, to switch from gas to hydrogen, to switch from coal to hydrogen,” he said. “And then it will happen very fast.”
Described by the International Energy Agency as a “versatile energy carrier,” hydrogen has a diverse range of applications and can be deployed in sectors such as industry and transport.
One area that has generated a significant amount of debate in recent years is the use of hydrogen fuel cells in cars.
“On private cars, or passenger cars, it’s a very, very difficult use case,” Siemens Energy’s Bruch said. “It’s not the use case I would go to first.”
“I think it’s much more reasonable to talk about hydrogen use either in … heavy duty mobility or in certain industrial applications,” he went on to add.
“We talk about green steel or green refining processes, which are much more reasonable, much more CO2 effective, and offer a much more beneficial cost environment to make green hydrogen possible.”