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    IRENA warns blue hydrogen assets could get stranded


As green hydrogen becomes more widely available and its costs fall, IRENA warns that blue hydrogen assets could be left stranded.

by: Maureen McCall

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Natural Gas & LNG News, World, Energy Transition, Hydrogen

IRENA warns blue hydrogen assets could get stranded

The International Renewable Energy Agency (IRENA) warned in a report published this month that the emergence of a green hydrogen market will set in motion factors that will strand blue hydrogen assets.

In the report, Geopolitics of the Energy Transformation: The Hydrogen Factor, IRENA argues that as green hydrogen becomes more widely produced, its production cost will rapidly decline in much the same way as the cost of producing solar cells has fallen. The report concludes that blue hydrogen will at the same time become uneconomic in part due to rising costs stemming from stricter climate mitigation policies. Blue hydrogen investments could be stranded very quickly, as electrolysis costs fall to the point that green hydrogen is competitive with blue hydrogen as soon as 2030.

As stated in the report: “the expected cost reduction in green hydrogen means that investments in supply chains based on fossil fuels – especially assets planned to stay in operation for many years – may end up stranded.”

IRENA goes on to say that "the risks of stranded assets [are] high, so fixed infrastructure should be assessed with a long-term logic. Every investment and planning decision around energy infrastructure today should consider that the geography of a decarbonised economy is likely to be very different from what currently makes sense.”

IRENA also stresses that hydrogen is part of a much bigger energy transition picture, and its development and deployment strategies should not be pursued in isolation. The agency calls for countries to carefully assess how hydrogen fits into their overall economic, social, environmental and political strategies. It advises that the maturity of a country's energy sector, the current level of economic competitiveness and the potential socio-economic effects of each energy choice should be taken into account.