In the fast-evolving global manufacturing landscape, Chief Executive Officers (CEOs) face mounting pressure from governments and society to slash carbon footprints and achieve net-zero emissions. The International Energy Agency (IEA) has reported the manufacturing sector is responsible for about 25 per cent of global greenhouse gas emissions, underscoring the need for businesses to act now.
To address the sector’s significant emissions, it is imperative manufacturers adopt cleaner solutions such as hydrogen to progress towards a more sustainable future. The World Economic Forum (WEF) asserts that hydrogen is poised to support the greening of various sectors, including the manufacturing industry, because it offers diverse applications, is abundant and, when burned, omits almost zero pollution.
As CEOs navigate their organisation’s decarbonisation journeys, the question remains: could hydrogen be the key to their organisation’s sustainability and net-zero success? By 2050, McKinsey and Co. predict hydrogen will significantly reduce global annual emissions by 20 per cent, but to unlock hydrogen’s full potential, a thorough understanding of hydrogen production and its diverse applications is essential.
Spotlight on the applications and production of hydrogen
The United States Energy Information Administration (EIA) suggests hydrogen can contribute to sustainability initiatives by powering industrial processes, functioning as fuel cells for electricity generation, and acting as a flexible energy carrier for storing surplus for renewable energy.
Hydrogen is versatile, and when combined with other technologies like biofuels and renewable energy, McKinsey and Co. report that hydrogen can support the decarbonisation of heavy-emitting industries like manufacturing.
In terms of production, hydrogen is generated mainly through electrolysis and steam methane reforming, but hydrogen comes in various forms. The method of hydrogen production determines its classification by colour but as WEF points out, not all forms of hydrogen are created equal.
The benefits of clean hydrogen in manufacturing
Among all hydrogen types, green hydrogen stands out as the most attractive option. It is made through the electrolysis of water by applying renewable energy sources and has zero carbon dioxide emissions. From improving industrial operations to supporting renewable energy integration, hydrogen offers diverse benefits that include:
1. Versatility in industrial applications
Hydrogen powers industrial processes and supports electricity generation.
2. Complements renewable energy
Acts as a key component in a sustainable energy mix by complementing renewables like solar and wind.
3. Reliable energy storage
Provides energy storage solutions and serves as a backup for fluctuating renewable output.
4. Economic advantages
Offers economic benefits, especially with the implementation of a carbon tax.
5. Potential for natural gas replacement
Holds potential to replace natural gas, enhancing sustainable energy storage capabilities.
Attracted by these benefits, Hitachi Energy embraced hydrogen as a solution. As a success story, the company applied hydrogen to electrify a 20 MW electrolyser for Ovako’s steel plant in Hofors, Sweden, making it the world’s first green hydrogen plant to heat steel before rolling. This practical example demonstrates the element’s potential to boost sustainability, but also has marked Hitachi Energy as a leader in adopting hydrogen for manufacturing.
However, as encouraging as these benefits seem, widespread hydrogen adoption poses significant challenges as a decarbonisation solution.
The roadblocks to adopting hydrogen
Arguably, one of the biggest barriers to adopting hydrogen is securing financing. By 2030, McKinsey and Co. have revealed that approximately USD$460 billion in investments will be required to make hydrogen a practical solution. This capital is needed in the key areas of production, distribution, and end-use applications.
Additionally, hydrogen is expensive to adopt, according to WEF, due to the sky-high costs of delivery and refuelling infrastructure, which comprise 85 per cent of total expenses.
Despite these challenges, successfully integrating hydrogen into a comprehensive manufacturing sustainability plan can reap substantial benefits. Manufacturers who overcome these barriers stand to unlock improved energy security, diversity and reliability in their clean energy supply, bringing them closer to their net-zero goals.
Developing a winning hydrogen plan for future manufacturing success
To address these challenges, manufacturers must ensure strategic environmental, social, and governance (ESG) planning and earmark investments to bridge the development and financial gaps in the hydrogen value chain. Hydrogen is not a silver bullet, but when applied under the right conditions, it can empower manufacturers to make their operations more eco-friendly.
However, manufacturers must first tackle their most pressing obstacles head-on and ensure that their facilities are equipped for its integration. Once addressed, manufacturers can unlock significant advantages and advance their sustainable practices to achieve their net-zero goals.
To navigate the integration of hydrogen, the Consumer Sustainability Industry Readiness Index (COSIRI) offers manufacturers a valuable ESG framework. It provides essential tools and insights to seamlessly incorporate ESG principles and hydrogen solutions into operations, regardless of sector or scale. By benchmarking ESG maturity and enhancing transparency, COSIRI helps manufacturers align with global standards, positioning them as leaders in sustainable manufacturing.
