Can hydrogen displace oil?

In my series on hydrogen, I have covered a variety of different possibilities so far. There’s no question that it could play a major role in decarbonising the economy, especially in some trickier sectors. But there’s one nagging question that ought to be asked whenever people start talking about energy revolutions: will it actually make a difference?

To be more specific, we have to ask if hydrogen will displace fossil fuels. As hydrogen use rises, will consumption of oil, gas and coal fall? Consider the graph of energy sources below. Sometimes we hear how coal took over from burning wood, a defining transition of the industrial revolution – but a quick glance at the graph shows that isn’t the case at the global level. We burn more wood today than we did 1800. Coal was a new power source that supplemented the old one. It didn’t replace it.

The same goes for oil, which did not reduce the amount of coal being burned. Neither did the discovery of natural gas make coal or oil obsolete. The world carried on burning more and more of all of them. There are specific places where there was a push to replace coal with gas, as the UK did under Thatcher. But overall, global consumption didn’t dip. There was no transition from coal to oil to gas – just adding new fuel sources onto the ones we already had.

To reduce greenhouse gases and prevent a climate breakdown, clean energy sources need to replace the old dirty ones, driving consumption downwards. That’s just visible in the graph if you look at the last few years of coal use. Under certain circumstances, renewable energy can bully coal off the grid. Finally, the world may be turning a corner on the dirtiest of fossil fuels.

So what can hydrogen do? What difference can it make? First of all, you can’t plug hydrogen into the graph above, because it’s not an energy source in itself. You have to make it, and that needs energy from somewhere else – preferably from renewable energy. But what we can do is look at the traded end products of the energy market, and that’s something that is modelled by the International Energy Agency in their latest World Energy Outlook report.

They offer two scenarios for 2050, compared to 2019. In the first scenario, countries don’t deliver anything more than they have currently pledged in their climate action plans. That leaves oil as the most significant commodity in the energy markets in 2050. In the second, hydrogen plays a bigger role.

If the world were to pursue a genuine net zero strategy, oil would wither as an industry. The materials for batteries, renewable energy and electrolyers would rise in importance – the ‘critical minerals’ above. All IEA models are to be held lightly, but here hydrogen has a third of energy related resource trade, three times more than oil. This would be a scenario where hydrogen, produced with renewable energy, would indeed have displaced oil.

A lot of things need to happen to ensure that the world looks more like scenario two in 30 years time – the widespread adoption of zero carbon targets, policies to meet them, and patient and persistent application. Oil won’t go quietly, and so all of that can be accelerated by actively winding down fossil fuels – a moratorium on exploration, an immediate end to subsidies, appropriate carbon taxes. And for anyone with investments, pull your money out of fossil fuels (why haven’t you done that already?) and put it into renewable energy and hydrogen.

Will hydrogen displace oil? The IEA seem to think it might, in a world of net zero. How seriously you take that will depend on how seriously you take the IEA.

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