By Bronwyn Wilde

To make hydrogen competitive with fossil fuels, the Government would need to use a combination of investment, incentivisation and regulation but these benefits should only apply to certified green hydrogen, produced with renewable energy.

The history of hydrogen as an alternative to fossil fuels has been more of a slow crawl than a big bang. The idea of the hydrogen economy first arose in the 1970s, but since then, hydrogen technology has been hindered by multiple false starts. Rumour has it that this time will be different, with the 2020s being hailed the “decade of hydrogen”. The global market for hydrogen is projected to grow from 70 million tonnes in 2019 to 120 million in 2024. There are a number of hydrogen projects already underway throughout New Zealand, and the Government is developing a hydrogen roadmap which paints us as future world leaders in green hydrogen exports. Even the Climate Change Commission includes hydrogen in its Draft Advice to Government as one of the means to achieve net zero emissions by 2050. So, what is hydrogen, what role will it play in reducing emissions, and is it as environmentally friendly and ethical as it seems?

What is hydrogen?

Hydrogen is the lightest element in the universe. It is also the most abundant, but it is not commonly found in its gas form. Instead, there are a range of ways to produce hydrogen through chemical reactions. So-called “grey-hydrogen” is made by separating natural gas or fossil fuels using steam, while “brown-hydrogen” does so with coal. Both of these methods emit carbon dioxide. “Blue-hydrogen” purports to be more environmentally friendly, as it mitigates these emissions using carbon capture and storage. However, the only truly “clean” variety is “green-hydrogen”, where renewable energy is used to separate water into hydrogen and oxygen through electrolysis. Once in this form it can be compressed and stored as a gas or liquid and used in much the same way as natural gas.

The Benefits of Hydrogen

Hydrogen is not a source of energy itself, but it carries energy which is released when combined with oxygen in the engine of a car, creating electricity. Like Battery Electric Vehicles (BEVs), hydrogen-powered Fuel Cell Electric Vehicles (FCEVs) have the benefit of being quieter than combustion engines and without the harmful CO2 emissions. As gimmicky advertisements have shown, the only emissions are a small amount of water vapour. Unlike BEVs, FCEVs are lighter weight, with more storage, shorter refill times, and a longer range.

The benefits of hydrogen extend beyond the transport industry. Hydrogen can be stored,

making it a solution to the “dry-year” problem created by the volatility of renewable energy. Rather than storing renewable energy in lithium batteries, which is difficult to do on a large scale over a long time, excess electricity could be used to make hydrogen. This could then be used instead of natural gas to supplement seasonal dips in electricity.

Because of our existing renewable energy and natural resources, there is also potential for New Zealand to become exporters of some of the greenest hydrogen in the world. The Government has already signed a Memorandum of Cooperation with Japan to develop hydrogen technology. This could help other countries meet their emissions targets, while also making New Zealand less reliant on fossil fuel imports.

The Limitations of Hydrogen

While a hydrogen-powered vehicle may only emit water vapour, the production of hydrogen is not so clean and green. 95% of the world’s hydrogen is currently brown and grey, producing 830 MtCO2 emissions a year. Meanwhile, the carbon capture technology used for blue hydrogen only captures 80-90% of emissions. Some forms of carbon capture, such as the creation of urea fertiliser, are only temporary as the CO2 is released again when the fertiliser is applied to the soil. Less than 0.1% of hydrogen produced today is “green-hydrogen”.

Electrolysis is a very electricity-hungry process, meaning its “greenness” depends on the level of renewable energy in the grid. Although New Zealand has plan to be 100% renewable by 2035, some estimate the extra electricity required for electrolysis would require an additional 270 new wind turbines to be built every year. Critics argue we should just cut out the hydrogen middleman and focus on electrification.

Existing electricity infrastructure is already in place, whereas a hydrogen economy would require new generation and supply chain infrastructure. High-pressure storage and transportation of such a light gas creates logistical challenges. From cradle to grave, through electrolysis, compression, transportation, conversion and driving a FCEV, 62% of the energy generated is lost. This is compared to a 20% loss for BEVs. With this level of inefficiency, some argue we would be better off just using the electricity itself.

The electricity cost of electrolysis makes green hydrogen 3-4 times more expensive than brown or grey hydrogen. However, there are predictions that these costs will fall within the next decade due to economies of scale and the increasing affordability of renewable energy. Even so, vehicle supply creates another hurdle. There are currently only 11,200 FCEVs worldwide, while there are more than 7.2 million BEVs.

Lastly, plant explosions in the past have created hesitancy around the safety of hydrogen.  Hydrogen is non-toxic, but highly flammable. It burns with a colourless, odourless flame not visible to the naked eye. Although there are decades of experience handling hydrogen in New Zealand alone, it will be difficult to overcome the public perception.

What Role for Hydrogen?

When it comes to hydrogen, the question is not a simple yes or no, but where and how. While a transition to a full hydrogen economy is unfeasible and perhaps undesirable, hydrogen can be a valuable gap-filler where electrification is not possible. Rather than competing, FCEVs and BEVs should be used to complement each other. BEVs are more efficient for light, passenger vehicles over short distances, while hydrogen is better suited for heavy commercial vehicles with long ranges.

Road transport makes up 17.9% of New Zealand’s emissions, and 40% of fossil fuel use. However, very heavy vehicles are notoriously difficult to electrify as the batteries required would be impractically large and take up valuable weight and space. The faster refuelling time for hydrogen also makes it well-suited to vehicles that are used continuously like buses, forklifts, taxis and ride-share vehicles. Ports of Auckland is investigating using hydrogen for tugs and straddle carriers.

Hydrogen is also integral to decarbonising other “hard to abate sectors” such as shipping and aviation. The shipping industry, which currently runs on dirty diesel or heavy fuel oil makes up 7-8% of global greenhouse gases, while planes, which run on kerosene, make up 2%. While New Zealand may only own a small fraction of these vessels internationally, we can still incentivise hydrogen-fuelled craft in our ports, and disincentivise dirtier fuels.

Hydrogen also burns at higher temperatures than natural gas. While less efficient than electricity for household use, this high temperature makes hydrogen ideal for industrial use. Industrial process heat uses 35% of NZ’s energy and creates 28% of energy-related emissions. Steel production currently makes up 6% of global greenhouse gas emissions. However, a recent Swedish project has shown the potential for hydrogen to be used for clean steel processing instead of coal.

Hydrogen could also replace natural gas as a feedstock for industrial chemicals. A recent example of this is Ballance Agrifoods using wind energy to create green hydrogen as a feedstock for create urea fertilizer. This would reduce New Zealand’s reliance on fertiliser imports from countries using less-green methods by as much as 7,000 tonnes, and create the potential for green urea export.

Ecological concerns

Although the production of Ballance’s urea fertiliser will technically be “green” in terms of carbon emissions, the end product is not. Runoff from fertiliser has long been known to cause excess nutrient levels and toxic algal blooms in waterways. While we are in a climate crisis, we are also in a biodiversity crisis, to which industrial agriculture is a major contributor. The discourse around “green” urea should be carefully regulated to avoid greenwashing that it is any less harmful on freshwater ecosystems.

Another concern is that the water use of electrolysis will deplete our freshwater resources. However, because fossil fuels use water for cooling, mining, fracking and refining, electrolysis actually uses 33% less water than other methods of hydrogen production. There is also ongoing research into desalinating sea water for hydrogen production. This doesn’t mean there aren’t still ethical concerns around freshwater use, however.

Ethical concerns

The historical exclusion of Māori from the governance of their geothermal and freshwater taonga has been documented by the Waitangi Tribunal. There are concerns that hydrogen will perpetuate these existing neo-colonial relationships that underly the extractive industry. However, hydrogen could equally be an opportunity for Māori self-determination. There is already an ongoing project with the Tuaropaki Trust and a Japanese corporation to create green hydrogen using the electricity from their geothermal resources.

On a global scale, hydrogen could create geopolitical conflict and exacerbate existing injustices in the fossil fuel industry. Although they don’t use lithium batteries, FCEVs still require rare earth metals which are mined, often under dangerous conditions, in the Global South.

Hydrogen production also creates geographic inequality concerns domestically. Although Auckland will have the highest demand, processing plants would be built in rural, less densely populated places. This is concerning, given the potential safety risks of explosion. The transition away from fossil fuels will cause 600-1,000 people to lose their jobs. The hydrogen industry could provide employment to ensure this a just transition.  Places like Taranaki have already developed a roadmap for hydrogen. In Southland, Meridian and Contact Energy are planning to build the world’s largest green hydrogen plant which could provide employment once the aluminium smelter at Tiwai Point closes.

Governance of Hydrogen

Hydrogen has the ability for “sector coupling” –  connecting heat, power, industry and transportation. However, hydrogen uptake is currently being hindered by the fragmented governance of electricity and fossil fuels in New Zealand. Some have suggested combining MBIE, EA and NZTA could be combined into a Ministry of Energy. Additional, there needs to be a clear regulatory framework under Resource Management Act, such as a National Environmental Standard on hydrogen.

Currently there are not adequate incentives or regulations to make hydrogen fuel competitive.  For example, Road User Charge exemptions and rebates like those for electric vehicles could be applied to FCEVs. Conversely, more accurately internalising the externalities  into the price of fossil fuels to reflect the true environmental costs would disincentive oil, gas and dirty hydrogen. Government funding is needed to support research and development of facilities, supply chains an infrastructure. If left up to the private sector, this change may not happen fast enough to address the climate crisis. However, if funding is to come from the Green Investment fund, this should strictly be for green hydrogen technology.

In the EU, fossil fuel companies have lobbied in favour of blue hydrogen in order to prolong their industry. However, blue hydrogen is just a short-term technological fix which prolongs emissions and defers the burden to future generations. Carbon capture technology also contains health and safety risks. The New Zealand Government has announced that blue, brown and grey hydrogen will play a transitory role in the move to green hydrogen. This was welcomed by fossil fuel companies, who will no doubt fight to make that transition as slow as possible. In the interim, it is important not to mislead the public with discourses about the cleanness blue hydrogen. The Government should develop a  certification process for green hydrogen like the EU, to avoid green-washing.

Perhaps the biggest risk of hydrogen is that it overlooks the root of the problem, which is that our Western lifestyles are inherently unsustainable. Even if the vehicles we drive emit no CO2, the roads we drive on are still constructed using fossil fuels. Such technological fixes allow us to continue our habits unchanged without reimagining different ways of travelling, such as investment in public transport or rail. In fact, there are concerns that the perception of hydrogen’s “greenness” could even lead people to drive more.

To make hydrogen competitive with fossil fuels, the Government would need to use a combination of investment, incentivisation and regulation but these benefits should only apply to certified green hydrogen, produced with renewable energy. Investing in grey, brown or blue hydrogen is counterproductive and only prolongs the effects of climate change. But it is only one more tool for which to address the multiple, interconnected crises we face, and which no technological solution can alone fix.


Bronwyn Wilde is currently pursuing a conjoint degree in Politics and International Relations, Māori Studies and Law at the University of Auckland.  

This article was prepared as part of a Stage III course on “Governing Planet Earth” directed by Professor Andreas Neef of the University of Auckland’s Development Studies programme.

Disclaimer: The views expressed in this article reflect the author’s opinion and not necessarily the views of The Big Q.

See Also:

How can New Zealand reach 100% renewable energy? 

Climate change: Where to next for Aotearoa?