The different colours of hydrogen in Asia’s energy transition

Asia, a global economic powerhouse, is at a critical juncture in balancing its industrial expansion with the urgent need for decarbonisation. As the region accounts for a significant share of global carbon emissions, hydrogen has emerged as a promising solution to drive Asia’s energy transition. This was the focal point of the recent ALIA Webinar titled “Examining Hydrogen’s Role in Asia’s Energy Future”, led by Ruella Menezes, director at Kline & Company’s Energy Practice, and moderated by Charlotte Kehoe, chair of the Asian Lubricants Industry Association (ALIA) Council.

With nine Asian economies, including China, India, Japan, and South Korea, already implementing national hydrogen strategies, the potential for clean hydrogen across sectors like power generation, transportation, and heavy industries is immense. However, challenges such as high production costs, underdeveloped infrastructure, and regulatory uncertainties persist.

“Asia’s journey towards clean hydrogen is promising but complex,” said Menezes. She highlighted that while China leads in hydrogen production and electrolyser manufacturing, Japan and South Korea aim to dominate as importers. Meanwhile, Australia is positioning itself as a global hydrogen export hub.

The different colours of hydrogen

Hydrogen is often categorised by “colours” that represent its production methods and environmental impact:

• Grey Hydrogen: Produced using natural gas without carbon capture, it is the most widely used but emits significant CO2.
• Blue Hydrogen: Similar to grey hydrogen but includes carbon capture and storage (CCS) to reduce emissions.
• Green Hydrogen: Made using renewable energy to electrolyse water, it is the most sustainable but currently the most expensive.
• Brown and Black Hydrogen: Generated from coal or lignite, these types are highly carbon-intensive.
• Gold Hydrogen: A relatively new concept, referring to naturally occurring hydrogen extracted from underground deposits with minimal environmental impact.

Asia’s hydrogen market is dynamic, consuming 50% of the world’s fossil-based hydrogen. Transitioning to green hydrogen is a priority, though it remains three to six times more expensive than grey hydrogen. Efforts to scale up green hydrogen production are supported by countries like India and Australia, which have abundant renewable resources.

Levers to accelerate hydrogen adoption

Menezes outlined several levers that could help accelerate hydrogen’s role in Asia’s energy transition:

• Cost Reduction Initiatives: Scaling electrolyser manufacturing in countries like China and increasing renewable energy capacity could lower the cost of green hydrogen.
• Policy and Incentives: Governments must introduce robust policies, such as subsidies for green hydrogen production and incentives for adopting hydrogen-based solutions in transportation and industry.
• Regional Collaboration: Collaboration among Asian countries can address supply chain challenges, build shared infrastructure, and enable cross-border trade of hydrogen and its derivatives.
• Technological Innovation: Continued R&D into hydrogen storage, transport technologies, and fuel cells can improve efficiency and reduce costs.
• Private Sector Involvement: Investment from private enterprises, particularly in sectors like steel, cement, and aviation, can drive demand and establish early use cases.

Challenges in scaling hydrogen

Despite its potential, significant challenges remain:

• High costs of green hydrogen: Production costs are three to six times higher than grey hydrogen, making it difficult to compete without subsidies.
• Infrastructure gaps: The lack of hydrogen pipelines, storage facilities, and refuelling stations hinders widespread adoption.
• Regulatory ambiguity: Uncertainty in the regulatory framework, particularly around emissions standards and cross-border trade, complicates investment decisions.
• Demand uncertainty: Industries remain cautious about transitioning to hydrogen due to unclear demand trajectories and ROI expectations.
• Energy source concerns: Producing green hydrogen requires vast amounts of renewable energy, raising concerns about grid stability and land use for renewables.

Scaling up hydrogen infrastructure

Asia’s potential is supported by its renewable energy resources, competitive electrolyser manufacturing in China, and increasing government investment. India’s National Green Hydrogen Mission targets 5 million metric tons of production by 2030, backed by a USD2.3 billion investment. Similarly, Japan plans to invest USD100 billion over 15 years to expand its hydrogen supply chain.

Hydrogen’s applications in Asia are expanding rapidly. It’s being tested in transportation, power generation, and heavy industries like steel and cement. Newer sectors, such as data centres and healthcare, are also exploring its potential. However, challenges remain, particularly in building the necessary infrastructure, such as pipelines and refuelling stations.

To unlock hydrogen’s potential, Asia must prioritise regional collaboration, robust policies, and innovation-driven initiatives. As Menezes concluded, “Hydrogen’s promise lies not just in overcoming today’s challenges but in reimagining the energy future through collaboration and innovation.”

Kehoe, as the webinar’s moderator, emphasised the need for platforms like ALIA to facilitate dialogue and partnerships across the hydrogen value chain. Her role as chair of the ALIA Council brought a strategic perspective to the discussions, ensuring alignment with industry objectives.