In brief

In brief

  • Hydrogen presents Europe and the chemical industry with an opportunity for growth and competitiveness as a solution molecule for climate neutrality.
  • Energy accounts for 75% to 80% of the cost of renewable, electrolysis-based hydrogen; developing cheaper, more abundant sources is key to its future.

Hydrogen is widely seen as a vital key to sustainability, and to helping to meet EU goals for the reduction of CO2 emissions. And it presents some big potential opportunities for the chemical industry.

Hydrogen can help with decarbonization in a variety of ways. It can be used to decarbonize the processes used to produce iron and ammonia, for example, or to convert CO2 back into hydrocarbons, among other things.

However, there are still challenges that need to be addressed before hydrogen becomes widely used in business. The use of hydrogen in decarbonization efforts will rely largely on the availability of "renewable hydrogen" that is created using renewable energy. But substituting existing fossil fuel-based hydrogen production with renewable energy-based production will require reductions in the cost of that renewable energy. Conversion losses—incurred during the production, compression, storage, transportation and eventual conversion of hydrogen back into electricity—are also significant.

These challenges are real, but they are not unlike those that have been faced and overcome by other technologies early in their evolution, from automobiles to computers. Efforts are under way to address renewable energy costs and conversion losses, and we are now seeing more and more initiatives focused on renewable hydrogen. These include the EU’s hydrogen strategy, which calls for an additional 80 GW of renewable hydrogen generation capacity, and the production of 10 million tons of hydrogen by 2030. In addition, various countries, from France, Germany, the Netherlands and Spain to Canada, Japan, Australia and Korea, have recently announced hydrogen initiatives.

For the chemical industry, the development of renewable hydrogen could create several large opportunities. For example, hydrogen can be used in place of the combustion of fossil fuels, and in the conversion of CO2 into syngas, which could then be used to synthesize methanol, aromatic compounds or other base chemicals such as ethylene, propylene or benzene.

Chemical companies may also find opportunities to play various roles throughout the emerging renewable hydrogen value chain, such as providing materials for electrolysis and energy-generation methods, or operating hydrogen-related processes, such as running electrolysis plants or providing hydrogen storage. The chemical industry could have an especially large impact by enabling decarbonization in other industries—for example, by supplying them with hydrogen and process technologies to sink CO2 emissions.

Ultimately, chemical companies that begin working with and understanding the challenges and potential of hydrogen now will be in better position to take advantage of it as it evolves—and to help build a growing role for hydrogen in Europe and the world.

Dr. Bernd Elser

Managing Director – Global Chemicals Lead and Europe Lead for Chemicals and Natural Resources

Michael Ulbrich

Managing Director – Global Chemicals Sustainability Lead

Dr. Emma Sophie Persoon​

Business Strategy Consultant – Strategy & Consulting​


Winning in a circular economy
Energy Decarbonization: From A to Zero

Subscription Center
Visit our Subscription and Preference Center Visit our Subscription and Preference Center