Green hydrogen faces a water problem
Most of the green hydrogen production projects planned worldwide are set to be located in water-scarce regions. Does it make sense to create a clean energy source at the expense of destroying ecosystems? In a world increasingly suffering from climate-induced drought, hydrogen production requires large amounts of fresh water.
Hydrogen is considered a key solution to the climate crisis, as its use can offer significant environmental benefits. When hydrogen is produced through electrolysis, a process that splits water into its components—hydrogen and oxygen—and renewable energy sources like wind or solar power are used, no CO₂ emissions are generated. This makes green hydrogen particularly environmentally friendly. When hydrogen is used in fuel cells, the only byproduct is water vapor, meaning no harmful greenhouse gases are released. This contributes significantly to air quality improvement and climate protection.
Currently, hydrogen accounts for less than two percent of Europe’s energy consumption, but it is expected to play a much larger role soon. In industries as well as in heavy-duty and air transportation, hydrogen is set to gradually replace natural gas, oil, and coal in the coming years. Building a hydrogen economy is a central task for the EU. Momentum for clean hydrogen in Europe has gained some traction, partly due to revised EU regulations. The updated Renewable Energy Directive (RED II) now includes a binding target for all EU industry players currently using grey hydrogen. They must replace at least 42 percent of their grey hydrogen with green hydrogen by 2030. Oil refineries, the largest consumers of hydrogen, are classified under the transportation sector. This sector is required to include at least one percent hydrogen-based fuels in its fuel mix by 2030.
In Europe, Germany is expected to dominate the demand for hydrogen, followed by France, Italy, and the Netherlands. According to estimates by the Federal Ministry for Economic Affairs and Climate Action (BMWK), Germany will need about 95 to 130 terawatt hours of hydrogen by 2030. Only about 30 percent of this demand is expected to be met through domestic production. Over the coming years, Germany will invest more than five billion euros in international hydrogen procurement. The first tenders for hydrogen imports have already been initiated.
Expanding renewable energy capacities for producing green hydrogen and green synthetic products is crucial. Therefore, it is of particular interest to identify global renewable energy potentials and regions that are especially suitable for renewable energy generation as a basis for hydrogen production. Electricity costs account for 40 to 60 percent of the costs of renewable hydrogen, making the availability of an affordable renewable power source a critical factor in achieving a competitive hydrogen price. Photovoltaics (PV) is the world’s cheapest source of electricity. The regions with the highest full-load hours for PV are located in Chile, the Middle East, North Africa, and Australia. However, one should not overlook the critical resource of water in this equation.
Hydrogen Partnerships
Germany and the European Union have established hydrogen partnerships with various countries in recent years to advance the development and import of green hydrogen. The goal of these partnerships is to secure Europe’s supply of green hydrogen, helping to achieve climate targets and accelerate the transition to a low-carbon economy.
Chile
Chile is considered a promising partner due to its optimal solar and wind conditions. Partnerships with Germany focus on developing hydrogen projects and future exports to Europe. However, many regions in Chile already suffer from water shortages, with about three-quarters of the country affected by drought, desertification, or land degradation.
Namibia
Southern Africa as a whole is experiencing a historic drought, caused by the El Niño weather phenomenon and exacerbated by climate change. In May, Namibia’s government declared a state of emergency, describing the situation as the worst drought in 100 years. Meanwhile, Namibia has shown great interest in collaborating with Germany in the field of hydrogen, aiming to become a major exporter of green hydrogen.
Morocco
Morocco has similar plans. In 2024, rainfall was 70 percent below the average for a normal year, leading to a halt in the use of dam water for crucial agricultural areas. The list continues with countries like Saudi Arabia and Australia.
Spain
Spain is also striving to build a hydrogen economy, targeting 4 gigawatts of electrolysis capacity by 2030, with plans to start exporting hydrogen derivatives to Rotterdam by 2026. Thanks to its wind and solar energy resources, Spain is an attractive location for renewable hydrogen production. However, Spain has repeatedly faced water shortages, making seawater desalination essential.
Water Stress
Freshwater is crucial for hydrogen production. Producing one kilogram of green hydrogen requires about nine liters of water, while producing one kilogram of blue hydrogen requires 12 to 19 liters. It’s important to note that this is pure water fed into the electrolysis process. Depending on the electrolysis method and technology used, additional water may be needed for cooling or purification.
Global freshwater consumption for hydrogen production could more than triple by 2040 and increase sixfold by 2050 compared to today. More than 35 percent of global green and blue hydrogen production capacity (both operational and planned) is located in regions with severe water scarcity.
Countries with High Water Stress – 2050 Forecast
Worldwide, water demand exceeds supply. Water stress, the ratio between water demand and renewable water supply, measures competition for local water resources. A country experiencing “extreme water stress” uses at least 80 percent of its available reserves, while “high water stress” means using 40 percent. Global water demand is expected to increase by 20 to 25 percent by 2050. For the Middle East and North Africa, this means that by 2050, 100 percent of the population will live under extreme water stress.
Desalination plants are not sustainable
When faced with water scarcity, expanding desalination plants often becomes the preferred solution. Modern desalination plants either remove salt through thermal distillation, where seawater is heated and the resulting steam is collected, or they use reverse osmosis, where water is forced through semi-permeable membranes to separate the salt.
Desalination plants consume a significant amount of energy. Currently, they are mostly powered by fossil fuels like oil or coal, making them harmful to the climate. There is ongoing research into more sustainable technologies that use renewable energy sources. However, desalination plants also produce large quantities of brine, a highly concentrated saltwater byproduct. This brine is typically discharged back into the sea, where the increased salinity can harm local marine ecosystems. Additionally, chemical pollution poses another issue; chemicals used for cleaning and maintaining the plants can leak into the ocean if not properly disposed of.
Desalination plants are not only energy-intensive but also environmentally damaging. They are costly, driving up the prices for hydrogen production, making them unaffordable for many poorer countries. Furthermore, many installed photovoltaic (PV) modules in hot regions face operational challenges, as their efficiency significantly decreases at temperatures above 25 degrees Celsius. Sand and dust particles also accumulate on solar panels, requiring regular cleaning with freshwater.
It should not go unmentioned that the Nordic countries also possess significant potential for renewable energy, which could be harnessed for hydrogen production, where water scarcity is not an issue. Norway, Denmark, Finland, and even Canada have made agreements to promote the production and export of green hydrogen. However, a large portion of the projects is located in water-scarce regions. According to the European Hydrogen Observatory, more than 23 percent of European green hydrogen projects and 14 percent of blue hydrogen projects are expected to be situated in areas of high or very high water stress by 2040.
The development of a hydrogen economy should not be focused solely on financial and technical aspects. The real challenge lies in ensuring sustainability throughout the entire value chain. Desalination plants are not sustainable. It is also worth questioning whether it makes sense to create a clean energy source at the expense of vital regional freshwater reserves.
Hydrogen made in Germany
The Wuppertal Institute’s updated report, which focuses primarily on the period from 2030, underlines the advantages of green hydrogen produced from domestic renewable energies. Especially when looking at the topic from a holistic perspective, it becomes clear that increased national production of green hydrogen makes sense. A crucial point here is that current studies show a decline in production costs for green hydrogen in Germany. In many cases, these costs are lower than the import costs for hydrogen transported by ship and are often competitive with pipeline imports. In addition to production, the use of hydrogen is also crucial for a future hydrogen economy.
In order to make efficient use of the hydrogen production possible by 2030, the Wuppertal Institute recommends concentrating its use on indispensable applications, such as in the steel or chemical industries, which cannot become climate-neutral without green hydrogen. This would help to limit the future demand for hydrogen and thus also reduce the required quantities of production and imports.
Doris Höflich, Market Intelligence Senior Expert
Sources:
- IRENA 2023
- The Arab Gulf States Institute Washington, 13.02.2024
- BMWK, 01.06.2023
- World Resources Institute, 16.08.2023
- Wuppertal Institut, 27.06.2023