Green hydrogen production and international competitiveness

Green hydrogen, produced by electrolysis using renewable or low-carbon electricity, is expected to play a key role in reaching the Scottish Government’s net zero emission targets.

The purpose of this study was to determine if Scotland can produce green hydrogen at scale and export it at a competitive cost to the EU market.

It explored the costs of producing hydrogen in Scotland, Chile, Norway, Morocco and France and the northeast region of the USA and exporting to northwest Europe, through a levelised cost model and literature review.

The study focused on:

• Production of hydrogen at scale
• Transport via pipeline, entering the EU via Rotterdam
• Transport via shipping ammonia: The hydrogen produced is converted to ammonia, shipped to Rotterdam and converted back into hydrogen in the Netherlands.
• Transport via shipping compressed hydrogen

Summary of findings

• From the countries analysed, hydrogen production is cheapest in France given its access to low-cost nuclear electricity. The most expensive is Scotland due to the higher cost of power from offshore wind compared with the other low-carbon power technologies used. Other countries are expected to become more competitive as low-carbon electricity costs reduce and technology improves.
• The most cost-effective transport option varies depending on distance, volume and technology. For longer distances, such as from the USA and Chile, converting hydrogen to ammonia and shipping via ammonia vessels is most effective. For shorter distances, pipeline or compressed hydrogen transport options are more cost-efficient. Pipelines are most cost-efficient when repurposed and the capacity is fully utilised. Where existing infrastructure is not available and the pipeline is not fully utilised, shipping compressed hydrogen offers a cost-saving alternative for shorter distances.
• Scotland’s proximity to Rotterdam gives it a competitive advantage. To outcompete countries that are closer to Rotterdam, production costs in Scotland must decrease.
• Considering the evolving state of the hydrogen industry, cost estimates for production and transportation carry uncertainty.

For further details, please download the report.