Uncovering the true cost of hydrogen production routes using life cycle monetisation

TLDR

Hydrogen is viewed as a key vector for decarbonising transport and chemicals, yet most assessments focus only on global warming potential and ignore other environmental impacts. The study aims to calculate the true total cost of hydrogen production by integrating life‑cycle assessment with monetised environmental externalities. By adding monetised values for human health, ecosystem quality, and resource depletion to the levelised cost, the authors evaluated SMR, coal and biomass gasification, methane pyrolysis, and renewable and nuclear electrolysis to rank technologies. Monetised externalities constitute a large share of the total cost, reshuffling rankings so that SMR with carbon capture and storage is cheapest, followed by methane pyrolysis and wind‑ or nuclear‑powered electrolysis, thereby revealing cost barriers for emerging routes.

Abstract

Hydrogen has been identified as a potential energy vector to decarbonise the transport and chemical sectors and achieve global greenhouse gas reduction targets. Despite ongoing efforts, hydrogen technologies are often assessed focusing on their global warming potential while overlooking other impacts, or at most including additional metrics that are not easily interpretable. Herein, a wide range of alternative technologies have been assessed to determine the total cost of hydrogen production by coupling life-cycle assessments with an economic evaluation of the environmental externalities of production. By including monetised values of environmental impacts on human health, ecosystem quality, and resources on top of the levelised cost of hydrogen production, an estimation of the “real” total cost of hydrogen was obtained to transparently rank the alternative technologies. The study herein covers steam methane reforming (SMR), coal and biomass gasification, methane pyrolysis, and electrolysis from renewable and nuclear technologies. Monetised externalities are found to represent a significant percentage of the total cost, ultimately altering the standard ranking of technologies. SMR coupled with carbon capture and storage emerges as the cheapest option, followed by methane pyrolysis, and water electrolysis from wind and nuclear. The obtained results identify the “real” ranges for the cost of hydrogen compared to SMR (business as usual) by including environmental externalities, thereby helping to pinpoint critical barriers for emerging and competing technologies to SMR.