rethink sustainability
Is hydrogen part of the future for the Philippines?
The country is exploring the use of hydrogen in a bid to diversify its energy sources
For the Philippines, mitigating the threat of climate change is urgent. It is the country most at risk in the world from the climate crisis, according to Global Peace Index 2019 report1. The archipelago is hit by an average of 20 typhoons a year1, and it is seeing rising sea levels. 19 out of the 25 cities most exposed to a one-meter sea level rise are in Asia, and seven are in the Philippines alone2.The nation is experiencing a higher frequency of extreme weather events and rainfall, as well as rising temperatures. Additionally, it is also dependent on climate sensitive natural resources, and its major cities are on vast coastlines where the majority of populations reside3.
Earlier this year, the Philippines said it was revising its target to cut greenhouse gas emissions to a 75% reduction by 2030 under its commitment to the Paris Agreement, up from a target of 70% set four years ago4.
Read more about The Race to Net Zero: an event with former UN leader Ban Ki-moon
Growth of Hydrogen
As part of that commitment, the country has turned to hydrogen to diversify its energy sources5.In January, The Philippine Department of Energy signed a Memorandum of Understanding (MoU) with Australia-based research and development firm Star Scientific, to explore the potential of hydrogen as an energy source for the country5. It went on to sign a further MoU with Tokyo-based Hydrogen Technology6.
Hydrogen energy is a nascent industry, one which will take some years to be adopted more broadly. The Philippines is currently heavily dependent on imported fossil fuel, with thermal energy accounting for around 76% of the national energy mix7. Hydrogen as a potential source of energy had been under discussion for some years in the country. In 2018, the National Electrification Administration (NEA) and Toshiba Energy Systems & Solutions Corporation also signed an MoU for the construction of H20ne as a source to generate power. H20ne is a solution to produce hydrogen through electrolysing, using renewable energy to create a power source through fuel cells7.
Industry commenters suggest that the Philippines does not have vast native energy reserves means it is more open to a rapid transition, unlike other countries, where there are vested interests lobbying for the fossil fuel industry7.
However, the initiatives are still in their exploratory phase, and hydrogen, which comes with higher costs, as well as its own implementation challenges, would only ever be part of a larger green energy solution. Globally, the hydrogen production market is expected to more than double over the decade to 2030, on the back of government sustainability goals8. Global hydrogen production is expected to rise from 71 million tonnes to 168 million by 2030, while revenue generation within the market is expected to increase from USD 177.3 billion in 2020 to USD 420 billion in 20308.
Read more about Lombard Odier's commitment to sustainability.
For a truly self-sustaining hydrogen economy to become mainstream, industry experts say more research and development work needs to be done in the technologies that support hydrogen, such as storage and transport, in addition to production8.
A report from the International Energy Agency (IEA) offers key recommendations for governments and companies and other stakeholders who want to scale up hydrogen production around the world. Among those recommendations, the report suggests9:
- Making industrial ports the nerve centres for scaling up the use of clean hydrogen;
- Building on existing infrastructure, such as natural gas pipelines;
- Expanding the use of hydrogen in transport by using it to power cars, trucks and buses that run on key routes;
- Launching the hydrogen trade's first international shipping routes.
Read more about Thailand's push towards electric vehicles
Looking to the Future
For the Philippines, a hydrogen solution will likely only ever be part of a wider green energy transformation. In 2020, the government announced a moratorium on new coal power projects10. The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that the ban on coal could bring attract US D 30 billion worth of renewable energy investment to the country11. When coal generation is cut from its existing 41.5% share in the supply mix, down to 16%, solar and wind energy can then increase from 5.4% to 43.8%, presenting significant opportunities for investors and developers10.
We believe that hydrogen will be a necessary tool in the climate transition toolbox, in particular in hard-to-abate sectors. Over time, costs will fall, and demand will grow. We see strong growth in the market and production capacities in the 2020s, followed by further sharp increases in the 2030s, but believe large scale deployment of hydrogen solutions is feasible closer to 205012.
The exploratory initiatives currently being undertaken in the Philippines can only be good news for the sector, as the country looks to build a sustainable future.
Read more about the Sustainability Revolution in Asia
1 https://www.amnesty.org.uk/philippines-country-most-risk-climate-crisis
2 https://www.rappler.com/environment/southeast-asia-facing-calamitous-weather-extremes-ipcc-report-2021
3 https://www.climatelinks.org/resources/climate-risk-profile-philippines
4 https://www.reuters.com/business/environment/philippines-raises-carbon-emission-reduction-target-75-by-2030-2021-04-16/
5 https://www.reuters.com/article/philippines-energy-hydrogen-idUSL4N2K40T8
6 https://www.doe.gov.ph/press-releases/cusi-pushes-rd-hydrogen-energy?ckattempt=1
7 https://www.h2bulletin.com/the-philippines-hydrogen-economy-offshore-wind-turbines-is-an-option/
8 https://www.powerengineeringint.com/hydrogen/global-hydrogen-production-market-to-hit-420bn-by-2030/
9 https://www.iea.org/news/international-action-can-scale-up-hydrogen-to-make-it-a-key-part-of-a-clean-and-secure-energy-future-according-to-new-iea-report
10 https://www.eco-business.com/news/philippines-announces-moratorium-on-new-coal-power/
11 https://ieefa.org/wp-content/uploads/2020/10/Philippines-Greenfield-Coal-Project-Moratorium-Will-Attract-Billions-in-RE-Investment_November-2020.pdf
12 Lombard Odier Sustainability Insights 'Hydrogen – H2- Hype and Hypothesis March 2021
