Working Paper

Hydrogen for heating? Decarbonization options for households in the European Union in 2050

This study compares the cost of several low-greenhouse gas (GHG) or GHG-neutral residential heating technologies in the year 2050: (1) hydrogen boilers, (2) hydrogen fuel cells with an auxiliary hydrogen boiler for cold spells, (3) air-source heat pumps using renewable electricity, and (4) heat pumps with an auxiliary hydrogen boiler for cold spells. The assessment includes low-carbon hydrogen from steam-methane reforming (SMR) using natural gas combined with carbon capture and storage (CCS), or SMR + CCS, and zero-carbon hydrogen produced from renewable electricity using electrolysis.

The analysis finds that air-source heat pumps are the most cost-effective residential heating technology in 2050 and are at least 50% lower cost than the hydrogen-only technologies. In a sensitivity analysis, we find that even if natural gas costs were 50% lower or renewable electricity prices were 50% higher in 2050 compared to our central assumptions, heat pumps would still be more cost-effective than hydrogen boilers or fuel cells. Renewable electrolysis hydrogen can be cost-competitive with SMR + CCS hydrogen in 2050, although electrolysis hydrogen is not produced at scale today. At the same time, energy efficiency measures to reduce heat demand would be a more cost-effective strategy for achieving GHG reductions than any of the low-GHG heating pathways we assess in this study.

The analysis shows that all pathways using renewable electricity have a near-zero GHG intensity, while SMR + CCS hydrogen could reduce GHG emissions by 69%–93% compared to natural gas if improvements are made in the future to reduce the GHG intensity of this pathway. Quantifying the GHG impact and cost effectiveness of various heating pathways is relevant for European policymakers facing decisions on how to both decarbonize buildings and alleviate energy poverty in line with commitments made in the Renovation Wave Initiative.



Alternative fuels Strategies