Working Paper

Hydrogen for heating? Decarbonization options for households in the Netherlands

Alternative fuels
Engineering & manufacturing

To align with the National Climate Agreement, Dutch municipalities must devise a “transition vision for heating” by the end of 2021 to phase out natural gas from heating by 2050. Possible decarbonization options for the heating sector include the use of hydrogen, renewable electricity, or a combination of the two. At the same time, energy poverty impacts 1 million households in the Netherlands, so it is important to consider the cost of these options.

In this study, we compare the cost of several low-greenhouse gas (GHG) or GHG-neutral residential heating pathways in the Netherlands 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. Our analysis includes zero-GHG hydrogen produced from renewable electricity using electrolysis and low-GHG hydrogen from steam-methane reforming (SMR) using natural gas combined with carbon capture and storage (CCS).

We find heat pumps to be the most cost-effective of the assessed residential heating technologies in the Netherlands in 2050. All heat pump scenarios are at least 50% lower in cost than those where hydrogen is the primary form of heating in a boiler or fuel cell, as shown in the bars in the figure. In a sensitivity analysis, we find that heat pumps would still be more cost-effective than any hydrogen heating technology, even if natural gas costs were 50% lower or renewable electricity prices 50% higher in 2050 compared to our central assumptions. While electrolysis hydrogen is not produced at scale today, we find that electrolysis hydrogen will be cost-competitive with SMR + CCS hydrogen in the Netherlands in 2050. When the lifecycle GHG reduction potential compared to fossil fuels is considered (shown as a percent in the triangles in the figure), we find that SMR + CCS hydrogen could reduce greenhouse gas (GHG) emissions by 69–93% compared to natural gas if improvements are made in the future to reduce the GHG intensity of this pathway. All pathways using renewable electricity have a zero or near-zero GHG intensity. Our findings support many municipalities’ decisions to pursue heat pumps as the primary decarbonized heating solution for Dutch residences.