Green hydrogen (GH) has the potential to be a game-changer in the transition to a low-carbon economy. It is emerging as a key player due to its versatility and sustainability and as a promising alternative to decarbonize the “hard to abate” sectors, such as heavy industry, transport and energy, which account for more than 50% of the world’s greenhouse gas (GHG) emissions. The IDB has been supporting Latin America and the Caribbean (LAC) in its efforts to promote GH national roadmaps and create favorable market conditions, as we recognize that GH represents a technology that may help the region deliver on its climate change mitigation commitments. However, the production, storage, and transport of green hydrogen are not without risks and impacts on the environment and people.
What is green hydrogen?
Hydrogen is produced by using a power source to split water into its two molecules, hydrogen and oxygen, through electrolysis. “Green” hydrogen refers to when the energy used for electrolysis comes from renewable sources, such as wind, solar and geothermal energy. This process is usually emissions-free and offers a way to store renewable energy for later use. Currently, GH cannot be liquefied in a cost-effective way. Therefore, GH may then be combined with nitrogen to produce green ammonia or with CO2 to generate green methanol. These are called energy carriers and they can be used as e-fuels for transport, storage and/or be reversed into GH again.
Green hydrogen and the ESPF
In the recently published “Environmental, Health, Safety, and Social Management of Green Hydrogen in Latin America and the Caribbean”, the IDB and Anthesis Group analyze the main risks, impacts, and mitigation measures of activities related to green hydrogen (e.g., production, transportation, and storage of GH, and associated energy carriers, including ammonia and methanol), focusing on a sample of eight countries in LAC that have made steps towards developing a green hydrogen value chain. The study summarizes and compares relevant regulatory frameworks of the sample countries, as well as international best practices in environmental, health, safety, and social management of hydrogen production, and analyzes their potential relation to IDB’s Environmental and Social Policy Framework (ESPF).
The study finds that four of the Environmental and Social Performance Standards (ESPS) of the ESPF are especially relevant to the green hydrogen value chain. It also concludes that a crucial aspect of the process of developing a GH value chain is the identification of potential sites for developments and their possible cumulative and indirect impacts, as the siting of facilities may directly trigger several additional risks and impacts addressed by other performance standards.
In this blog, we explore the main environmental and social risks and impacts of green hydrogen and how the ESPF can help to mitigate them.
ESPS 2: Labor and Working Conditions
One of the most significant risks associated with green hydrogen production is occupational health and safety, which is addressed by ESPS 2. Hydrogen is a highly flammable gas and, if not handled properly, it can pose a significant risk to workers’ safety during production, transportation, and storage. The production process involves the operation of complex and potentially dangerous high-pressure equipment and the handling of hazardous chemicals, which can lead to accidents and injuries.
Workers may also be exposed to intense electromagnetic fields within the electrolyser building, to toxins (including methanol and ammonia) in conversion and storage units, and to cold surfaces in cryogenic storage units. Moreover, workers may be exposed to risks associated with the use of renewable energy sources, such as working at heights or in extreme weather conditions. Additionally, the production of catalyzers involves the use of rare earth elements such as iridium, which can present labor risks in the primary supply chain if not sourced responsibly.
ESPS 2 requires project borrowers to assess and manage the potential risks to labor and working conditions. This includes identifying potential hazards, evaluating the risks associated with each hazard, and implementing measures to minimize or eliminate risks. Project developers should also provide appropriate training and protective equipment to workers and establish emergency response plans in case of accidents.
ESPS 3: Resource Efficiency and Pollution Prevention
One of the main environmental risks associated with green hydrogen is the potential for water scarcity. The production of green hydrogen requires a significant amount of water and, in some areas where water is already scarce, this increase in demand could exacerbate existing water shortages. While the use of deionized water produced by desalination plants may reduce freshwater demand, it generates a need to discharge a stream of brine into the water sources and soils.
In addition, the production of ammonia and methanol generates waste and often involves the use of catalysts and other chemicals that can be toxic or harmful to the environment, potentially contaminating water sources and soils during production and transportation, if not handled properly. In case of continuous discharge or leaks into water bodies, this may represent an immediate danger to aquatic life, with subsequent impacts on the livelihood of communities depending on it.
ESPS 3 requires that borrowers elaborate a comprehensive risk assessment that considers the potential impacts on the environment and develop appropriate measures to avoid or minimize the potential for contamination due to hazardous materials and substances that may be released by the project. The policy standard also mandates the adoption of appropriate waste management practices and the implementation of measures to prevent contamination and reduce water consumption, and requires projects to assess and manage water risks, including the potential impact of the production of green hydrogen on water resources.
ESPS 4: Community Health and Safety
One of the main concerns among public authorities and citizens related to the use of green hydrogen is the risk posed to community health and safety, which is addressed by ESPS 4. Hydrogen storage and transport require the use of high-pressure containers and pipelines, which can be a threat to nearby communities in case of leaks or explosions. Accidents involving the transport of hydrogen can also lead to explosions and fires, potentially causing harm to both people and the environment. In addition, green hydrogen produced using offshore wind energy may pose risks to coastal and marine habitats, which may provide ecosystem services to local fishing communities. Meanwhile, if solar photovoltaic is used as the energy source, significant areas of arable land may be needed to attain the necessary wattage, potentially generating conflicting land uses.
ESPS 4 requires borrowers to assess and manage the potential risks to community health and safety. This involves identifying potentially affected communities in the area of influence of a green hydrogen project, evaluating the risks associated with each hazard, and implementing measures to avoid or minimize risks. ESPS 4 also highlights the need to engage with communities early and often to ensure that they understand the potential risks and their rights to information and consultation, and mandates the adoption of appropriate safety standards for the transport and storage of hydrogen and the use of renewable energy sources. Furthermore, it requires borrowers to develop emergency preparedness and response plans and conduct regular safety drills to prepare for potential incidents.
ESPS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
Another environmental risk associated with green hydrogen is the potential for land use and land cover change. The production of renewable energy, which is needed to power electrolysis, often requires large amounts of land. This could lead to the conversion of natural habitats or agricultural land, which could have negative impacts on biodiversity and food security. Land use changes entailed by large-scale GH projects and related large-scale renewable farms may imply the loss of natural buffer areas such as wetlands, mangroves, and upland forests that mitigate the effects of natural hazards such as flooding, landslides, and fire; these may result in increased vulnerability and community safety-related and health-related risks and impacts.
Aside from considerations of impacts related to land use, biodiversity conservation can be affected by impacts of excessive pressure on water resources, whether freshwater or seawater, receiving brine discharge from desalination plants. Additionally, the use of renewable energy sources such as wind turbines can have negative impacts on wildlife, including migratory or endangered birds and bats, which can be injured or killed in collisions with wind turbine blades.
ESPS 6 requires borrowers to assess and manage the potential impacts on land use, land cover, and biodiversity. The policy standard emphasizes the need to assess direct, indirect, and cumulative project-related impacts on biodiversity and ecosystem services and identify any significant residual impacts. This process focuses especially on habitat loss, degradation and fragmentation, invasive alien species, overexploitation, hydrological changes, nutrient loading, and pollution, and requires the borrower to apply the mitigation hierarchy in a differentiated manner in modified, natural, and critical habitats, as well as in legally protected and internationally recognized areas. ESPS 6 also takes into account the differing values attached to biodiversity and ecosystem services by project-affected people and, where appropriate, other stakeholders.
The value of strategic environmental and social assessment
To ensure that green hydrogen projects are developed in a comprehensive, sustainable and socially responsible manner, the GH scoping study recommends the use of a Strategic Environmental and Social Assessment (SESA). SESA is a tool that allows project developers to assess the potential environmental and social impacts of green hydrogen policies, plans or programs from a strategic perspective. It takes into account the diverse types of infrastructure and environmental and social evaluation and licensing requirements in potential green hydrogen projects and their associated facilities, and recommends the development of appropriate measures to mitigate impacts and risks throughout implementation of the policy, plan, or program. SESA can also help identify opportunities for stakeholder engagement and participation, which can lead to the development of more sustainable and socially responsible projects.
Green hydrogen has the potential to be a crucial tool in the transition to a low-carbon economy, but it is essential to manage the potential environmental and social risks and impacts associated with its production and use. By taking a comprehensive approach to environmental and social risk management, green hydrogen can play a key role in the transition to a sustainable future.
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