Hydrogen can lead energy transition with appropriate safety standards: Allianz
Hydrogen can play a leading role in the energy transition towards a low-carbon economy, according to Allianz Global Corporate & Specialty (AGCS).
As an alternative to fossil fuels like oil and coal, hydrogen solutions could be key for tackling climate change in future, AGCS said, helping companies reduce their carbon emissions.
In a bulletin highlighting some of the opportunities and challenges faced by the emerging hydrogen industry, AGCS said potential risks around the production, storage and transportation of hydrogen – most notably fire and explosion but also technical failure and business interruption – need to be proactively managed.
An AGCS analysis of more than 470,000 claims across all industry sectors over five years revealed fire and explosions caused considerable damage and destroyed values of more than €14 billion over the period. Excluding natural disasters, 11 of the 20 largest insurance losses analysed were due to this cause, making it the number one cause of loss for businesses worldwide.
Chris van Gend, global head of energy and construction at AGCS, said Hydrogen can transition from a niche power source into big business. Over 30 countries have already produced hydrogen roadmaps, while governments worldwide have committed more than $70 billion in public funding, according to McKinsey.
Hydrogen can assist the transition towards a low-carbon economy as an energy carrier and storage medium for conversion back to electricity or as a fuel for all means of transport and mobility, AGCS said. It is also a potential substitute for fossil hydrocarbons in industries such as steel production or petrochemicals.
However, van Gend highlighted challenges around production, supply chain complexity and safety. Hydrogen can explode when mixed with air, creating a significant risk, while leaks are hard to identify without dedicated detectors since hydrogen is colorless and odorless. Industry loss investigation statistics show approximately one in four hydrogen fires can be attributed to leaks, with around 40 percent being undetected prior to the loss.
Thomas Gellermann, an AGCS risk consultant at Allianz Center for Technology, advised businesses to think about fire and explosion protection on three different levels: preventing the escape of flammable gases; ensuring safe design of electrical and other installations where ignition sources cannot be excluded; and constructing buildings and facilities to withstand an explosion with limited damage.
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