**1. Introduction**

The economic, social, and political dynamics of the Association of Southeast Asian Nations (ASEAN) have made it one of the fastest-growing regions. However, Southeast Asia faces great challenges in matching its energy demand with sustainable energy supply as the region transitions to a lower-carbon economy. The transition requires development and deployment of green energy sources. Growing energy demand can be met by energy supply produced by renewables and other clean energy alternatives such as hydrogen and by clean technologies [1]. Whilst Organization for Economic Co-operation and Development (OECD) countries have quickly reduced greenhouse gas emissions in response to the commitments of the Paris Climate Conference or the 21st Conference of the Parties (COP 21), developing Asia has some way to go to balance economic growth and affordable and available energy. Much of the future energy mix of emerging ASEAN countries will rely on fossil fuel to power economic development. However, they can follow a renewable energy path to economic growth, social well-being, and environmental sustainability.

The power generation mix of the Association of Southeast Asian Nations (ASEAN) is dominated by fossil fuels, which accounted for almost 80% in 2017 and are expected to account for 82% in 2050 if the region does not transition to cleaner energy systems [2].

Reducing greenhouse gas emissions is high on the global agenda under COP 21 and the upcoming COP 26, which will require leaders to pursue alternative fuel pathways, shifting from fossil fuel–based to clean energy systems. In this regard, hydrogen fuel represents growth potential as world leaders start to see the great benefit and promise of its use to abate climate change. In many ASEAN countries, hydrogen as an alternative fuel is not yet on the policy agenda. The ASEAN Plan of Action for Energy Cooperation (APAEC) Phase 2, however, will include policy measures to encourage emerging and alternative technologies such as hydrogen and energy storage.

The potential use of hydrogen in transport, power generation, and industry has been proven by projects around the world. Renewable hydrogen has attracted leaders' attention as an option to increase the share of renewables in electrical grids amidst the falling cost of renewable electricity from wind and solar energy. The International Renewable Energy Agency (IRENA) [3] predicted that the cost of electrolyzers, the devices used to produce hydrogen from water, will halve from US\$840 now to US\$420 per kW by 2040. Renewable hydrogen production could be the cheapest energy option in the foreseeable future. The cost-competitiveness of producing renewable H2 is key for the wide adoption of hydrogen. Renewable H2 production costs dropped drastically from US\$10–US\$15/kg in 2010 to US\$4–US\$6/kg in 2020 [4]. Costs are expected to decrease to US\$2.00–US\$2.50/kg of H2 in 2030, which is competitive with hydrogen production using natural gas through steam methane reforming with carbon capture, sequestration, and storage (CCS) [5].

Hydrogen is a clean energy carrier and can be stored and transported for use in hydrogen-run vehicles, synthetic fuels, upgrading of oil and/or biomass, ammonia and/or fertilizer production, metal refining, heating, and other end uses. Developing hydrogen, therefore, is an ideal pathway to sustainable clean energy systems and can help scale renewables such as solar and wind energy. Adopting renewable hydrogen would bring more renewables into the energy mix and could be a game changer in the transition from fossil dependence to a cleaner energy system in ASEAN. Hydrogen could help integrate the current electricity system with wind and solar energy. Solar and wind penetration of the electrical grid is hindered by the high intermittency of electricity from wind and solar energy, and many grid operators in ASEAN are, therefore, hesitant to include a large share of it.

The Economic Research Institute for ASEAN and East Asia's research on hydrogen energy since 2017 has identified the significant potential of hydrogen energy supply and demand in East Asia. By 2040, the cost of hydrogen will decrease by more than 50% if it is adopted in all sectors. The target price of US\$2.00–US\$2.50/kg of H2 in 2040 is competitive with the price of gasoline. The cost of supplying hydrogen is about 3–5 times higher than that of gas, mainly due to limited investment in hydrogen supply chains and the lack of a strategy to widely adopt hydrogen usage. The wide adoption and usage of hydrogen will need time to ensure cost-competitiveness and safety, especially for automobiles. The large-scale hydrogen-based energy transition from 'grey' and 'blue' to 'green' hydrogen will happen concurrently with a global shift to renewables. 'Green' hydrogen can face current system integration challenges that have blocked increasing the share of wind and solar energy.

In ASEAN, Brunei Darussalam leads in the hydrogen supply chain and has supplied liquefied hydrogen from Muara port to Japan since late 2019 [6]. However, the liquefied hydrogen process consumes a great deal of energy to cool gaseous hydrogen into liquid hydrogen at temperatures of −253 degrees Celsius and lower. The hydrogen supply chain demonstration project, in cooperation with Japan's government, explored an alternative way of shipping hydrogen using a new technology called liquid organic hydrogen carrier. If the technology is economically viable, it will pave the way for market access worldwide and overcome hydrogen supply chain barriers.

In many ASEAN countries, hydrogen is not yet on the policy agenda as an alternative fuel. However, APAEC, which is under preparation for endorsement at the ASEAN Ministers on Energy Meeting in November 2020, will include policy measures to promote emerging and alternative technologies such as hydrogen and energy storage [7]. APAEC will help AMS increase their adoption of hydrogen to enlarge the share of hydrogen in the energy mix.

The study investigates the potential of renewable hydrogen as a clean energy source for ASEAN's energy mix, which will need huge investment in hydrogen energy–related industries. The paper aims to do the following:


Hydrogen adoption and development could be highly beneficial for ASEAN. Renewable hydrogen will enable the deployment of variable renewable energy (VRE) such as wind and solar and will be a game changer by breaking the barrier of integrated traditional power systems, which cannot absorb a high share of wind and solar energy. The paper is organized as follows: Section 2 reviews the pathways of hydrogen production processes; Section 3 explains the methodological approaches; Section 4 discusses the study's results; and Section 5 draws conclusions and policy implications.

## **2. Selected Pathways of Hydrogen Production Processes**

Hydrogen emits zero emissions when used in combustion for heat and energy. If pure hydrogen (H2) combusts by reacting with oxygen (O2), it will form water (H2O) and release energy that can be used as heat, in thermodynamics, and for thermal efficiency. Hydrogen is the most abundant chemical substance in the universe, but it is rarely found in pure form (H2) because it is lighter than air and rises into the atmosphere. Hydrogen is found as part of compounds such as water and biomass and in fossil fuels such as coal, gas, and oil [8]. Several ongoing researches use two processes to extract hydrogen fuel: steam methane reforming, mainly applied to extract hydrogen from fossil fuels, and electrolysis of water, applied to extract hydrogen from water using electricity.

Steam methane reforming extracts hydrogen from methane using high-temperature steam (700–1000 ◦C). The product of steam methane reforming is hydrogen, carbon monoxide, and a small amount of carbon dioxide [9]. Most hydrogen is produced through this process, which is the most mature technology. Given how cheap natural gas is in the US and other parts of the world, hydrogen is one pathway to transition to a cleaner economy if steam methane reforming can be augmented with CCS. Technically, the chemical reaction process can be written as follows.

Steam methane reforming reaction (heat must be supplied through an endothermic process):

$$\text{CH}\_4 + \text{H}\_2\text{O} \ (+\text{heat}) \rightarrow \text{CO} + \text{3H}\_2\text{.} \tag{1}$$

Applying water-gas shift reaction (1) produces more hydrogen:

$$CO + H\_2O \rightarrow CO\_2 + H\_2(\text{ + small amount of heat}),\tag{2}$$

At this stage, carbon dioxide and other impurities are removed from the gas stream, so the final product is pure hydrogen.

Instead of steam methane reforming, partial oxidation can be applied to methane gas to produce hydrogen. However, the partial oxidation reaction produces less hydrogen fuel than does steam methane reforming. Technically, partial oxidation is an exothermic process, producing carbon monoxide and hydrogen and giving off heat:

$$2\text{ CH}\_4 + \frac{1}{2}\text{O}\_2 \rightarrow \text{CO} + 2\text{H}\_2\text{ (+heat)},\tag{3}$$

Applying a water-gas shift reaction in (3) produces more hydrogen:

$$CO + H\_2O \rightarrow CO\_2 + H\_2(\text{ + small amount of heat}),\tag{4}$$

Electrolysis can produce hydrogen by splitting water into hydrogen and oxygen in an electrolyzer, which consists of an anode and a cathode. Electrolyzers may have slightly different functions depending on the electrolyte material used for electrolysis.

The polymer electrolyte membrane (PEM) electrolyzer is an electrochemical device to convert electricity and water into hydrogen and oxygen. The PEM electrolyte is solid plastic. The half reaction that takes place on the anode side forms oxygen, protons, and electrons:

$$2H\_2O \to O\_2 + 4H^+ + 4e^-,\tag{5}$$

The electrons flow through the external circuit and the hydrogen ions move across the PEM to the cathode, in which hydrogen ions combine with electrons from the external circuit to form hydrogen gases:

$$4H^{+} + 4e^{-} \rightarrow 2H\_{2} \tag{6}$$

PEM electrical efficiency is about 80% in terms of hydrogen produced per unit of electricity used to drive the reaction. PEM efficiency is expected to reach 86% before 2030.

Another method is alkaline water electrolysis, which takes place in an alkaline electrolyzer with alkaline water (pH > 7) with an electrolyte solution of potassium hydroxide (KOH) or sodium hydroxide (NaOH). In the alkaline electrolyzer, the two electrodes are separated. Hydroxide ions (OH−) are transported through the electrolyte from cathode to anode, with hydrogen generated on the cathode side. This method has been commercially available for many years, and the new method of using solid alkaline exchange membrane is promising as it is working in a laboratory environment.

## **3. Methodology and Scenario Assumptions**

Hydrogen is used mainly to produce petrochemicals and ammonia. The potential of hydrogen, however, clearly remains untapped in ASEAN countries because it is a clean energy carrier that can be produced from various sources using fossil fuel and renewable energy. To build a hydrogen society, the cost of producing hydrogen must be competitive with that of conventional fuels, such as gas, for transport and power generation.

Renewable or 'green' hydrogen must be produced using renewable electricity from wind, solar, hydropower, and geothermal energy. Excess electricity from nuclear power, however, could be used to produce hydrogen as nuclear power plants provide base-load power and cannot be easily ramped up and down. During low demand, electricity from nuclear energy and VRE could be used to produce hydrogen. To produce renewable hydrogen using VRE, it is important to know the predicted available curtailed electricity resulting from power system integration challenges due to higher share of renewables.

Two components determine the cost to produce 'green' hydrogen: electricity cost from renewables and the cost of electrolysis. If these costs could be reduced significantly to allow the cost of hydrogen production to be competitive with that of natural gas, then hydrogen adoption and usage could be accelerated. This study reviews the falling cost of VRE and electrolysis to see how their current and future cost could allow a competitive hydrogen production cost. High VRE penetration of the electrical grid is the biggest challenge for the grid operator as electricity from VRE is variable and intermittent. Upgrading the grid system with the Internet of Things to create a smart grid could allow more penetration by VRE; otherwise, VRE electricity would be greatly curtailed due to a weak power grid system. This study calculates potential renewable hydrogen production and potential emission abatement under various scenarios assuming the following:

	- -Scenario1H2 (Mt-H2) = [Scenario1 (TWh) × (Percentage of curtailed electricity)/48 (TWh)].
	- -Scenario2H2 (Mt-H2) = [Scenario2 (TWh) × (Percentage of curtailed electricity)/48 (TWh)].
	- -Scenario3H2 (Mt-H2) = [Scenario3 (TWh) × (Percentage of curtailed electricity)/48 (TWh)].

Mt-H2 stands for million tonnes of hydrogen; TWh is terawatt-hour; and percentage of curtailed electricity is 20–30% of total generation from renewables. The study also applies the conversion factor of 48 kilowatt-hours (kWh) of electricity needed to produce 1 kg H2 [10].

The potential emission abatement is the difference between (a) the business as usual (BAU) scenario and (b) the alternative policy scenario (APS) and other high-renewable-share scenarios such as Senario1, Scenario2, and Scenario3.

To estimate potential hydrogen produced using curtailed electricity, the power generation mix for the BAU and APS is estimated using ASEAN countries' energy models by applying the Long-range Energy Alternative Planning System (LEAP) software, an accounting system to project energy balance tables based on final energy consumption and energy input and/or output in the transformation sector. The LEAP software has been chosen in this study to estimate the future demand in power generation mix because the input of energy data provided by experts from ASEAN member states adopted their energy demand and supply modelling based on the LEAP modelling structure. Thus, the forecast of power generation demand is based on energy demand equations by energy and sector and future macroeconomic assumptions.

In the modelling work applying LEAP, the baseline of 10 AMS was 2017, the real energy data available in 2017, which are the latest that the study employed. Projected demand growth is based on government policies, population, economic growth, and other key variables, such as energy prices used by the International Energy Agency energy demand model [11]. BAU is in line with current energy policy in the baseline information, which is used to predict future energy demand growth. However, APS differs from BAU in policy changes and targets, with a greater share of renewables, including possible nuclear uptake based on an alternative policy for energy sources and more efficient power generation and energy in final energy consumption.

For electricity generation, experts from 10 AMS specified assumptions based on their national power development plans and used the assumptions to predict ASEAN's power generation mix. For renewable hydrogen production, the study applies a conversion factor of 48 kWh of electricity needed to produce 1 kg of hydrogen [10].
