Hydrogen gathering strong momentum with a $300bn+ project pipeline, says new report

Hydrogen gathering strong momentum with a $300bn+ project pipeline, says new report

Hydrogen can become the most competitive low-carbon solution in more than 20 applications by 2030, including long haul trucking, shipping and steel, says new report released today by the Hydrogen Council.

The report comes at a time when hydrogen is receiving unprecedented interest and investment, and it shows the rapid acceleration of hydrogen projects worldwide – with 200+ large-scale projects announced across the value chain, totalling more than $300bn.

At the beginning of 2021, more than 30 countries have released hydrogen roadmaps and governments worldwide have committed over $70bn of public funding in support of decarbonisation through hydrogen technologies, the report, developed in collaboration with McKinsey & Company, highlights.

No less than 228 large-scale projects have been announced along the value chain, with 85% located in Europe, Asia and Australia.

These include large-scale industrial usage, transport applications, integrated hydrogen economy, infrastructure, and giga-scale production projects.

If all announced projects come to fruition, total investments will reach more than $300bn in spending through 2030, the report says.

Of this investment, $80bn can currently be considered “mature” – meaning that these projects are in the planning stage, have passed a final investment decision (FID), or are under construction, already commissioned, or operational.

This momentum exists along the entire value chain and is accelerating cost reductions for hydrogen production, transmission, distribution, retail and end applications.

Cost reductions

With the advent of hydrogen giga-scale projects, hydrogen production costs can continue to fall.

For renewable hydrogen, the biggest driver is a quicker decline in renewables costs than previously expected, driven by at-scale deployment and low financing costs, the report says.

2030 renewable costs could be as much as 15% lower than estimated just a year ago.

The strongest reductions are expected in locations with optimal resources such as Australia, Chile, North Africa and the Middle East.

But lower renewable costs are not enough, the report says. For low-cost clean hydrogen production, value chains for electrolysis and carbon management need to be scaled up.

The report says a further step-up of public support is required to bridge the cost gap, develop low-cost renewable capacities and scale-up carbon transportation and storage sites.

Such a scale-up would lead to a rapid industrialisation of the electrolyser value chain.

The report projects that renewable hydrogen production costs could decline to $1.4 to $2.3 per kilogram by 2030 (the range results from differences between optimal and average regions).

This means new renewable and grey hydrogen supply could hit cost parity in the best regions by 2028, and between 2032 and 2034 in average regions.

“We are seeing a new level of maturity for the hydrogen industry, and this is only set to accelerate,” said Daryl Wilson, Executive Director of the Hydrogen Council.

“Hydrogen Council members collectively are planning a sixfold increase in total hydrogen investments through 2025 and a 16-fold increase through 2030.”

“The plan is to direct most of this investment toward capital expenditures, while collaborations, consolidations and innovation will also be a key focus.”

“A huge step in the fight against climate change has been taken, as both governments and investors now fully grasp the role hydrogen can play in the energy transition,” said Benoît Potier, Chairman and CEO of Air Liquide and Co-chair of the Hydrogen Council.

“Now, to bring this potential to its full fruition, governments, investors and industrial companies must work together to scale up the hydrogen ecosystem around the world.”

“Their collaboration in the coming months will allow for many of the projects around the world to become a reality and to turn hydrogen into a new, clean, abundant and competitive energy carrier.”

Read Hydrogen Insights 2021: A Perspective on Hydrogen Investment, Deployment and Cost Competitiveness in full here.

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