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Global hydrogen development: great potential to accelerate the energy transition

‘Used by permission of the World Energy Council’

The World Energy Council recently published a series of working papers and reports on the global development of hydrogen and its role in the energy transition. The publications explore demand dynamics and price changes for hydrogen, as well as national strategies around the world to support the development of hydrogen technologies.

Thanks to the ambition to achieve zero greenhouse gas emissions through clean energy sources, there has recently been a significant uptake in interest in hydrogen worldwide. At present, demand for hydrogen is largely concentrated in the petrochemical industry, but experts say there is great potential for chemicals, steel production, aviation, and heavy duty transportation. Hydrogen demand projections vary considerably, the only thing all estimates have in common is a prediction of limited but steady growth in hydrogen demand until 2030.

According to forecasts, hydrogen will become economically viable only after 2030 and to get there a lot of investments in infrastructure and pilot projects are needed. Although the true potential of hydrogen as a component of future energy systems is not yet clear, by 2050 the share of hydrogen in total final energy consumption is estimated to be in the range of 6% to 25%. The estimated volumes of hydrogen needed for 2050 are widely varied, ranging from 150 to 600 million tonnes.

At present, the price of producing so-called "green hydrogen" ranges worldwide from $2.7-8.8/kg, with all studies predicting a significant price reduction by 2030 to the $2-6/kg range due to falling costs of electricity from renewable sources and hydrogen technologies. By 2050, the price is expected to be in the $1.5-$5/kg range, and in countries with excellent renewable resources the cost of green hydrogen may even be $1/kg or lower. Experts note that there will be significant differences between countries, depending on the price of renewable electricity. For example, production would be cheaper in countries such as Australia or Chile, where the cost of renewable electricity is lower and therefore the capacity factor of the electrolyser is higher.

There is a great diversity in the development of hydrogen in different regions of the world as well as in national hydrogen strategies and policies. Countries in Asia and Europe are currently analysing demand to a greater extent, while in the Middle East and North America the primary focus is on supply. In Asia, there is more discussion about the prospects for hydrogen as a liquid fuel in the form of ammonia and as a transport fuel for ships and vehicles. Japan and South Korea are the only Asian countries to have published national strategies towards developing a hydrogen strategy –Japan is seeking international supply chains, while Korea is prioritising new technologies such as hydrogen fuel cell vehicles. China, Singapore and Uzbekistan have their national strategies in preparation.

In Europe, by contrast, hydrogen is seen more as an opportunity to reduce carbon dioxide emissions in industries where it is particularly difficult to achieve, including the transportation. France, Germany, Netherlands, Norway, Portugal, Spain and Hungary as well as the European Union as an entity have published their national hydrogen strategies.

In North and South America, options are being explored to produce hydrogen for domestic consumption and for export, with Chile and Canada having published their national hydrogen strategies. Canada, a major hydrocarbon exporter, sees great potential for fuel cell applications in road haulage, rail, and shipping transport, as well as decarbonising heating by blending natural gas with hydrogen.

In general, experts from the World Energy Council note that the hydrogen economy has great potential for job creation and economic growth, but needs to address a number of issues that impede the assessment and realisation of hydrogen's potential. Firstly, hydrogen is non-competitive with other energy sources in terms of cost. Secondly, there is the issue of primary supply and demand, the volume of which is insufficient to form a full value chain. Thirdly, the existing technologies of hydrogen production are studied in different degrees and research is carried out simultaneously in several directions, which further complicates the situation.